textfiles/conspiracy/CN/cn11-02.txt

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Conspiracy Nation -- Vol. 11 Num. 02
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("Quid coniuratio est?")
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SECRET MEETING AT THE HOUSE OF MORGAN
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On January 2, 1889, a circular marked "Private and Confidential,"
was issued by the three banking houses of Drexel, Morgan &
Company, Brown Brothers & Company, and Kidder, Peabody & Company.
The most painstaking care was exercised that this document should
not find its way into the press, or otherwise become public.
Indeed, extraordinary measures were taken to surround its
contents with every precaution of secrecy.
Why this fear? Because the circular was an invitation, tacitly
understood as a command, to the great railroad magnates to
assemble at J.P. Morgan's house, No. 219 Madison avenue, and
there form, in the phrase of the day, an iron-clad combination.
The plan was to make a strict compact which would efface
competition among certain railroads, and unite those interests in
an agreement by which the people of the United States could be
bled even more effectively than before.
That circular was a historic document, well worth more than
passing notice; and he who was familiar with the forces then at
work rightly considered it of far greater importance than a
series of Presidents' messages, ordainments of Congress or
Courts' decrees.
At a time when the whole gravamen of law and juridical precedent
was being used to insist upon industrial forces remaining
stationary and stagnant, this circular came as a proclamation of
defiance. Common and statute law sternly declared that the thing
called competition in trade must be kept alive, and that if it
could not sustain itself by its own merits, the law should demand
its maintenance. The causes producing and justifying competition
were passing away, but none of the law-making bodies recognized
the newer conditions, nor made any provisions for them. But the
magnates realized that the old indiscriminate system of
competition was rapidly becoming archaic, and that the time was
ripe for a more systematic organization of industry. And so,
while Congress and the legislatures were busily enacting law
after law, supposedly edicts of "the sovereign people of the
United States," a few magnates issued a brief circular which
intrinsically was of far, far more binding weight than entire
volumes of statutes impotent.
A momentous gathering it certainly was that assembled in Morgan's
mansion on January 8, 1889. Who were they we note there?
Apparently private citizens; in reality monarchs of the land:
Jay Gould with his son George; Stickney, of the Northwest
territory; Roberts, of the Pennsylvania Railroad; sleek Depew,
echoing the Vanderbilts; Sloan, of the Delaware, Lackawanna &
Western Railroad, and a half dozen more magnates or their
accredited mouthpieces. The honorable legislature could gravely
discuss the advisability of this or that legislation; the noisy
"Congress of the United States" could solemnly meet and after
wearing out months in rodomontade, profess to make laws; the high
and mighty Courts could blink austerely and pompously hand down
their decisions. But in that room in Morgan's house sat many of
the actual rulers of the United States; the men who had the power
in the final say of ordering what should be done.
Morgan was chairman of the meeting, and with wonted brusque
directness went straight to the point. Thanks to a stenographic
report of the proceedings which fortunately we were able to get
hold of, the work of that meeting was clear. The name of the
organization was to be the "Interstate Commerce Railway
Commission"; its essential purpose the cessation of competition
among its members. But how was any magnate to be prevented from
competing with another, or stopped from encroaching upon
another's domain? What penalties should there be, and how could
they be enforced? Certainly no law could be invoked to compel
the carrying out of such an agreement, for the law explicitly
prohibited combinations, and any legislation would not only be
outlawed, but would reveal the extent of the whole criminal
compact.
There was, however, a far greater power than that of law, namely,
the power of massed money. If any magnate present were inclined
to balk at the prepared program he was brought to an instant
realization of the punishment when Morgan announced:
I am authorized to say, I think, on behalf of the banking
houses represented here that if an organization can be
formed practically upon the basis submitted by the
committee, and with an executive committee able to enforce
its provisions, upon which the bankers shall be
represented, they are prepared to say that they will not
negotiate, and will do everything in their power to prevent
the negotiation of any securities for the construction of
parallel lines, or the extension of lines not approved by
that executive committee. I wish that distinctly
understood.
The threat, or promise, as it could be differently interpreted,
was assuredly understood. Vast as was the wealth of the magnates
present or represented, neither any one or a combination of them,
dared (had they been so disposed) to defy such an ultimatum. To
do so meant inviting the vindictive, crushing wrath of a clique
of national and international bankers whose money and power could
be used with the most destructive results.
[Excerpts from *History of the Great American Fortunes* by
Gustavus Myers. (1936)]
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