At ten o’clock on Thursday morning, September 18, 1873, leading Wall Street bankers and brokers gathered at the New York office of Jay Cooke and Co. The Philadelphia-based investment banking house had long been considered one of the strongest in the country, but it was now teetering at the edge of bankruptcy, and Cooke’s men pleaded for an immediate transfusion of funds. Their pleas were refused. At eleven o’clock, they closed their doors and telegraphed the bad news to Cooke in Philadelphia. He promptly shut down the entire concern. A titan of American finance had crumpled.
When news of Cooke’s suspension was announced on the floor of the New York Stock Exchange, “a monstrous yell went up and seemed to literally shake the building.” Now “dread seemed to take possession of the multitude,” the Tribune reported. Brokers began trampling one another to sell off stocks that were suddenly, terrifyingly vulnerable.
All that day and all the next, as a Nation reporter observed from the gallery, a “mad terror” swept through the “great crowds of men [who] rushed to and fro trying to get rid of their property, almost begging people to take it from them at any price.” Jay Gould reigned jubilant amid the carnage. Having gauged the market correctly and bet on a massive decline, he had already made an instant fortune and now sought to claw down prices even farther. Vanderbilt, champion of the bulls, bought desperately to buoy prices. He protected his New York Central but was unable to do much more. Many Vanderbilt concerns were battered down, and Gould (with his ally Russell Sage) scooped them up. Brokerage firms failed on all sides. Banks buckled. On Friday, despite a pelting rain, a “seething mob” filled Broad Street. Frenzied depositors surged through the mud to remove their funds from banks whose vaults were stuffed with railroad bonds deteriorating in value by the minute. One broker moaned that the unfolding catastrophe was the “worst disaster since the Black Death.”
By Saturday the governors of the Exchange had had enough. At eleven o’clock they shut down trading “for an indefinite period.” Wall Street, in its extremity, turned to Washington for help. President Grant and Secretary of the Treasury Richardson hustled north to take charge. At a crisis conference in the Fifth Avenue Hotel, bankers, brokers, merchants, manufacturers, and railroad men—laissez-faire scruples jettisoned for the moment—pleaded with Grant to deposit twenty to forty million greenbacks in the city’s banks. The administration judged that such an action would exceed its authority, but it did agree to buy government bonds in the open market, injecting some currency into the system.
It wasn’t enough. Next week the Exchange stayed closed, but crowds bought and sold sinking securities on the streets. Bank runs multiplied (as did defalcations by bank officials). Brokerage houses collapsed. By the following Friday, most of the major banks and insurance companies, and almost all the second-rank institutions, had shut down. The panic spread rapidly from New York to the rest of the country. Chicago, its banks paralyzed, was reduced to barter.
Reporters besieged Vanderbilt asking what had gone wrong. The ill-tempered Commodore blamed the crisis on excessive railroad promotion. “There are,” he argued, “many worthless railroads started in this country without any means to carry them through.” To raise money, entrepreneurs had turned to “respectable banking houses in New York, so called,” who affixed them with “a kind of moral guarantee of their secureness” and sold the bonds in Europe. But the roads, many of which went “from nowhere to nowhere,” soon got into difficulties. “If people will carry on business in this madcap manner,” he concluded, “they must run amuck.”
Vanderbilt had a point. To convince investors to buy his Northern Pacific Railroad stocks, Jay Cooke had had public relations experts crank out stories that the bleak right-of-way through the Dakota and Minnesota territories was in fact a “vast wilderness waiting like a rich heiress to be appropriated and enjoyed.” Cooke’s campaign formed the basis for Mark Twain and Charles Dudley Warner’s Gilded Age, a satire on boom-time ethics. Cooke enticed some immigrants with his planted fairy tales, but nowhere near enough. Investments fell off. To save his existing stake, Cooke cooked books, corrupted politicians, and milked capital to meet debt payments. Rivals spread rumors of his deteriorating position. Bond sales dwindled to nothing, European creditors called in their notes, and the Northern Pacific went bankrupt, dragging the House of Cooke down with it.
The Northern Pacific’s story, though larger than life, was not atypical. Far more roads had been built than the transport market demanded. Many ran at a loss most of the year, hoping to make up deficits during harvest time’s mass movement of crops to markets. But they could never squeeze enough profits out of the farmers, who, themselves confronting lower commodity prices, vigorously resisted railroad exactions. This left the heavily indebted lines highly vulnerable to contraction elsewhere in the economy.
Another source of strain was the now familiar end-of-boom diversion of capital into speculative channels. Bankers Magazine had fretted at all the money pouring into the call market, pursuing interest rates that ranged from 12 to 24 percent. These funds, in turn, had fueled the sporting of bulls (including Vanderbilt) and bears (such as Gould and Sage). Wall Streeters had become convinced that crises like those of 1837 and 1857 were no longer possible as governmental safeguards had been erected. The secretary of the treasury had been given so much power, said the Herald, that “it is difficult to conceive of any condition of circumstances which he cannot control.”
Among the many things the secretary could not control were the capital markets of Europe. The American rail boom had been sustained by overseas funds, but overexcited European investors had spiraled off into a wild speculative binge, often snapping up absurd or fraudulent prospectuses. One Viennese journalist expected any day to see a company formed “to transport the aurora borealis in pipelines to St. Stephen’s square.” And it was in Austria that the great Panic of 1873 started. It spread to Berlin, jumped to Paris and Amsterdam, then slammed into London. European markets lost interest in American railroad stocks, and it was this, together with seasonally tight money and news of widespread corruption, that brought down the New York market.
Beyond this lay still vaster problems with the global capitalist economy. Since the 1840s it had been powered by the international development of the railway system, which in turn had stimulated coal-, iron-, and steam-based industrialization. In the 1870s the limits of that expansion were reached, and the world economy tumbled into a slump of unprecedented proportions. The U.S. economy, more globally integrated than ever, tumbled with it. The depression would last from its inception in 1873 until a partial recovery in 1879, with effects far more disastrous than those of any slump before it. The fifty-one hundred bankruptcies of 1873 rose to 10,478 in 1878. By 1876 half the nation’s railroads—twenty-one thousand miles’ worth—had defaulted on their bonds and were in receivership. Blast furnaces shut down. Farmers were foreclosed. Within a year an estimated three million people were unemployed.
