other, by inveigling those elements into investing their funds in great stockjobbing enterprises which subsequently turned out to be adroit swindles. In surveying this war the most remarkable phase was the ease with which the great moneyed interests traded on the shortsighted cupidity of the middle groups. With the naive expectation that the magnates would fraternally and benevolently create riches for them, the middle groups poured collective wealth into their schemes, only again and again to find that wealth wrenched from themselves.

Surmounting these forms of the conflict in society was the titanic warfare among the magnates to hold back one another or to seize from the other spoils each had seized from the multitude below. When the interests of these lords of finance and industry clashed, then the thunderbolts flew. Such a battle notably occurred in 1901. From whatever point of view it was considered, sociologically, philosophically or historically, it was an event full of curious instruction. It symbolized a new order of things; between it and the times when feudal dukes and barons and kings rushed to arms to settle their quarrels of self-interest, lay a long and broadening gap. These modern battles also carried their wake of disaster but it was so indirect as not to be outwardly observable. The weapons were money, reinforced by cunning and fraud; very powerful weapons which none in these days have been able to withstand. Under the old system the feudal lord lost caste if he did not fight in person; success might often mean his own death. But no bodily risk was entailed to confronting money monarchs; they could make wealth fight for them in the stock markets; and if, perchance, it became necessary for them to determine their quarrels with capitalists of other countries by force, they could impress, through their governments, armies, led by men trained by those governments in the art of slaughter, to do their fighting. Happen what would, their hides were safe.

A BATTLE OF MAGNATES

The daily routine budget of news in May, 1901, was suddenly enlivened by the reports that an array of great magnates had rushed headlong into a fractious contention. There was unwonted commotion in high places. James J. Hill, E. H. Harriman, and other superlative eminences were entangled in warfare. Here was rousing news, indeed. What was the meaning of this furor among the exalted? How did it begin and where would it end?

We have hitherto described Harriman's gigantic and audacious plan of fastening his grip upon all of the transcontinental railroads. In 1901 the Northern Pacific Railroad Company, conjointly with the Great Northern Railroad Company, had issued $215,155,100 of securities for the purpose of acquiring the stock of the Chicago, Burlington & Quincy Railroad. J. P. Morgan & Company marketed these securities, and that firm was also a heavy stockholder in the Northern Pacific and a depository for its funds. Harriman knew, of course, that if the Union

Pacific could get a majority of the stock of the Northern Pacific he would consequently obtain control of the Chicago, Burlington & Quincy. "Possession of these lines," later reported the Interstate Commerce Commission, "would have given to the Union Pacific absolute mastery over every avenue leading to the Pacific coast within the United States save that afforded by the Great Northern Railroad on the northern border of the country, and that offered by the Santa Fe upon the southern. This plan, if executed, would have subjected to a common will and policy nearly one-half of the territory of the United States-a comparatively undeveloped, rapidly growing, and extremely rich territory, into which must necessarily extend the population and business of the eastern United States."

James J. Hill, controlling the Great Northern Railroad, a line extending throughout the Northwest and Canada, was alarmed at the approach of so near and so powerful a competitor. Between Harriman and Hill a desperate contest now set in to gain control of the Northern Pacific Railroad in which Hill had a leading interest. Of the history of this line details are given in a later chapter.

A PANIC CAUSED BY THEIR COLLISION

With some of the very richest and most potent men in America scrambling for Northern Pacific stock, its market price shot up to an astonishing figure. Five months previously it had been in a rut at 58: it now rose sometimes as much as twenty-three points a day, reaching $300 a share, and for a part of one day, $1,000 a share. A "corner" surpassing in magnitude any previously known in railroad stock resulted. "The sacrifices necessary to secure funds for covering contracts," reported the Industrial Commission, "precipitated a panic of widespread proportions." 8 Thousands upon thousands of lesser stockholders of other railroad securities were caught in the whirligig and ruined; as fast as the quotations of Northern Pacific stock went on increasing, those of other railroad stocks precipitately declined.

Both of the contending magnates spent huge sums in seeking to overcome the other. The specific amount expended by Hill was not authoritatively revealed, but the sum used by Harriman's Union Pacific Railroad Company became a matter of record. In buying what it believed to be a control of the Northern Pacific Railroad it disbursed $79,459,000.9 And, it may be parenthetically added, the entire $100,000,000 of Union Pacific convertible bonds, utilized in this and other purchases, were later converted into the same amount of Union Pacific common stock. While the country resounded with the mournful outcries of a scattered host of petty stock speculators, there emerged a plan to harmonize the interests of all of the magnates concerned.

Final Report of Industrial Commission, xix:317.

Interstate Commerce Commission, 1907, Report No. 943, P. 333.

The disputed territory should be nicely partitioned among them, and affairs would be made tranquilly satisfactory. A "gentlemen's agreement," otherwise phrased "a community of interest," would cement their brotherly relations. Such a covenant would choke out competition, and simplify and enlarge the pleasant work of squeezing more tribute from the people.

