Chapter X. The Lessons of Monopoly

The thing I have referred to as my civic consciousness was deepening. My congressional experiences had confirmed me in my belief that political corruption was a secondary symptom and political remedy but an opiate which might disguise the symptom for an hour, or a day; that crime and vice and misery were for the most part consequences of involuntary poverty, and involuntary poverty the result of law-made privilege whereby some men get more than they earn while the vast mass of mankind earns more than it gets. More and more I realized that it was the existence of this legalized privilege in society which creates a Riverside drive in New York, a Lake Shore boulevard in Chicago, a Euclid avenue in Cleveland, and at the same time an East Side in New York, a Canal street in Chicago and a slum district in Cleveland.

I was thinking a lot about these things by the time I left Congress and my business associates commenced to complain of my philosophy, saying it was at variance with their interests, and that to put it into operation would hurt them. This feeling gradually extended from friends and immediate associates to an every enlarging group, gathering bitterness as it spread until the time came when I was looked upon as a public enemy by Big Business.*

The attitude of the Cleveland Chamber of Commerce while I was mayor clearly illustrates this. My position on any question was all they had to know about it to determine what stand they should take. If I was for it, they were against it. If I was against it, they were for it. But this never troubled me. When I started out in my fight against privilege I saw the road I had to travel, the obstacles I should have to overcome, the personal abuse I should encounter. These things and more I foresaw and they all came along on scheduled time.

In the meantime my own business enterprises were growing though I was seriously thinking of getting out of all of them. Our rail-mill at Johnstown becoming inadequate for our increasing business we decided to enlarge it and add blast-furnaces and blooming-mills thus making it a complete steel plant beginning with the ore and ending with the finished rail. There wasn’t room for so much expansion in Johnstown, nor was that the best point for assembling raw material and distributing the finished product. The improved blast-furnace practice had carried the economic point of assembly nearer to the mines, so the lake region now had the advantage over Pittsburgh as a place of location for such industries as ours.*

Our experts reported the largest tract of land and the best harbor available at Lorain, Ohio, so we purchased there seven square miles at the mouth of the Black river. This gave us ample space for the mill and left plenty of land to be influenced by increased values.

We built the mill in terrifically tight times and had been running about a year and a half when the Federal Steel Company, the present United States Steel, was beginning to be formed. Our financial embarrassment was so great that we sold out to the Federal, but too early to reap the large benefit, later developments showing that a year’s delay would have meant many millions more of profit.*

In addition to our land speculation, we built a street railroad ten miles long from Lorain to Elyria, and we retained both the land and the railroad when we sold the mill.

My brother Albert and R. T. Wilson of New York, a man high up in the business and financial world, had purchased the street railways of Detroit, an old broken-down horse car system with a few worn-out electrically equipped cars. When I was defeated for Congress they knew I would soon be free for business again and came to me with a proposal that I undertake the management of this road on a profit-sharing basis. I didn’t want to do it, told them I was thinking of quitting business, but they insisted. What finally induced me to accept was not so much the pecuniary reward which the undertaking promised, as the chance to build unhampered by lack of funds a modern street railroad in a growing city. This looked like something worth doing. I consented to it on certain conditions and that enterprise was the beginning of a second plunge into big business undertakings.

Hazen S. Pingree was mayor of Detroit and though I had never met him I admired him greatly. He was promoting a three-cent-fare line for the city through Henry Everett, one of my old enemies. Privilege was putting up a fight against Pingree which in its essential features was much the same as the fight I was to encounter later as mayor of Cleveland.

I stipulated to Mr. Wilson and my brother that I was not to be expected to try to defeat the mayor’s three-cent-fare project except by improved facilities on our lines; that is, I was to so remodel our railroad that it should have the advantage on its merits, rather than to go before the city council and engage in as scramble and put a lot of obstacles in the way of the Everett grant. Neither the mayor nor Mr. Everett knew anything of this agreement of course. The latter had no reason to expect any quarter from me in any contest, and there were plenty of influences at work to prejudice Mayor Pingree against me.

The newspapers added to this prejudice by saying that I was coming to Detroit to hypnotize him and nothing made him so mad as that.

His attitude at our first meeting was very hostile. When he had stated two or three ultimatums of street railway policy to which I agreed he was greatly surprised but still skeptical. As we proceeded to tear up old tracks and rebuild the road complying with the mayor’s suggestions as to construction, doing the very things the city had been unable to compel the former owners to do and asking no favors in return the mayor commenced to melt a little. We spent six million dollars in cash on that railroad and the result was the best electrically equipped street railroad in existence anywhere. The credit for this was largely due to A. B. du Pont, the engineer in charge. Mr. du Pont is a son of my early employer Bidermann du Pont.

When some of the councilmen who were known to be friends of the old system – the one purchased by Mr. Wilson and my brother and comprising all the lines then in existence – told the mayor I had advised them to vote with him for the three-cent grant and had advised against imposing any hardship on Everett and his friends, he was thoroughly mystified.

When we met he asked me in his frank manly way to explain my attitude. I told him the city needed additional street railway facilities, it was evident our company couldn’t get any concessions and that the new company ought to have them’ that my reason for wanting the grants made to the new company on as fair a basis as possible was purely selfish, for it would be only a question of time until the old company would acquire them. To impose unfair conditions in the new grants would be simply putting burdens on our own backs when these lines came to be absorbed by ours.