New York City’s economy fell apart with frightening speed. Wall Street brokerage houses took the first hits, but the damage swiftly spread to other financial institutions that had invested heavily in railroad stocks and bonds. Life insurance companies crumbled: of the thirty-two companies chartered since 1861, only eight remained in 1877. A score or more savings banks collapsed as well. Investment bankers too were gloomy: “Everything looks dark,” August Belmont wrote his son in October 1873. It was impossible for him to “imagine the utter prostration of all business.”
The real estate bubble burst. Inflated values collapsed; the equities of thousands of property owners were wiped away, one industry spokesman wrote, “as with a sponge.” An avalanche of foreclosure proceedings drove down land values, and lots near Fifth Avenue that fetched a hundred thousand dollars in 1873 went for forty thousand in 1876, if they found a buyer at all. Row after row of middle-class houses, thrown up so confidently, now went begging. Fully half the speculators who had built them were, said the Real Estate Record and Buyers’ Guide in 1875, “swept out of sight [by the] momentous and unprecedented crisis.” Construction projects declined 70 percent between 1871 and 1877. The grand plans for uptown improvement went into hibernation. The boom on the metropolitan frontier deflated. Small investors who had bought Queens lots in the auction sales of 1870-73 couldn’t pay their taxes and were foreclosed. Promoters went bankrupt. The development of Queens came to a complete stop.
In Manhattan the blight spread from the financial district up lower Broadway, which by 1876 was plastered with FOR LET placards. Many former wholesale stores were now occupied by auction marts selling off bankrupts’ goods. Two years later, “vacant shops, stores and manufactories,” the mayor reported, “stare at us in every street.” Steinway agreed that “business seems to be perfectly dead,” with “not a single order coming in.”
As usual, most people’s loss was some people’s gain. Sharks cruised the roiled stock market waters, snapping up sinking securities. Jay Gould emerged the master of Western Union. The young George F. Baker bought out the majority shareholder of First National Bank. Drexel, Morgan made a substantial profit in 1873, and with Jay Cooke removed, the big treasury offerings would now go to them, to New York’s other Yankee house, Morton, Bliss, and to the two major German-Jewish firms run by Seligman and Belmont. In the land market too, as prices scraped bottom, well-heeled buyers moved in to scarf up bargains: Belmont was active; so was newcomer William Rockefeller.
As usual, working people bore the brunt of things. By the winter of 1873-74, 25 percent of the city’s labor force had lost their jobs, and the wages of the rest declined steadily. Hunger and homelessness spread. The shanty-dwelling population of the West Side burgeoned. Thousands sought shelter on the floors of police stations or almshouses. The New York Commissioners of Charity relief rolls soared. “Formerly,” one official said, “[we confined] relief to women. Now the men come to us hungry with hollow cheeks. . . . It is terrible, terrible.” Too terrible for some: in August 1875, Andreas Fuchs, a forty-year-old shoemaker, shot himself to death in Central Park, leaving a note for his wife and children that explained, “I have no work and do not know what to do.”
As in prior depressions, hard times stirred popular discontent. Workingmen disliked charity. The YMCA sold “dinner tickets” to New York businessmen to give to the unemployed, but the New York Workingmen’s Central Council rejected “crumbs that fall from the tables of the rich.” Nor did they like the police lodgings—“living charnel houses” that reeked “with filth and vermin.”
Station House Lodgers, engraving by Winslow Homer, Harper’s Weekly, February 7, 1874. (© Collection of The New-York Historical Society)
The Spring Street International (the American reformers recently expelled from the IWA) argued that the unemployed were entitled to better, as a matter of right. The government had showered aid and assistance on the wealthy; now it should “legislate for the good of all, not the few.” In October 1873 it proposed a comprehensive anti-depression program. New York should provide public employment on street and park improvements and in building a rapid transit system. The city should also establish municipally owned markets where people could buy necessities at cost.
Such ideas rapidly gained popularity. The Workingmen’s Central Council announced plans for a mass meeting to demand “Work or Bread.” J. P. McDonnell, an Irish Fenian and socialist, argued in the New York Sun that to make “wealthy citizens and law-makers” listen, labor should mount the “greatest demonstration ever held in New York.” Leading trade unionists endorsed the idea. So did German socialists, currency reformers, and neighborhood mass meetings around the city (including one of fifteen hundred French workers and refugees from the Commune). Wagons paraded through the streets with placards announcing the December 11 gathering at Cooper Institute. On the appointed day four thousand crammed their way in, leaving thousands more outside, as speakers analyzed the nature of the depression (in German and English) and how to respond to it.
Many blamed the financial system. Bankers and brokers—the “moneyocracy”—had obtained special privileges by corrupt deals with politicians, then used their ill-gotten wealth to “speculate in stocks, money, gold, or other commodities.” These operations had brought on the crisis that now endangered the producing classes and the republic itself. One long-term answer was to set limits on the accumulation of personal wealth, at a maximum of three hundred thousand dollars, by imposing a graduated income tax. In the short run, the city should undertake massive street, pier, and park improvements and construct housing for the homeless.
Socialists at the Cooper meeting offered similar prescriptions and added some novel ones, including suspension of evictions for nonpayment of rent during the coming winter and dispensation of a week’s supply of food or money to distressed families. Peter J. McGuire, a young socialist carpenter, later endorsed the meeting’s no-violence pledge but argued that if relief were not forthcoming, then “a provisional committee” in each ward should “take food” to keep people from starving and “send the bills to the city for collection.”
The Cooper meeting appointed a fifty-man Committee of Safety—nomenclature borrowed from the Paris Commune—and selected German, French, Irish, and American representatives. The committee organized ward clubs of the unemployed throughout the city and called for a meeting with city authorities. When Mayor Havemeyer did get together with a delegation of workers, it became clear that they inhabited different universes. Havemeyer expressed concern for the men’s plight but suggested, none too subtly, it was their own fault for not having prepared themselves for such contingencies. “I know that it is hard for you to be out of employment,” he said, “but don’t you think that workingmen should lay up something for a rainy day?” “Yes, sir,” a delegate replied, “that’s all very well, but workingmen can’t save much out of their wages. Rents are so high; and then many of us can only work four or five days out of a week.” The mayor responded with homilies: “Men who get rich, gentlemen, are men who save. When a man has $100 in a bank he becomes a capitalist.” His father (a wealthy sugar manufacturer), Havemeyer remarked pointedly, “didn’t go to the beer shops and theaters every night.” Besides, public works meant higher taxes and the “confiscation” of property and so were out of the question.
