Great Fortunes from Railroads | Page 9

those
corporations.
Much of this immense area was given on the condition that unless the
railroads were built, the grants were to be forfeited. But the capitalists
found no difficulty in getting a thoroughly corrupt Congress to extend
the period of construction in cases where the construction had not been
done. Of the 155,000,000 acres, a considerable portion of it valuable
mineral, coal, timber and agricultural land, only 607,741 acres were
forfeited by act of Congress, and even much of these were restored to
the railroads by judicial decisions. [Footnote: The principal of these
decisions was that of the Supreme Court of the United States in the
case of Schluenberg vs. Harriman (Wallace's Supreme Court Reports,
xxi:44). In many of the railroad grants it was provided that in case the
railroad lines were not completed within certain specified times, the
lands unsold or unpatented should revert to the United States. The
decision of the Supreme Court of the United States practically made
these provisions nugatory, and indirectly legalized the crassest frauds.
The original grants excluded mineral lands, but by a subsequent
fraudulent official construction, coal and iron were declared not to be
covered by the term mineral.
Commissioner Sparks of the U. S. General Land Office estimated in
1885 that, in addition to the tens of millions of acres the railroad
corporations had secured by fraud under form of law, they had
overdrawn ten million acres, "which vast amount has been treated by
the corporations as their absolute property, but is really public land of
the United States recoverable to the public domain." (House Executive
Docs., First Session, Forty-ninth Congress, 1885-86, ii:184.) It has
never been recovered.]
That Congress, not less than the legislatures, was honeycombed with

corruption is all too evident from the disclosures of many
investigations--disclosures to which we shall have pertinent occasion to
refer later on. Not only did the railroad corporations loot in a gigantic
way under forms of law, but they so craftily drafted the laws of both
Nation and the States that fraud at all times was easy.
DEFRAUDING THE NATION OF TAXES.
Not merely were these huge areas of land obtained by fraud, but after
they were secured, fraud was further used to evade taxation. And by
donations of land is not meant only that for intended railroad use or
which could be sold by the railroads. In some cases, notably that of the
Union Pacific Railroad, authority was given to the railroad by acts
passed in 1862 and 1864 to take all of the material, such as stone,
timber, etc., needed for construction, from the public lands. So, in
addition to the money and lands, much of the essential material for
building the railroads was supplied from the public resources. No
sooner had they obtained their grants, than the railroad corporations had
law after law passed removing this restriction or that reservation until
they became absolute masters of hundreds of millions of acres of land
which a brief time before had been national property.
"These enormous tracts," wrote (in 1886) William A. Phillips, a
member of the Committee on Public Lands of the Forty-third Congress,
referring to the railroad grants, "are in their disposition subject to the
will of the railroad companies. They can dispose of them in enormous
tracts if they please, and there is not a single safeguard to secure this
portion of the national domain to cultivating yeomanry." The whole
machinery of legislation was not only used to exclude the farmer from
getting the land, and to centralize its ownership in corporations, but
was additionally employed in relieving these corporations from
taxation on the land thus obtained by fraud. "To avoid taxation,"
Phillips goes on, "the railroad land grant companies had an amendment
enacted into law to the effect that they should not obtain their patents
until they had paid a small fee to defray the expense of surveying. This
they took care not to pay, or only to pay as fast as they could sell tracts
to some purchasers, on which occasions they paid the surveying fee and

obtained deeds for the portion they sold. In this way they have held
millions of acres for speculative purposes, waiting for a rise in prices,
without taxation, while the farmers in adjacent lands paid taxes."
[Footnote: "Labor, Land and Law": 338-339.]
Phillips passes this fact by with a casual mention, as though it were one
of no great significance.
It is a fact well worthy of elaboration. Precisely as the aristocracies in
the Old World had gotten their estates by force and fraud, and then had
the laws so arranged as to exempt those estates from taxation, so has
the money aristocracy of the United States proceeded on the same plan.
As we shall see, however, the railroad and other interests have