This amused the mayor and he called my attention to a provision in the grant which said that if the new company should consolidate with or sell out to the old the grant became void. I replied that notwithstanding that provision or any other they could frame into words nothing could prevent us from acquiring the other railroad. This rather staggered Mr. Pingree and in his childlike way he said,

“Mr. Johnson, explain that to me, won’t you?”

“I will not consolidate with the new company or make any attempt to buy,” I answered, “but some day I will have a friend of mine down in New York or West Virginia or somewhere else, whom I shall call Smith for convenience, acquire the stock of the railroad by purchase; and, Mr. Mayor, if you attempt to put in a provision to prevent my Smith or some other Smith from doing this, you will simply defeat your own ends, for railroad stocks to be useful must be saleable.”

It gradually dawned on him that he didn’t have much safety in his safeguard provision and he said to me that what he said to me many, many times afterwards,

“I have here a clean sheet of paper. You tell me how to write this grant so that you can’t get it.”

I said there was only one way and that was for the city to acquire the three-cent line, own and operate it; then we could neither consolidate, purchase nor have Smith purchase it. All my subsequent observation and experience have not enabled me to work out any better answer than that. The mayor said that though he believed in municipal ownership he was doubtful of the powers conferred by the state law in this direction and he feared the inauguration of such a project would arouse the opposition of the business interests and defeat it.

The city gave Everett the grant. Everett built the road. We completed remodeling the old lines before his was done and when he operated for three cents we did the same. We weren’t in need of money. Our enterprise was financed and we could stand the contest. Everett had yet to raise the money for his project. It was a foregone conclusion that with our better laid-out system our line would first cripple, then acquire the three-cent road. In eight months this was accomplished and I announced it to the mayor one day by inviting him to take a ride in a private trolley-car and telling him, at the moment we stepped onto the car on the Everett line, that this property had just passed into the hands of a friend of mine named Smith.

We at once raised the fare on the old lines, the three-cent fare continued on the other and to this day these two lines are operated with two rates of fare. It has never been possible to raise the fare on the three-cent lines.

It was Mayor Pingree’s promotion of that three-cent fare line for Detroit that first impressed me with the practicability of this rate of fare. The company’s loss is so slight compared to the gain to the public that where the traffic is dense people should insist upon the lower fare.

Before I got though with the Detroit enterprise Pingree and I became warm friends. One night after a supper together in my room we talked for a long time over our cigars. An ordinance was pending granting our lines a double track privilege where there was now a single track. He said,

“Of course, Johnson, I’m going to veto that ordinance if it passes; but I don’t know why. The people out that way all want it; it seems like a necessary improvement, but I’m against it. I wish you’d tell me what’s wrong with it.”

I said there wasn’t much wrong with it, but that if I were a member of the city council I’d see Tom Johnson in the hot place before I’d vote for it. Next day at the committee meeting Pingree made a speech against the ordinance and when he said,” If I tell you what a man said to me last night not one of you will dare to vote for this measure, ” I suspected what was coming. He repeated my exact words and appealed to me to verify them which of course I did. The ordinance didn’t get a vote, not one.

If anybody but Pingree had done that I should have resented it. He hadn’t promised not to use my words against me, but I never dreamed that he would hold me up to public ridicule in that fashion. Yet I couldn’t resent it in him. He said afterwards that he was in a tight place and that he had to do it because he didn’t know what else to do.

Later I cooperated with him in trying to sell the whole street railway system to the city. Popular clamor and opposition to Pingree defeated this. It was claimed that the price was too high and that I was getting the advantage of the mayor. The public did not know that I had agreed to reduce the cost to the city by such share of the purchase price as would come to me as my profit. It would have been useless to tell this. Nobody would have believed it. I suppose there are people who will not believe it now. But the citizens later had the humiliation of seeing the property which our company had offered to the city for fifteen millions sold to other private interests for twenty-five millions. Then Detroit realized the chance it had missed and couldn’t avoid seeing that I was more interested in municipal ownership than I was in personal profits – a fact that Pingree knew all the time. But any attempt on our part to have made the public believe this would have brought ridicule upon us, so I allowed myself to be misunderstood.

Pingree was charged with being a political boss, but he wasn’t one, for a political boss is a man whose word is his capital and it must be absolutely good. Pingree was a political idol. He was always in a fight and always on the popular side. Thoroughly honest and trustworthy except when he was in a political contest, then as he said of himself he never hesitated to promise the same place to more than one man. Once before a whole roomful of people he stated that he was out of ammunition, for he had promised every job at least twice.

After Pingree became Governor I twitted him once on one of his public messages, saying:

“That’s a nice message, that is! There isn’t a democratic line in it.” Instantly he came back with this:

“Well, I’ll have you know I’m a Republican Governor.”

At another time when someone complained that the Governor had advanced different arguments on the same public question on two different occasions, he replied:

“You are the most unreasonable damn fool I ever saw. Of course the second argument isn’t like the first one, but I’ll have you understand I’ve changed secretaries in the meantime.”

One of the last things Pingree did was to collaborate in the writing of a book about the Boer War which he dedicated to me. It was never published, but the manuscript with his inscription was sent to me after his death.

*Appendix