The press was even less diplomatic The New York Graphic said that “there is no point in railing at the rich nor in scowling at the capitalists nor in condemning corporations simply because one’s stomach is empty and he happens to be dinnerless.” The paper went on to snarl, “Whining and whimpering are as useless as they are disgusting.” The Times loftily lectured the unemployed on the hard facts of political economy. The “natural laws of trade” were “working themselves out.” Governments could “only watch the process.” Finally, “things must regulate themselves.”
“Things” got rapidly worse. Unemployment rose as the thermometer dropped, and the Committee of Safety issued a call to all “in sympathy with the suffering poor” to rally in Tompkins Square on January 13, 1874, and then march on City Hall to demand a municipal contribution of a hundred thousand dollars to a Labor Relief Bureau for the unemployed.
The press, badly alarmed, insisted the meeting be suppressed as a “communist agitation.” The Committee of Safety was adopting the “favorite tactics of the worst class of European socialists,” and on behalf of the unemployed—a “thriftless and improvident” lot. More hysterically (or cynically), it was asserted that leaders of the defeated Commune had smuggled diamonds—stolen from the churches of Paris—into the city to buy ammunition and bombs to launch a revolution. The Department of Parks had already given permission to use the square, but the Police Board, composed of wealthy entrepreneurs and powerful politicians, forced it to renege at the last minute. Word of the revocation did not reach the working-class quarters.
The next morning, by eleven o’clock, over seven thousand people had turned out despite below-freezing temperatures. The ten-acre park was filled, and the crowd, which included many women and children, overflowed into the surrounding streets. One corner of the square was occupied by twelve hundred resolute members of the German Tenth Ward Workingmen’s Association.
At that moment the police commissioner and a squad of patrolmen marched into the square. Announcing, “Now, you all go home, right away!” they immediately waded into the assemblage with clubs flailing. The crowd scattered “like wild birds” except for the German workers, who battled back until mounted police drove them from the square. As the demonstrators fled into adjacent streets, a Sun reporter noted, the police kept “close at their heels, their horses galloping full speed on the sidewalks,” their batons flailing. One zealous young German socialist, Justus Schwab, marched boldly back to the square waving the red flag of the Commune, only to be attacked and arrested. The police continued clubbing groups of workers for hours, Samuel Gompers remembered, in “an orgy of brutality,” until, finally, the area was cleared and still.
The Tompkins Square clash was a minor affair materially—a few score bloodied heads and arrested bodies—but a major one symbolically. It hardened attitudes on both sides of the class divide and shaped larger patterns of response to the depression.
Organized labor bitterly attacked the police, asserting their rights of free assembly and free speech had been violated. Iron molders rejected the way “every protest, petition, or demand of labor is met with the cry of ‘Commune.’” Unions and ethnic organizations raised funds for the arrested, tried and failed to oust the police board, and held protest meetings. The New York Graphic and the New York Sun—both editorial antagonists of the unemployed movement—similarly condemned the “clubbing of innocent and peaceful men.”
Police charge the Tompkins Square demonstrators, from Frank Leslie’s Illustrated Newspaper, January 31, 1874. (Library of Congress)
Such reactions were exceptional. The authorities, the press, and the upper and middle classes were virtually united in their satisfaction with the outcome. Mayor Havemeyer was delighted: “Nothing better could have happened,” he declared. The police commissioner was elated: “It was the most glorious sight I ever saw the way the police broke and drove that crowd. Their order was perfect as they charged with their clubs uplifted.”
The press was convinced that vigorous action had forestalled a host of horrors. Behind the Tompkins Square “rabble,” the World was sure, stood “the red spectre of the commune.” The Times reported (incorrectly) that all those arrested were “foreigners,” which at least proved that communism was not a weed of “native growth.” Religious spokesmen were even more ferocious, with one prominent clergyman vowing that if workers “lift their hands against law, order, and good government, they will be mowed down like grass before a scythe.”
The depression overrode middle-class republican inclinations to respect the “rights of labor,” or even labor’s right to public protest. Also set aside was the notion that capital and labor shared a fundamental harmony of interest. In smaller cities and towns the urban middle classes would continue to harbor older republican convictions and even blame the newly rich for many of the nation’s ills. But in New York City a social and cultural chasm had opened up, and for the moment, most of the middle class jumped to the side of the rich and powerful.
In this atmosphere employers rapidly mopped up remaining union resistance. In October 1874 stevedoring companies united to humble the longshoremen’s union. After a five-week strike, the union’s power on the docks was shattered. Wages plummeted to twenty-five cents an hour; they would not return to their 1874 levels for another forty years. Whitelaw Reid, Greeley’s successor at the Tribune, proved as ruthless an employer as editorialist, slashing his printers’ wages and replacing construction workers on the new Tribune building, when they struck in 1874, with Italian laborers.
The city did its part. Police smuggled spies into labor and socialist meetings, pressured landlords to evict radical groups, broke up picket lines. The city also (in 1876) laid off many public employees, hiring day laborers through private contractors instead, resulting in reductions of wages by as much as 65 percent. This in turn helped dampen wages in the private sector.
In these circumstances, union militancy melted away. When the Cigar Makers Union rank and file complained of their leaders’ inaction, they begged members to “remember the adage that prudence is the better part of valor.” Members chose instead to melt away themselves. New York City’s labor movement was not utterly destroyed, as it had been in 1837 and 1857, but by the late 1870s its rolls had shrunk from forty-five thousand to five thousand.
In the chaotic aftermath of Tweed’s fall, wealthy Democratic Party leaders like Tilden, Belmont, and Hewitt—coming to be known as “Swallowtails” for the cut of their fashionable coats—demanded a housecleaning. To refurbish Tammany’s image they selected former city sheriff John Kelly as the new leader. Kelly was a shrewd choice. “Honest John” had not been implicated in the scandals. As a deeply religious Catholic, a respectable Murray Hill resident, and a relative-by-marriage of Archbishop John McCloskey (who in 1875 was appointed the first American cardinal), Kelly had strong support in the immigrant community, especially among the Irish middle class.
