"I went to Jerusalem to become acquainted (Gk. istoria) with Cephas" - Paul's words from Galatians 1:18.

He that sells what isn't his'n must buy it back or go to pris'n - Corrupt Politics vs. Cornelius Vanderbilt

People today are "up in arms' over corruption in local, state and national politicians - and well we should be. However, it's important to remember that "there's nothing new under the sun," and truth be told, people in power have been crafting laws for personal benefit since the day of Nimrod, the founder of Babylon.

One of the more fascinating stories of political corruption occurred 150 years ago in the state of New York. It revolves around a native New Yorker named Cornelius Vanderbilt. Born into poverty on Staten Island in 1794, as a teenager Vanderbilt borrowed money from his mother to purchased a small sail boat. He established a ferry from Staten Island across New York Harbor to Manhattan, and through frugal savings, hard work, and an entrepreneurial spirit, Vanderbilt eventually arose to become the wealthiest man in America.

This is a story of how crooked politicians almost took Vanderbilt down financially, but instead, Cornelius Vanderbilt took them down.

With the money Vanderbilt earned from his ferry business, Vanderbilt invested in a new invention called "steam boats." He established a steam boat business that was able to take goods back and forth from Albany to New York, bringing to the ever growing market of Manhattan the furs that frontier trappers brought to Albany from the Great Lakes region. Vanderbilt made his first fortune through this steamboat business, but he saw the proverbial "handwriting on the wall," and decided it was time to invest in railroads.

Vanderbilt bought shares in a small railroad line called the New York and Harlem Railroad in the 1850's. This line, along with the famous Hudson River Railroad line, were the only two railroad companies with access to Manhattan. In 1857, at the age of 61, Vanderbilt began buying even more shares of the New York and Harlem Railroad, and soon he became the majority owner.

Here's where it get's interesting.

The members of the Common Council of New York, what we now call New York's City Council, attempted to line their pockets by following the advice of a Wall Street mogul named Daniel Drew, who also happened to represent Harlem as a city council member.

The shares of Vanderbilt's New York to Harlem Railroad were rising. The company was profitable, and word on the street was that the city council was going to grant Vanderbilt's Railroad the right to have a trolley from Battery Park to Broadway, the length of Manhattan. A trolley was the forerunner of a modern subway, and if the Vanderbilt's railroad had this trolley business, his company's profits would soar even more.

Councilman Drew privately convinced the New York city council members to continue talking publicly about the council's desire to grant Vanderbilt's company the authority to build a streetcar line - a public discussion which only contributed to the skyrocketing share prices of Vanderbilt's New York and Harlem Railroad company.  Drew told council members that if they passed the law granting trolley authority to Vanderbilt, "but at the last minute  rescinded their decision," then the shares for the New York and Harlem railroad would plummet in price. The key to council members making money was "to sell short" New York and Harlem Railroad shares before the rescission announcement was made to the public.

The City Council's bill authorizing the construction of the streetcar line was passed on 23rd April 1863. Council members began selling short Vanderbilt's railroad shares over the next two days.  Vanderbilt had some idea of what was happening and he warned the Council members to cease their actions. However, the city council continued with their illicit plan and formally rescinded the streetcar line franchise on the afternoon of 25th June 1863 for the sole purpose of making themselves rich.

Boom! People the newspapers screamed that the New York and Harlem Railroad stock would plummet during trading the next day.

But it didn't happen. The stock price of the Vanderbilt's company actually rose.

How could this happen?

Unbeknownst to the New York's city council members, Vanderbilt had purchased all of the New York and Harlem railroad stock available. He was not only the majority owner, he was now the sole owner.

When you sell a stock short and there are no shares to trade, the price of the stock rises. It is what is called a short squeeze. Short sellers can't do anything but watch in horror as the price of the stock they promised to buy back goes up in price rather than down. Unwise short selling has bankrupted many an investor.
New York city council members came to Vanderbilt and begged him to help them. Remember, these politicians sought to ruin Vanderbilt through politically corrupt business dealings. But instead, Vanderbilt had them over a barrel. The politicians were obligated to buy Vanderbilt's stock, but Vanderbilt wasn't selling yet - and the price of the stock was rising.

