-Caveat Lector-
an excerpt from:
America’s Sixty Families
Ferdinand Lundberg
The Vanguard Press©1937 & 1938
The Citadel Press
New York, NY
578 pages Out-of-print
--[A]--
APPENDIX A
The Public-Utilities Background of Wilson's Backers
AN EXCEEDINGLY rich field in the most densely populated area of the country
was controlled by this group of utilities lords before 1912. Included in this
field were the Consolidated Gas Company of New York (Rockefeller),. the
constituent parts of what are now the Brooklyn Edison Company (Brady), the
New York Edison Company (Brady), the Third Avenue Railway Company
(RockefellerRyan), the New York Railways Company (Ryan), the Brooklyn Rapid
Transit Company (Brady), the Interborough Rapid Transit Company
(Belmont-Morgan), the developing Brooklyn-Manhattan Transit Company
(Brady-Rockefeller), and the Queens Electric Light and Power Company
(Morgan-Baker). There were also scores of outlying, unconsolidated gas,
electric, and traction companies controlled by the same group and later
consolidated.
The same bloc controlled, either as individuals or collectively, the local
public utilities in practically every other large city of the United States
where there was not municipal ownership. And it was this bloc that surreptitio
usly fought public ownership through newspapers and political tools during
the early years of the century. Individuals like Hearst, striving to gain a
personal foothold in the same field, supported the public-ownership element
and mobilized liberal and radical sentiment for it in order to bring the
dominant interests to private terms.
The Metropolitan Securities Company, through which Ryan, Brady, and the
Rockefellers manipulated traction companies, functioned in collaboration with
Tammany Hall. As it was brought out by a grand jury in December, 1907, Ryan,
P. A. B. Widener, William L. Elkins, of Philadelphia, and William C. Whitney
bought from Anthony N. Brady for $250,000 the unused franchise of the Wall
and Cortland Street Ferries Railroad Company. This franchise was then sold to
the Metropolitan Securities Company for $965,607.19, yielding Ryan and his
associates a profit of $692,292.82 and Metropolitan Securities a loss equal
to the purchase price. Another operation by Ryan and his associates was the
purchase for $1,600,000 of the franchises of the People's Traction Company, a
paper enterprise, and the New York, Westchester and Connecticut Traction
Company. Shortly before this transaction the franchise of the latter company
had been, sold in bankruptcy proceedings for $15,000.
In 1907 the Public Service Commission learned that $16,oooooo in cash had
disappeared from the treasury of the Third Avenue Railway Company, controlled
by the Metropolitan Securities Company, and that the books had been
destroyed. Through tactics such as these, resorted to in connection with
scores of franchises, the investing public lost more than $90,000,00 in the
Metropolitan Street Railway Company.
Ryan and his cronies escaped prosecution for their misdeeds through the
collaboration of the authorities. The foreman of the grand jury which heard
the charges was, according to later revelations, a direc-tor in Ryan's
Equitable Life Assurance Society. And according to the opinion rendered by
Judge Otto Rosalsky in General Sessions on January 27, 19o8, District
Attorney William Travers Jerome had so examined Ryan before the Grand Jury as
to invalidate the state's case. Ryan's attorney was Paul D. Cravath.
Jerome admitted before an investigating commission that he had improperly
asked leading questions of Ryan and Brady. Yet removal proceedings instituted
against Jerome were dismissed by Governor Charles Evans Hughes, Cravath's law
partner.
The escape of Jerome, as well as of Ryan and his friends, was all the
stranger in view of the fact that William N. Amory, former official of the
Third Avenue Railway Company, charged that while he was a state's witness a
former law partner of Jerome offered him $200,000 to drop the accusations
against Brady and Ryan. It was also brought out that Samuel Untermyer,
counsel to Hyde in the insurance scandal, was a contributor to Jerome's
political campaign fund.
The Metropolitan Street Railway Company had extensive political connections.
State Senator Patrick H. McCarren of Brooklyn, realestate operator and
race-track entrepreneur, acted in Albany for Brady and Whitney, and was known
to function as well for H. H. Rogers, J., P. Morgan, August Belmont, and
William K. Vanderbilt. In 1910 it was brought out in an official inquiry that
ten members of the New York State Legislature were on the confidential pay
roll of Metropolitan Securities.
In New York City today virtually all the gas and electric companies have been
combined into the Consolidated Edison Corporation' (Morgan-Rockefeller). The
traction companies, losing propositions because of the indoctrination of the
public mind with the politically useful slogan of the five-cent fare, are now
being offered to the city at stiff prices.
Ever since the first franchises were issued to its own favorites by Tammany
Hall immediately after the Civil War the operation of the New York
public-utility companies has constituted an uninterrupted scandal. As to the
gigantic Consolidated Gas Company and the New York Edison Company, now
constituent parts of the Consolidated Edison Corporation, their history has
been dispassionately summarized by Judge Samuel Seabury in these words:
"Their record has been one of extortion. Their privileges were conceived in
fraud and political corruption and throughout their existence they have been
a constant source of temptation to corrupt officials. Both of these
corporations exist in violation of the law and both enjoy absolute monopolies
in the necessaries of life. Both have violated the law of the State, both
have made false reports to avoid the payment of their just taxes, and both
have entered into a close and friendly alliance with public officers whose
duty required that they should protect the public from extortion."
pps. 493-495
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