Once installed, Kelly consolidated the Tammany hierarchy, formalized and centralized its lines of command, muted the power of working-class ward heelers, weeded out remaining Tweed supporters, and by 1874 had become the acknowledged boss of a revitalized machine. Setting out to topple the nonpartisan and deeply unpopular Mayor Havemeyer—who had given total support to Comptroller Andrew Haswell Green’s slashing cutbacks, which had only accelerated after the onset of the depression—Kelly ran William H. Wickham, a prominent and Tammany-connected diamond merchant. Wickham campaigned on a platform of kick-starting the economy (and aiding the poor) with a vast program of public works, while simultaneously reassuring the taxpaying community he would continue reducing expenditures.
Wickham won, as did the Democrats generally, and after January 1875 New York City was again in Tammany hands. The mayor made an initial effort to fulfill his pledge by appointing developer William Martin—eager as ever to launch public building programs—to run the Parks Department. But the landowners, insurance companies, trust companies, and savings banks—whose property investments had dropped drastically in value during the depression—fervently resisted new municipal programs, and their agent, Comptroller Green, stonily pressed on with retrenchment.
Kelly sought Green’s removal, to restart the flow of patronage. But Green’s patron, Swallowtail-in-Chief Samuel Tilden, had just been elected governor and was now the presumptive presidential nominee of the Democratic Party. Tammany, accordingly, backed off and committed itself to retrenchment. Even when Green’s term expired in December 1876, and Kelly himself took over as comptroller, the Tammany leader adamantly opposed demands from developers, labor unions, and radicals for a depression-combating program of public works. Indeed, determined to win the business community’s confidence, Kelly cut Green’s austerity budget even further, reducing the city’s debt.
Taxes declined too, despite complaints by city and state tax commissioners and several legislative investigations that the city’s wealthy, far from being fiscally overburdened, were flagrantly evading their fair share of such taxes as existed. Real estate in the mid-1870s was seldom assessed at more than 60 percent of its value—less in the case of the Astor family and Trinity Church—and evasion of even shrunken impositions was commonplace. “Personalty” income got off even more lightly, despite the fact that in the postwar era the value of such holdings—money, goods, debts due, bonds, mortgages, and public or corporate stocks—had grown far faster than landed wealth. City tax commissioners conservatively estimated local personalty to be worth between two and three billion dollars, even though in 1879 only eighty-nine hundred people on the tax rolls admitted having any such holdings at all. Liquid portfolios, moreover, were even more grossly undervalued than real estate, via subterfuges like shifting taxable capital into nontaxable forms, or more straightforwardly through fraud and perjury.
Not only did William H. Vanderbilt pay taxes on half a million dollars of personalty income, though his total such holdings were estimated at forty million, but his New York Central railroad, while reporting a capital of $143 million, paid taxes on only twenty-two million. Corporations in general proved particularly skillful tax dodgers, deliberately violating the rules by cooking books, establishing phony indebtedness, or simply by bribing tax collectors. Investigators calculated that corporate evasion alone cost the state and city millions each year, but the notion of increasing revenues rather than cutting expenses was not to be placed on the political table.
In their continuing search for new ways to slice the budget, reduce taxes, and restore investor confidence, municipal officials turned their attention instead to the burgeoning relief budget. In 1873 five thousand families had been receiving public assistance; by 1874 twenty-four thousand were being aided. In March of that year, Mayor Havemeyer, aware that Tweed’s Department of Charities and Correction had been implicated in corruption, and convinced that the level of “destitution and suffering” did not seem “to warrant the interference of the Municipal authorities,” announced the suspension of all public outdoor relief from July through December. Aid resumed for a time on Mayor Wickham’s watch, in the hard winter of 1875. But in 1876, pressed by welfare reformers, the new Board of Estimate and Apportionment—which included the mayor, comptroller, and president of the Department of Taxes and Assessments—announced that such assistance would henceforth be permanently discontinued, apart from cash stipends to the blind and fuel handouts to the proven poor (an exemption that pleased Democratic coal merchants). The Board of Aldermen protested, saying there were “more needy and deserving poor in this city than ever before in any one winter, rendered so in consequence of the general prostration of business,” but the post-Tweed-charter reform of 1873 had rendered them powerless in the matter. Outdoor relief would not return to New York City for nearly sixty years.
The termination of assistance to the poor in their own homes did not increase the almshouse population, as the commissioner of Charities and Correction took steps to ensure that indoor relief remained an unenticing alternative. “Care has been taken,” he noted, “not to diminish the terrors of this last resort of poverty, because it has been deemed better that a few should test the minimum rate at which existence can be preserved, than that the many should find the poor-house so comfortable a home that they would brave the shame of pauperism to gain admission to it.” Spending on almshouse inmates actually dropped, to a per capita twelve cents a day.
Brooklyn too tightened its municipal belt, insofar as the poor were concerned. When relief rolls began to climb after 1874, the city slashed its per capita expenditures so that actual outlays stayed relatively steady, despite the growing number of recipients. Handouts took the form of either food (flour, potatoes, rice, tea, sugar) or coal, never both in the same week, and never in amounts exceeding a dollar per week per family of four. Critics attacked the inclusion of tea and sugar as profligate and debated deleting coal, which though cheaper to give out was often sold by recipients for cash to buy other commodities. Soon, not to be outdone by their neighbors across the river, Brooklyn reformers began demanding the total abolition of outdoor relief. Not only was it a symbol of wasteful public spending, but corruption had been uncovered in the (Democratic) Department of Charity, which the (Republican) County Board of Supervisors was determined to end.
Leading the crusade was Seth Low, the youthful and independently wealthy Republican whose grandfather had founded Brooklyn’s Association for Improving the Condition of the Poor (AICP). Low and his allies urged that, as an experiment, outdoor relief be phased out over a two-year period, disbursing only coal in 1876-77, then nothing the following year. In the winter of 1876-77, however, the charity commissioners protested, noting that starving people were congregating at warehouses where food was stored, begging they be opened. When the commissioners took it upon themselves in mid-January to vote an emergency appropriation and give out flour and potatoes, enraged reformers denounced them in editorials. The Board of Supervisors subtracted the appropriation from the commissioners’ salaries; in 1878, it succeeded in shutting down the program altogether.
Low acclaimed welfare reform as a great success—and it did launch his political career—on the grounds that money had been saved, and corruption curtailed, without any increase in suffering of the poor. It was true that some with other sources of income, who had been fraudulently obtaining relief, carried on much as before. It was also true that there was no great increase in the poorhouse population (jammed as it already was) and that some of the poor who borrowed, pawned, and lived on credit from landlords, grocers, or kin managed to get by for a year or two. But it was true as well that hunger and cold sent many to the city’s hospitals or police station basements; that many impoverished parents sent their children to asylums, where they cost the county forty dollars a month rather than one or two dollars in home relief payments; and that while women sought jobs as live-in servants, many men took to the streets seeking charity or work—and triggering a new round of complaints by reformers.