When the short squeeze was over and Vanderbilt finally allowed the city council out of their short positions, the price of the stock was at $180 a share, having grown from the $8 a share Vanderbilt first paid for the stock when he began investing. Vanderbilt made millions off the crooked desires of New York politicians.

Daniel Drew, the architect of the corrupt scheme to line his and other politicians' pockets with ill-gotten gains waxed philosophical about his loss of over a million dollars (over $20,000,000 in today's money). Daniel Drew one of the few politicians in New York who could afford such a massive loss in 1863 because he had already made a fortune on Wall Street. The poem that Drew wrote is something that the federal government of the United States should pay attention to in 2016, particularly since politicians have "borrowed" the Social Security money of participants - money that isn't theirs - with a "promise" to pay it back. Instead, they are funding their respective district's with money that is not theirs. Daniel Drew wrote:
"He that sells what isn't his'n, must buy it back or go to pris'n."
Since those in political power today are not prone to put themselves in prison, I've written another poem that more likely parallels the future of the American government come November 2016.

"The politicians who from others steal will find themselves replaced on Capitol Hill."

10 comments:

Rex Ray said...

Wade,

This is quite a story from a sailboat to the wealthiest man in America. That Vanderbilt was one smart fellow.

I keep waiting for someone to say something, but I guess we don’t like bad news.

A guy was in the hospital when his doctor told him he had bad news and worse news.

“What’s the bad news?”
“You have one day to live.”
“What could be worse than that?”
“I forgot to tell you yesterday.”

When I was in high school I thought social security money I paid was being saved for me. When I learned how it worked I was fearful long-haired hippies were not going to make enough money and I’d be in bad shape. But now it’s not hippies but politicians is the cause.

I believe politicians are not the only one bankrupting Social Security. Some doctors are doing their share. For instance, a doctor did less than a 30 minute operation on me in his office. (Medicare pays 80% and patient pays 20%.) I believe my part for the anesthesia doctor’s bill was an honest $73. But my part for the operating doctor is $2,764. (Haven’t paid it.) That means Social Security paid $11,056.

This has been on internet a long time:
http://thesovereigninvestor.com/exclusives/bthe-end-of-social-security-leaked-evidence-stumps-obama-stuns-retirees/?z=503067

There’s truth in this but I think it’s a scheme to get your money.

Dave Panzera said...

It's clear that many times the schemes of the corrupt actually work. What is not really focused on is its temporal and temporary nature.

"For what does it profit a man to gain the whole world and forfeit his soul?" Mark 8:36 ESV

Time and again we catch many in such schemes but I would contend that many times more we do not. When the public trust is so violated by the self-styled elite there are moments where there is correction to said people yet many times there is none. I can think of no other instance more corrupt lately than what is happening with our FBI related to the investigation to Secretary Clinton's actions with her illegal private server. Is it the lying that is the issue? How about the flagrant disregard for federal law? Perhaps its the lying to the publics face on this (and other important issues) that finally arouse our ire? I would say only this...Too many people do not care. The apathy with which all of this has been treated is indicative of a culture ravaged by 200+ years of moral decay.

Ananias and Sapphira in Acts Chapter 5 did what many do today...I am guilty of the same action myself. That action being the lie to the Holy Spirit. A lie, that I would tell myself because I wanted to justify an action. So many in positions of power, whether public or private sector or even here in the military, will be tempted more than once on such things. The real power is found when at the moment of temptation you give it to the One Whose power over temptation was shown in the desert by use of three words..."It is written!"

There have been many who have honorably served. Even today I see evidences of some who do so. We need to pray for ourselves first to be delivered from the temptations and to act with integrity each time but to also pray fervently for those in positions of power to do the same. We need to pray that the Holy Spirit would have His way with their hearts. Vanderbilt saw the scheme unfolding and acted wisely, our eyes are no different but our advantage is the eyes the Lord will give us. We need to invoke 1st Peter 5:8 to be sober and alert to such things in our own lives and in the lives of those "public servants" we are to hold accountable...because our adversary, the devil, is seeking whom he may devour.