Who was to be chosen as arbiter? Whose was the just mind to be entrusted with the selection of the new directors of the Northern Pacific Railroad? Morgan was the man chosen for the adjustment. No vague "gentlemen's agreement" for him however, when something better could be substituted. He conceived the idea of a huge holding company, an incorporated body to hold title to both the Great Northern and the Northern Pacific railroads. The Northern Securities Company was thereupon organized with a capital of $400,000,000.

Upon the announcement of this, the people of the Northwest bestirred themselves in vehement protest. Were they not oppressed enough already? So crushing a monopoly must not be permitted, they declared; it would hold them in absolute thralldom; suit must be brought to void it. The United States Government did bring such a suit and pressed it. The motive for the great energy and ability shown in its prosecution was not clear. The Supreme Court of the United States decided that the Northern Securities Company was an illegal corporation. Harriman had thought that he saw his way to obtaining control by means of stock ownership of the Northern Pacific Railroad and the Chicago, Burlington & Quincy Railroad through dissolution of the Northern Securities Company. He brought a suit-Harriman vs. Northern Securities Company-to effect that purpose. But the Supreme Court of the United States held that as those lines were competitors of the Union Pacific, control of them would be a violation of the Sherman Anti-Trust Act. This decision frustrated Harriman's aim. But the Southern Pacific was left under control of the Union Pacific.

Even while opponents of the trusts were gleefully praising the Supreme Court of the Untied States as "the bulwark of freedom of trade,” the trusts caused Congress to enact a law which knocked over the main prop upon which the anti-trust forces had been depending in their war upon the great centralized corporations.

For more than a decade trust organizers had been confronted with a national law decreeing fine or imprisonment or both upon conviction for engaging in any act in restraint of trade. None had gone to prison, nor controlling the deciding functions of government, as they did, was there any prospect of the visitation of such a punishment. But the imprisonment clause was a constant irritant; why have it on the statute books when it could easily be obliterated? And why not also have a specific declaration of immunity? A solitary provision calling for fine in case of conviction, the magnates did not mind at all. It would give an appearance of deferring to public sentiment and, at the same time, could be lightly regarded by those at whom it was directed. When trust mag

nates were gathering in immense sums from illicit acts, what did a fine of a few thousand dollars matter? It was too trivial to bother over. Besides, even if the fine, by some extraordinary possibility were made heavy, it could be assessed, in turn, upon the consumer.

COMPLETE IMMUNITY FOR THE MAGNATES

That annoying imprisonment clause, however, had to be thrown out of the laws, and it deviously was by an act passed by Congress in 1903. Concurrently, the same act reasserted and amplified the principle of granting immunity to trust officers. No matter how much or how often they violated the anti-trust laws, they were now absolutely secure from any possibility of prison sentence.

The Government might examine them with the greatest pretended inquisitiveness, and in the process draw out the most self-incriminating admissions, but this evidence as testimony could not, by the act of 1903, be used against them in the trial of any criminal proceeding. Not only was the individual exempted; the corporation itself was distinctly relieved from prosecution for any penalty or forfeiture.

The triumph of the trusts was now intrinsically complete.

Chapter XXIII

MORGAN AT HIS ZENITH

By the end of the year 1902 J. Pierpont Morgan, reckoning by appearances, seemed to outrank every other American magnate; scarcely a day passed that the newspapers did not report some new achievement of his, or obsequiously render tribute to his ever-expanding power. In the public appraisement he bulked as a supervitally preponderant man, a figure standing out with an immense and peculiar distinction, eclipsing the most obtrusive political and industrial functionaries.

Contrasted with him, ostensible political rulers were innocuous ephemeral personages. For a time they might vociferously command attention, but their encumbency was dependent upon the will of the magnates, and they were pushed up or pulled down as suited the policy and purposes of the great propertied interests. A long array of "eminent statesmen” had shuffled into solemn view, and for a while had been the cynosure of the nation, and then, like exploded rockets, had disappeared into obscurity, or into a state akin to it. Yet, in another aspect, brief and borrowed as was their power, theirs was not the portion of oblivion; conventional history, which accepts the apparent as the real, documents and often perpetuates their names, ignorant of the fact that they were only the servers or servitors of particular impelling forces and interests. Behind the nominal political masters stood the real masters—the great magnates.

HISTORICAL OMISSIONS AND MIS JUDGMENTS

Seeing that this was so, what vitally boots it whether this or that individual happened to fill the so-called great elective or appointive offices? In stereotyped historical textbooks and narratives the names of J. Pierpont Morgan and his like do not enter; not even a cursory glimpse is given of their deeds. Yet, in large part, these are the significant things that fundamentally made economic history. If history tells the tale aright it will tell how President Theodore Roosevelt begged campaign funds from the very trust magnates whom he pretended to flout; how in a critical moment in the national election of 1904, he so despaired of success that he was forced to appeal to Morgan, Harriman and their fellow magnates for a fresh and immediate infusion of funds.

The irresistible progress of the trust movement and the all-comprehending power of the magnates, can be better estimated when it is recalled that it was during Theodore Roosevelt's administration that the most antagonistic campaign thus far essayed against the trusts was car