In May 1874 the American Social Science Association organized a conference of charitable organizations, at which participants denounced the increase in street begging and petty crime, clucked about “imposter paupers” on the charity rolls, and deplored the way “charity assisted labor in the combat to keep up wages.” Not only were beggars (aided by soft-hearted benefactors) nullifying the law of supply and demand by refusing to sell their labor at whatever price employers were willing to pay, but the police were abetting them in their malingering. Under existing statutes, officers of the law could, at their own discretion, summarily arrest vagrants and lock up them up pending trial in police court, usually without benefit of jury, with suspects presumed guilty unless they could give “a good account of themselves.” Those found guilty, in deliberations that seldom lasted more than a minute, were taken to the workhouse and set to hauling coal, breaking stone, laying pipes, and making bricks—a procedure workingmen protested as a throwback to fugitive slave laws. Reformers found the process satisfactory in theory but claimed that the police were insufficiently zealous and that judges too often acquitted the poor; and indeed, although vagrancy arrests in New York City soared in the depressed 1870s, not all those arraigned were convicted.
Reformers were ever more exercised by “tramps,” a new and pejorative word for the homeless unemployed (one of its earliest uses occurred in the New York Times in February 1875). The term referred to those who boarded in the cheapest lodging houses in the winter or bedded down in doorways, docks, empty warehouses, or Central Park, or along the Battery, on tolerable nights. When the weather turned bitter, many resorted to the verminous police basements. Touring one of them, a Herald reporter noted that his flickering gas lamp sent “feeble rays through the laden air and every ray touches a pile of rags which in the morning will hatch out a tramp.” The stations gave lodging on a one- or two-night basis, forcing users to move repeatedly to a new precinct (hence their label of “revolvers”). In 1874 and 1875 thirty thousand were said to be so circulating.
In the summer many of the unemployed roamed the surrounding countryside, looking for handouts or doing chores for farmers’ wives in return for food and shelter. Those few who bullied or stole what they wanted had their crimes splashed across the front pages, and out of these stories was conjured up the “tramp evil.” The press routinely treated the homeless not as victims but menaces. Some papers defined “tramp” in racial terms—as an urban Indian—or, in the words of one professional, “a lazy, incorrigible, cowardly, utterly depraved savage.” The Times suggested that readers worried about tramps “procure a large dog who understands how to insert his teeth where it will do the most good.”
Finally, the scientific reformers were dismayed, as they had been for decades, by New Yorkers’ stubborn penchant for undisciplined benevolence. Mayor Havemeyer had felt free to suspend outdoor relief in part because he was convinced that the needs of the poor were being “adequately met by private donations and the various Christian and charitable institutions.” Many churches indeed struggled to help during the depression. Thirty-four free soup kitchens fed five to seven thousand daily, and missions provided refugees from the freezing streets with shelter (and sermons). The St. Vincent de Paul Society declared: “Let all strangers be received and welcomed as Christ himself.”
Such efforts infuriated the AICP. Appalled at the “outgush of morbid sympathy,” the organization applauded the end of public outdoor relief and urged an end to scattershot beneficence as well. “Charity,” agreed the World, “rages like an epidemic,” and to what end? It only encouraged “idleness and dependence in the lower classes” and gave “impetus to worthlessness and vagrancy” by making “begging more profitable than labor.” Cutting off charity, on the other hand, would ensure that “the large class drawn hither by the possibility of living without work should be compelled to return to the country, where their hands are needed, by the stern necessity to work or starve.” E. L. Godkin declared in the Nation, “Free soup must be prohibited,” and “all classes must learn that soup of any kind, beef or turtle, can be had only by being paid for.”
The AICP was partly mollified when, after 1876, the city’s Board of Estimate and Apportionment began giving large sums of municipal money directly to a few private charities—the AICP chief among them—on the grounds that they would provide home relief (as they already did institutional relief) more efficiently. The AICP had resisted the idea at first, but when its expenses almost doubled in the depression’s first year as its income from contributions dropped, it decided (in December 1876) to accept the new policy of public subsidies with private controls, then through careful scrutiny managed to disqualify the majority of the approximately sixty thousand who were stripped of public aid.
But reformers believed that more concerted and coordinated action was needed to bring down vagrancy and beggary, and the State Charities Aid Association (SCAA), established in 1872 by Louisa Lee Schuyler, pillar of the wartime Sanitary Commission, took the lead in generating fresh thinking. The SCAA, another private organization with public responsibilities, had accepted the task of visiting and inspecting all charitable institutions receiving state aid. Now, in 1877, it summoned a grand assemblage of charity reformers at the fashionable Saratoga Springs resort.
Almost all those present agreed that tramps were socially defective beings. One person did suggest there might be a connection between the depression and homelessness, but the idea that tramps couldn’t find work was generally decried as absurd. Some, notably eugenicist Richard T. Dugdale of the New York Prison Association, argued that vagrancy and pauperism were hereditary traits, and one conference participant drew the obvious conclusion: “I don’t think a pauper has any right to marry nor do I think the State has a right to allow him.” There was also interest in Charles Loring Brace’s proposal of a pass system (like one used in England) that would require tramps to carry papers certifying they were genuinely unemployed and looking for work.
In the end, the preferred (if not so fresh) solution was the one advanced by the SCAA’s Committee on Abie-Bodied Paupers, set up the previous year to investigate the tramp problem, under the chairmanship of Josephine Shaw Lowell, whose prominence at the gathering was itself remarkable. In 1855 Josephine Shaw had moved with her family from Boston to Bard Avenue, near West New Brighton, on Staten Island. The wealthy and patrician Shaws, despite their Fourierist and abolitionist convictions, moved easily into New York’s genteel society, and Josephine’s older sister soon married George William Curtis, editor of Harper’s Weekly. The Civil War tore her comfortable existence to pieces. An ardent Unionist, she joined a branch of the Sanitary Commission and threw herself into war work. Her brother, Robert Gould Shaw, was soon cut down while leading the first African-American regiment in action in South Carolina; and the following year, her husband, Charles Russell Lowell, died in battle. Widowed at twenty, Josephine Shaw Lowell would wear black (and keep her hair tightly coiled) for the rest of her days.