Rex Ray said...

Dave,

You mentioned Hillary. You don’t watch her expression or eyes to know when she’s not telling the truth. Only watch her mouth and see if her lips are moving.

I didn’t finish my tale of some doctors exploiting Medicare. One charged over $300 for a ‘boot’ when all that was put on my ankle was an ‘ace bandage’. The largest scam was the hospital charge at that doctor’s office. They charged the same cost if you went to the emergency room.

How could the office be an emergency room when it was three miles from the hospital and the three times I went there I had an appointment time?

I reported it as fraud to Medicare but nothing was done.

Rex Ray said...

ANYBODY,

Are some doctors that I see the only ones ripping off Medicare?

From time to time I’ve taken antibiotics. I was requested to see a small town doctor to get a refill. It took him a minute to see a picture of my ankle and said a refill would be at Walmart. I was charged $10 which was fine. But because I had to wait two and a half hours after my appointment time, I changed doctors the next day.

That doctor charged the usual $190 for a physical examination but Medicare would not pay for two physicals in one week.

THE FIRST DOCTOR HAD CHARGED FOR A PHYSICAL!

I believe every bill received by Medicare should have the patient’s signature and phone number to insure the facts.

Bill said...

There is so much of this going on that I think Medicare just writes it off as the cost of doing business.So many doctors and health care providers are ripping us all off that there are not enough criminal courts available to handle the abuse.To be frank,Medicare obviously does not give a damn.

Rex Ray said...

A story on the light side but true,

In 1955, I was on two crutches from a motorcycle wreck the first time I met my present wife in Baptist Student Union at NTSU.

When I met her again, sixty years later, I was in better shape as I was only on a crutch and a cane.

I seemed to have developed an ‘Achilles Heel’ caused by cellulitis. I’ve had three lazar-vein treatments, one skin graph, one blood clot operation, and several expensive doctors’ medicines.

A D O doctor gave me the best medicine that is doing the most good. It is a large 16 oz jar of “Fura-Zone” that cost $12. My ankle is almost well. No more walking with a cane.

BUT it has a caution: “Federal Law prohibits the use of this product in food-producing animals…for use on horses only.”

One day while laughing my head off there was a strange sound. My brother-in-law swears it sounded like the whinny of a horse.

I know one thing, if I get eaten by cannibals; they’re going to be sorry.

Victorious said...

The Mailbag section of my local newspaper yesterday carried a comment by a woman who was recently hospitalized. While there, she was encouraged to get a pneumonia vaccination because the hospital as a policy of ensuring infections are reduced by a number of means and this was apparently one of those means.

What she was not told was that her insurance provider would be charged $937.05 for the vaccination as well as a $38 charge for administering it!! When she called her insurance company to determine whether this was an excessive charge, she was told that their cap on the vaccination is $109.99.

So Rex's patient-signature solution to reduce some of this type of fraud gets a "thumbs up" from me.

Mary Ann

Dave Panzera said...

Medical service and insurance and provision has been a horribly gone-awry incestuous relationship between government, insurance companies and providers. That "relationship" represents the greatest problem and cost to us all. Why is it that when I lived and worked in South Africa I could go (and did by the way) to the emergency room for a muscle tear and pay all of $180 dollars for what would have cost over 2000 in the US? I'll tell you what it is...

False price floors and ceilings made by a government bureaucrat and or bean counter working with an actuary from a company who sought to "inform" the government as to "better" ways to do "business" all the while enslaving the providers to a new "process" for said medical procedure or provision. In the end the prices go up, the provision goes down and the very problem they set out to "fix" as promised in the election of the government officials who we elected to do so is now worse. Compounding this is the desire by many statist minds in government to scheme to make this all worse so they can frustrate the populace to the point where in exasperation they throw their hands up and settle for single payer, complete state control...what the statist always wanted. What all good little Marxists always want. After all, they "care about the children" and always seem to know better than you and I..,. right?

Christiane said...

REX RAY,

that story is a whinner :)

Rex Ray said...

CHRISTIANE,

:)