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The Circumstances Surrounding the Closing of the Atlantic Avenue Tunnel 
. . .OR. . .The Great Brooklyn Railroad And Land Development Fraud Of 1859 - 1861 . . .
OR . . .
In 1862 The LIRR Led To Minnesota


E.B. Litchfield









One of the most misunderstood aspects of the history of the Atlantic Avenue Tunnel and the early LIRR in Brooklyn, are the factual reasons for its closure in 1861.

Introduction:

The original LIRR destroyed itself in the mid 1840's by first, deviating from their original business plan, and then failing to follow Cornelius Vanderbilt's "master plan".

Starting in 1850, the LIRR was taken over by a group of Philadelphia investors, and operated as a local transit line for Atlantic Avenue, and as a conduit for the farmers (and the substantial farm produce) of Long Island. The LIRR wasn't removed from Brooklyn, until a small clique of real estate speculators lead by the Litchfield brothers prevailed circa 1859-1861.

It should be noted, that the activities of the Litchfield brothers, as well as that of governmental officials, as described below, was quite the norm for the time period. In fact, "Robber Baron" business practices as well as "Urban Machine Politics" are considered to be two of the three "antecedents" of Organized Crime in the United States. (See" Organized Crime by Howard Abadinsky, 1997, pg 39-69.)


Part I - Why The Litchfield Brothers

To break it down to its simplest terms, the Litchfield brothers simply "went where the money was".

During the mid 1840's through the mid 1850's, three of the Litchfield brothers, Electus Backus, Edwin Clark and Elisha Cleveland, owned substantial, if not controlling interests in several Midwest railroads, viz.: the Cleveland & Toledo RR, Toledo & Illinois RR, Belleville & Illinoistown RR, Michigan Southern & Northern Indiana RR, Terre Haute & Alton RR- and last, but not least, the Demoine Navigation & Railroad Company- which wasn't a railroad at all, just an Iowa land scam. Source: US Railroad Directory, 1856 (see pgs 111,123,133,138,140,157). The fourth Litchfield brother, Erasmus Darwin, comes into play during the early 1860's, utilizing his position as a London banker, and as the "Collector" for the Tunnel Closing Special Assessment Tax. The fifth Litchfield brother, Egbert Delos, makes his appearance in future dealings with James J. Hill (in Minnesota), but apparently played no part in the brother's Brooklyn activities.

Many of the railroads cited above, together with the New York Central RR and the Hudson River RR, were used to form the "first all rail line" from New York City to Chicago during the mid 1850's. This was well before Commodore Vanderbilt was involved with the New York Central, or the Hudson River RR. However, in the Financial Panic of 1857, the Litchfield brothers "found their interests overextended, and could not hold their control in the reorganizations that followed". This fully explains the total, virtually desperate focus E.B. Litchfield and his associates were able to level at Brooklyn's Long Island Railroad in particular, and Atlantic Avenue in general. As far as the Litchfield brothers were concerned, in 1857, Brooklyn became the only game in town...at least until Minnesota came a knocking..." (Source 1: Biographical Dictionary of American Business Leaders, Vol 2, pg 806, by John N. Ingham, 1983.   Source 2: Machines and Morality: The 1850's, by Robert Sobel, 1973, pg 66- 67, 235-238. ).
 
A question that begs an answer, is why the opposition to the LIRR was "inconsistent" during the 1850's? The answer is world affairs, relative to the financial activities of the Litchfield brothers. Opposition to the LIRR in Brooklyn first nebulized during the period of 1850- 1853. This period coincided with the Litchfield brothers mainly focusing their attention on Brooklyn real estate speculation, as exemplified by E.B. Litchfield becoming Alderman for the 6th Ward during 1850- 1851, their purchase of the square mile sized Vecht- Cortelyou farm (1852) which was the origin of Park Slope, and E.B. Litchfield's January 1853 applications to the City of Brooklyn, for permission to build and operate a streetcar line connecting the Litchfield's Brooklyn real estate holdings with the Fulton and Montague Street ferries, via Brooklyn Height's Montague Street.
 
With the start of the Crimean War in October 1853, the prices and demand for U.S. grown grain skyrocketed, as the Russian Empire, then known as the "bread basket of Europe [today's Ukraine]" was now at war with the British Empire, French Empire, the Ottoman Empire, the Kingdom of Sardinia, and the Duchy of Nassau. A large portion of the grain grown in the U.S. at the time, came from today's Midwest (Ohio), and other adjacent areas, then partly referred to as the "Pacific Northwest Territories". This translated to an increase in the value of Midwest land usable for agriculture, and also the railroads needed to provide transportation access. Thus, in 1853, the Litchfield brothers refocused their attention away from Brooklyn, to renewed speculation in Midwest land and railroads.
 
The end of the Crimean War in 1856, led to a major drop in demand for U.S. grain, and a subsequent drop in value of Midwest land and railroads, starting a series of events in the U.S. that led to the Panic of 1857- and the return of the attention of the Litchfield brothers to Brooklyn. Other major factors of the value decline in Midwest land speculation and railroads, was the failure of Ohio Life, a bank with a free-wheeling New York office and extensive speculative Midwest railroad and land mortgage holdings, as well as the Dred Scott Decision of March 6- 7, 1857. The specter of slavery spreading through the new Midwestern states, threw a major damper on land speculation in that region, as immigrants would certainly not come to new slave holding territory. In fact, "the difference between western and eastern through passengers entering Chicago from the east, a measure of net immigration, declined from an estimated 108,000 passengers in 1856, to a mere 10,000 in 1860". (Source 1: The Panic of 1857, Calomiris and Schweikart, 1991 Source 2: Fishlow, American Railroads, pg 202- 203).