After working in Virginia with the Freedmen’s Relief Association, Lowell was invited by Louisa Lee Schuyler to join a committee visiting Bellevue and other hospitals. She then helped found the SCAA and made the investigation of able-bodied paupers her specialty. She came to public attention in 1876 after an infant died at the breast of Julia Deems, a young woman who had been nursing her baby on the freezing city streets while asking alms from Christmas crowds. When the Tribune suggested this was a shocking demonstration of social indifference, Lowell wrote a spirited letter insisting that the real fault lay with the errant Mr. Deems, with lax enforcement of the beggary laws by the police department, and with New Yorkers who opted for “indiscriminate almsgiving” over providing appropriate shelter.
In the same year, and in a similar vein, Lowell completed her SCAA report, which suggested that the key to solving the tramp problem was recognizing that they were not only “vicious and idle” but carriers of moral contagion, capable of infecting others. To limit the “corrupting influence of these worthless men and women,” they should be “committed, until reformed, to district work-houses, there to be kept at hard-labor, and educated morally and mentally.” This analysis so impressed Governor Tilden that he appointed her the first woman commissioner of the New York State Board of Charities.
In a step toward accomplishing Lowell’s program, the SCAA prevailed upon New York City to end the police department’s program of giving free lodging. Those deemed “worthy” were sent to special lodging houses like that established in 1876 by the Night Refuge Association of New York in the Old Strangers Hospital, on Avenue D and 10th Street. The vast majority were arrested as vagrants and jailed. Soaring prison occupancy rates prompted Lowell, in March 1878, to again appeal to the state legislature to construct workhouses.
In 1879 she proposed a law to incarcerate all women under thirty who had been arrested for misdemeanors or who had produced two illegitimate children. To prevent them from transmitting their “moral insanity” to others, they would be sentenced to a reformatory, under the exclusive management of women, where, under “tender care,” the “weak and fallen creatures” would undergo rehabilitation. “The very character of the women must be changed”—they must “learn to enjoy work”—and as this could not be done overnight, the reformatories should be places “where, if necessary they may spend years.” Though the legislature refused to embark on an extensive building program of either workhouses or female reformatories, it did pass an Act Concerning Tramps in 1880 that imposed imprisonment at hard labor in the nearest penitentiary for up to six months.
In 1874 Governor Samuel Tilden, elected in large measure on the strength of his role in prosecuting Tweed, set up a commission to study the “decay of municipal government.” Its members included intellectuals and influentials, like Nation editor E. L. Godkin and railroad lawyer Simon Sterne, who had been arguing for some years that the root of New York City’s problems was an insufficiently fettered franchise. In March 1877, after nearly two years of deliberation, the commission revealed what it thought should be done.
It called for a constitutional amendment that would establish a Board of Finance, to be elected solely by men who paid taxes on property worth over five thousand dollars or an annual rent higher than $250. This board would appoint all financial and legal officers of the city and take control over all municipal revenues and expenditures. The rest of the citizenry could still participate in electing the mayor and Board of Aldermen, but these worthies would be effectively stripped of their power to distribute public goods and services. The city would become more like a business corporation, where ultimate authority was reserved to those who provided the capital, in this case the leading taxpayers. The proposed Board of Finance would in effect institutionalize the power the bourgeois Committee of Seventy had temporarily seized during the fight against Tweed. It would guarantee, Sterne explained, that New York’s propertied elite “would no longer find themselves in contest with the loafer element, which would eventually outnumber and beat them.”
The commission’s proposals were an instant hit in upper-class circles. The Chamber of Commerce, the New York Stock Exchange, the Produce Exchange, the Cotton Exchange—indeed every leading business organization—endorsed them enthusiastically. So did Astor, Vanderbilt, Dodge, Havemeyer, and leading newspapers like the Times, the Herald, and the Tribune, whose publisher Whitelaw Reid opined that “ignorant voters” were “as dangerous to the interests of society as the communists of France.”
At a mass meeting held April 7, 1877, to rally support for the amendment, speakers hammered away at the necessity of taking power away from the “the idle, the vicious and the scheming politicians.” They dismissed as “preposterous” the idea that “a mere majority should direct how the public expenses, paid by the minority, should be regulated.” Democracy, acceptable for a small town, was lunacy in a large city like New York. Most towns, after all, had an “intelligent, orderly American population,” whereas Manhattan was filled with dependent proletarians and “desperadoes from all ends of the earth.” (Nor was it much better across the East River: the World believed that the “uncivilized classes in Brooklyn are quite as murderous as the savage in Montana.”)
Urged on by Governor Tilden, the state legislature passed the proposed amendment in the fall of 1877. Under existing rules, if it passed again the following year it would go into effect. In the fall of 1878, unfortunately, New York City voters gave Tammany Hall a controlling influence in the state legislature and the Common Council. Despite John Kelly’s heretofore extraordinary willingness to court businessmen’s approval, he recognized the Tilden Commission’s suffrage restriction plan for what it was—a device to dethrone politicians by disfranchising their electoral base—and when the proposed constitutional amendment came up for reconfirmation, it was scuttled. For the moment, neither the propertied nor the new-model politicians could rule without the other, and an uneasy power-sharing arrangement was cobbled together in which Kelly maintained control of the party, and the wealthy contented themselves with strategic positions in the government and on independent boards and commissions.
During the period when the city’s political and economic elite were striving mightily to rein in democracy and the immigrant masses, New York City played host to an object that would become the quintessential emblem of them both. Auguste Bartholdi, one of the many Frenchmen who had arrived in New York in 1871, was not a Communard seeking refuge but a sculptor seeking a site. Bartholdi was the emissary of a group of activist French intellectuals, of moderate republican stamp, who were intent on erecting a monumental statue in the United States, dedicated to liberty, to commemorate the upcoming centennial of 1776. The leader of this group was Édouard-René Lefebvre de Laboulaye, a prolific writer who had produced a three-volume Histoire des États-Unis and a book, Paris in America, about a Parisian transported to Manhattan.
Laboulaye was fascinated with the United States because he saw it—especially after the northern victory—as the kind of ideal republic he wanted to establish in France. He had worked to liberalize Napoleon’s reign from within, and after the fall of the empire he became a republican member of the royalist-dominated National Assembly. To advance his cause he fastened on the idea of having a collaborative Franco-American group erect a statue in America, far enough away to avoid provoking a monarchist backlash, yet close enough to foster (by association) a republican image for France. Hence Bartholdi’s scouting mission. In addition to meeting with American notables, he inspected various locations and found his ideal spot on Bedloe’s Island, situated in what was now unquestionably the gateway to the United States, the harbor of New York City.
The project advanced slowly during the 1870s. In 1873, in a kind of test case, the French government commissioned Bartholdi to execute a larger-than-life bronze statue of Lafayette, to give to New York City for having sent aid to Paris after it had been besieged by the Germans in the winter of 1870-71. It would be delivered and erected in Union Square for the 1876 centennial of the American Revolution.
By 1875 Laboulaye and his colleagues had gained the ascendancy and established the Third Republic. Now a French-American Union was created (with Laboulaye heading the French side), and Bartholdi forged ahead with producing a prudent Statue of Liberty, one that embodied republican ideals but steered clear of any taint of the Commune. The initial fragmentary result—Liberty’s hand and torch—destined for display at the Philadelphia Centennial, was first parked in Madison Square, where New Yorkers could enter and climb to a viewing platform. Lest anyone mistake the symbolism, Laboulaye underlined that Bartholdi’s figure “does not hold an incendiary torch, but a beacon which enlightens.”
As the metropolitan bourgeoisie worked to wrest power from the urban masses, they grew ever more understanding of, and sympathetic to, the efforts by southern elites to recapture power from Reconstruction governments. New York Democrats hoping to restore their prewar southern allies to power had long sought to topple Radical Republican regimes, routinely denouncing them (in the World’s words) as “Semi-Barbarians Led into Horrible Excesses by the Very Scum of Northern Carpetbaggism.” Now many Republicans, alarmed by their own urban barbarians, had come to agree. George Templeton Strong, who had long backed Grant’s policies, now excoriated southern governments as “nests of corrupt carpetbaggers upheld by a brute nigger constituency”—the equivalent of New York City’s “celtocracy.” The Tribune, the Nation, Scribner’s, Harper’s—all began to depict Reconstruction as a monstrous inversion of the natural order, in which the men of “intelligence and culture” had been sidelined by the lower orders.
Many white Republicans also thought it was time to stop courting electoral disaster by supporting blacks. In 1869 their party had backed black suffrage and been trounced at the polls. In 1873 African-American Republicans led by Henry Highland Garnet got Albany legislators to pass a statewide Civil Rights Act, which outlawed the exclusion of blacks from “full and equal enjoyment of any accommodation, advantage, facility, or privilege furnished” by public conveyances, innkeepers, theaters, public schools, or places of public amusement and expunged the word “white” from previous statutes. In 1874 their party was again crushed at the polls. The remnants of support for Reconstruction collapsed. It was time, said the Best Men of the North, to come to an understanding with the Best Men of the South, end misguided reform efforts, and unite in defense of property.
The presidential election of 1876 became the vehicle for arranging this detente. Samuel Tilden, the Democratic nominee, was not a personally popular figure. “Silk Stocking Sammy,” even his associates agreed, was vain, ambitious, cold, and aloof. But Tilden had won credit for his part in breaking Tweed. He was also a rich man—having made his fortune reorganizing bankrupt railroad lines and representing the likes of Gould and Fisk—and he was backed by rich Swallowtails like August Belmont and Abram Hewitt.
Tilden’s opponent, Rutherford B. Hayes, had his own wealthy backers in New York City, but Tilden was a Democrat and a favorite son, and by the closing minutes of November 7, after having spent the evening at Everett House on Union Square tallying votes, it seemed clear he had carried city, state, and country. Tilden returned to his Gramercy Park home, where a crowd gathered at his doorstep acclaimed him as the next president. In the early morning hours of November 8, however, someone at Republican headquarters discerned a possibility of reversing the popular victory in the Electoral College, if Republicans in three southern states took appropriate action. Telegraphs were dispatched from New York to this effect, starting a chain of events that led, in March 1877, to Hayes’s selection as the next chief executive and the swift abandonment of Reconstruction.
For the New York bourgeoisie, the president’s pulling of federal troops out of southern politics and back to their barracks came not a moment too soon, as it meant that ample firepower would now be available to deal with the nationwide rail strike that broke out four months after Hayes was inaugurated.
The depression had exacerbated cutthroat competition between those railroads that had survived the crash. Fierce rate wars led to savage losses and repeated attempts to arrange a lasting truce. But invariably some opportunistic free enterpriser pursuing short-term profits—Jay Gould notable among them—would break ranks shortly after a price-fixing accord was reached. On those rare occasions when it seemed that rail executives might actually succeed in collectively hiking their rates, shippers and merchants protested, especially in New York City. In 1874, after forty rail lines agreed to a rate-boosting Saratoga Compact, the New York Chamber of Commerce and the Cheap Transportation Association attacked the Erie and the New York Central for their participation, claiming it would harm New York City’s trade. This in turn led to the spectacle of the presidents of the two roads denouncing the “destructive communistic characteristics” of the New York Chamber of Commerce.
The primary alternative to raising prices was cutting wages, and it was a wage reduction that sparked a skirmish at Martinsburg, West Virginia, on July 16, 1877, which spread to Baltimore, then Pittsburgh, then to most major cities in the country. The struggle of railroad workers to reverse depression-era losses attracted support from other unionists and from the disaffected urban poor. Heavy-handed military responses provoked counterviolence, which in some cities—especially Pittsburgh—crescendoed to full-scale urban warfare.
The strike spread to the Erie and Central lines. Buffalo railmen went out and were joined by sympathetic factory workers, and the struggle spread east to Rochester, Syracuse, and Albany. The governor declared martial law, Albany was ringed with troops, and the great conflict seemed about to roll south into New York City—but it didn’t. Part of the reason was that the metropolis was not really a railroad town; neither rail companies nor rail unions occupied the same commanding position as they did in smaller cities. But there were other reasons for the city’s escape from the national cataclysm: a phenomenal mobilization of military might directed at would-be strikers and supporters, and, in sharp contrast to other urban battlegrounds, a closure of ranks and hearts by the upper and middle classes against the urban working class and its depression-era hardships.
As the strike spread, New York opinion makers had waxed ever shriller in denouncing it. The Tribune saw the strikers as “Communistic and law defying, against all law, order, and civilization,” and if the upheaval spread to New York City, it should be “met by the shooting of every rioter within range of a musketball.” The Congregational journal the Independent was more bloodthirsty still: “If the club of the policeman, knocking out the brains of the rioter, will answer, then well and good; but if it does not promptly meet the exigency, then bullets and bayonets, canister and grape” were the proper remedy: “Napoleon was right when he said the one way to deal with a mob is to exterminate it.”
Congregationalist Henry Ward Beecher, still a moral tribune despite his recent contretemps, gave two sermons on the strike in mid-July. Though agreeing that the “oppressed” working class was entitled to organize “for mutual protection against the mutual selfishness of employers and of capital,” he denounced the railroad strikers. Their effort was immoral because it contested the workings of “natural law,” which was “on the side of the largest, always, whether men would have it so or not; and no meddling on their part can interrupt it.” To this Spencerian outburst he added divine benediction, asserting that God “has meant that great shall be great and that little shall be little,” and the poor must “reap the misfortunes of inferiority.” Besides, he told his comfortable Plymouth parishioners, the poor’s misfortunes weren’t all that great. “It is true that a dollar a day is not enough to support a man and five children, if the man insists on smoking and drinking beer. Is not a dollar a day enough to buy bread? Water costs nothing. [Laughter] Man cannot live by bread [alone], it is true; but the man who cannot live on bread and water is not fit to live.” More laughter, capped by applause.
Three days after Beecher’s second sermon, the Workingmen’s Party was scheduled to hold a strike support meeting in Tompkins Square. Railroad executive William H. Vanderbilt wrote mayor Smith Ely urging him not to allow it, but the mayor refused. The authorities did, however, cancel all police leaves, call out the First and Second divisions of the New York National Guard, summon the men of the Seventh Regiment back from vacation, connect Tompkins Square to armories by telegraph wires, garrison the New York Central roundhouse and depot, place two gatling guns at the heads of Wall and Pine, and dispatch seventy-five volunteers to defend the subtreasury. Frederick Law Olmsted surrounded Central Park headquarters with loaded howitzers. The Treasury Department, anxious about the millions stored in the Custom House, arranged for troops to be transferred to New York garrisons. The navy secretary sent a vessel that could, if necessary, clear the streets surrounding the Custom House. When told streets in the financial district were too crooked, Evarts responded: “The big guns will straighten them.” Finally, with over a thousand sailors and marines at the ready, and an estimated eight thousand rifles and twelve hundred clubs in place, New York was ready to put down a “Communist riot.”
On the evening of July 25, in the glare of hundreds of torches and calcium light at each corner of Tompkins Square Park, a crowd of twenty thousand turned out to hear socialist orators hold forth from a platform draped with an American flag. (All speeches were repeated in German at a second stand.) David Conroy, labor union leader, opened the giant rally saying: “I hope and trust that you, fellow citizens and workingmen will show to the press of New York tonight that you are an orderly people and that you are no rioters.” Temperate speeches followed, expressing sympathy with the railroad strikers. An address to President Hayes was proposed, decrying the fact that all the government had offered workers hard hit by depression was “the hangman’s rope and the soldier’s bullet.” There were calls for “political revolution through the ballot box” and the nationalization of transport, communication, and banks. John Swinton, editorial writer for the New York Sun, attacked Beecher’s recent effusions as particularly unseemly coming from a man who made thirty thousand dollars a year.
After two hours, just as the meeting adjourned, policemen charged in, clubbing people without apparent provocation, yet without sparking resistance. As Emmons Clark of the Seventh Regiment summed up, the “large and dangerous assemblage in Tompkins Square was inspired with a wholesome terror” and “sullenly dispersed.”
In the strike’s aftermath, the War Department began constructing a system of armories in major cities. The labor press bitterly opposed the notion of establishing a standing army. The New York Sun said it presaged a “radical revolution of our whole republican system of government.” Even the Commercial and Financial Chronicle opposed the armory program, fearing the military could be used “against business itself.”
But an armory program had already been launched in New York City. The Seventh Regiment had been pushing for new quarters since 1873 and in 1874 had asked the city to provide them the plot of land bounded by 66th, 67th, Fourth, and Lexington. In 1875, after the state legislature authorized New York City to spend money erecting new armories, the aldermen appropriated $350,000 and assigned the desired parcel. Then budget cutter Andrew Haswell Green vetoed the expense, and the regiment decided to build the armory itself. At first subscriptions were slow, despite the Tribune’s exhortation that “banks, insurance and trust companies, in fact all the large corporations of every kind, owe to themselves as well as to the regiment, ample aid in this matter.” Then came the 1877 strike, and money poured in. John Jacob Astor, A. T. Stewart, William H. Vanderbilt, Brown Brothers, Harper Brothers, Singer Manufacturing Company, Equitable Life, and Drexel, Morgan were among the many benefactors. In the end it cost $589,000, twice the sum raised for the Statue of Liberty, but when it opened in November 1879 it was the finest armory in the world. Its huge hall, ample enough to accommodate regimental maneuvers, was stoutly defended by a bronze gate, a bronze portcullis, and a solid oak door half a foot thick. Loopholes for riflemen enfiladed all approaches, and two or three gatling guns could be quickly mounted in the tower to sweep Fourth Avenue.
The Seventh Regiment Armory was only the first of many to follow, but for all the bourgeoisie’s readiness to militarize Manhattan, many of its leading figures—John Pierpont Morgan chief among them—were becoming convinced that this was not a viable long-term solution to the problems and divisions wracking city and country. Morgan was appalled by the chaos of the national economy. Unrestrained competition, rate wars, depressions, strikes, and warfare in the streets—this was not the way to attract European investors for American securities. As the depression hit bottom, Morgan busied himself with developing an alternative: the consolidation of the continental economy under the aegis of a manageable number of large-scale corporations, manageable, that is, by him and his fellow investment bankers in New York City. As Morgan reorganized many of the era’s failed railroads, he took care to obtain seats on the boards of the new, more powerful companies he fashioned. In 1879 the New York Central itself passed into Morgan’s control, after he brokered the sale of 250,000 shares owned by Commodore Vanderbilt’s heirs. Slowly he and his fellow financiers were accumulating unheard-of levels of power. The consolidation of a nationwide corporate economy under the control of Manhattan bankers in the next two decades would have enormous consequences for the global economy, for the United States, and, perhaps above all, for New York City.