Its noteworthy that the first "Broadside Posters" calling for a series of public meetings against the LIRR to be held at the Brooklyn Athenaeum starting on March 9th, suddenly appeared in early March, 1857, within a day or two of the infamous Dred Scott Decision.  It should be further noted, that Supreme Court Justice Catron, in violation of the Constitutional mandate for a separation of powers, gave a "heads up" on the court's ruling to politicians in late February, well before the Dred Scott decision was publicly announced by the court in March. The Litchfield brothers were now solidly re-focused on Brooklyn- until Minnesota beckoned them in 1862. (Source1: Collections of the New York Historical Society. Source 2:  Machines and Morality: The 1850's, pg 256- 257.)
 
Their immediate objective, became the abrogation of the "Tripartite Agreement" of 1855, a contract between the City of Brooklyn, the LIRR and the Brooklyn and Jamaica RR. This contract, which was created and sanctioned by a special law of the State of New York in 1853, "permanently" granted to the LIRR the right to use steam power in Brooklyn, and removed the LIRR from under all City of Brooklyn authority. Source:


Part II - The Circumstances Surrounding the Closing of the Atlantic Avenue Tunnel

During the 1850's, downtown Brooklyn's newly created Tenth Ward was burgeoning with nascent commercial development. This ward was bounded on the west by Court Street and on the east by Flatbush Avenue- and bisected north and south by the street surface running section of the LIRR. If a rational and honest state of affairs would have prevailed at the time, the Atlantic Ave tunnel would have simply been extended eastward to Flatbush Avenue, thereby making the contentious Brooklyn 10th Ward whole.
 
However, certain interests wanted to politically and economically exploit this situation. Seemingly out of nowhere, came a mysterious rabble rouser known only by the nom- de- plume of "Pro Bono Publico". Virtually singlehandedly, "Pro Bono Publico" organized "public meetings" against the LIRR and the tunnel- but was in hearty support of the newly proposed "Atlantic Avenue Drive & Promenade" project. Note that 19th century "public meetings" commonly entailed the distribution of money, free food and alcohol to the attendees. These "meetings" quickly grew into a political pressure group- the "Tenth Ward Association". The Brooklyn City Common Council members- and State Legislators- from this large and populous ward must have relied heavily on the constituency of  "The Tenth Ward Association".

"The immediate results of these "meetings" was series of City of Brooklyn Common Council Ordinances during the very early 1850's, which hampered the operations of the LIRR (speed, hours of operation, etc.), and also attempted to revoke its right to use steam power within City limits. It should be noted, these deleterious City Ordinances originated ca 1850- 1851, while E. B. Litchfield was the Alderman for Brooklyn's Sixth Ward- the Ward from which the new 10th Ward was then carved from.  At that time the Litchfield brothers had other pressing business in the Midwest, so they temporarily lost interest in the LIRR. However, once instigated, the anti-LIRR movement in the newly created 10th Ward didn't just go away. E.B. Litchfield "passed the torch" (which he would  pick up again in 1857) to the newly elected Abraham B. Baylis, the first Alderman of the newly created 10th Ward. However, the LIRR soon silenced Baylis, by appointing him a Director of the railroad." (Sources: Source 1: (see pg 36), Source 2)

Pro Bono Publico & Company had a master plan: remove the LIRR, close the tunnel and build the Atlantic Avenue Drive & Promenade- essentially a sweeping real estate development project. To effect this plan- and create a source of public funding for the private real estate aspect of their project, they pushed through the NYS Legislature in 1859 the "Tunnel Act", Chapter 484 Laws of 1859. This law banished the steam powered LIRR from Brooklyn, closed the tunnel- and created a pot of public money totaling $130,000- a huge sum of money in the late 1850's. This pot of public money was to be generated by a Special Assessment District created under the "Tunnel Act"- but was to be given over to private entities for their own use.

There is very little evidence that "Pro Bono Publico" had any wide spread support for closing the tunnel beyond the questionable "Tenth Ward  Assn." and their political operatives- who were purportedly "blackmailed" into compliance. In fact, according to the following Brooklyn Daily Eagle article, Ten Thousand Brooklynites signed a remonstrance to the State Legislature Against passage of the proposed tunnel closing Act of 1859. In fact in 1853, over four hundred landowners and business people of Atlantic Avenue (said to be the majority) signed a petition to the City of Brooklyn IN FAVOR of using steam power on the LIRR, and also desirous of a new streetcar line be superimposed over the LIRR and Furman street: (Source 1  And Source 2)

Further, it was later argued in Court (Litchfield vs. Vernon), that the closure of the tunnel and the elimination of the LIRR's steam powered downtown Brooklyn route in reality inflicted injury on the property value and commerce of downtown Brooklyn. Those pleadings fell upon deaf ears. (See pg 125)

The legal mechanism by which the public money was subsequently collected by and retained by private interests under the "Tunnel Act" and a subsequent companion State Act, was later found Constitutional by the NYS Appeals Court in 1869 (Litchfield vs. Vernon). HOWEVER- the same court proceedings (Litchfield vs. Vernon) exposed the fact that the actual execution of the "Tunnel Act" - and thereby the closing of the tunnel, was nothing more than a huge Fraud perpetrated upon the people of Brooklyn. This betrayal of the public trust was perpetrated by then Mayor of Brooklyn Samuel S. Powell.
 
Its noteworthy that only a couple of years earlier, in 1857, Mayor Powell was the LIRR's staunchest ally, vetoing a Common Council ordinance that could have barred the LIRR from Brooklyn at that time. How a portion of graft and blackmail does change things.  Source

So who in the world was "Pro Bono Publico" ? Maybe the devil can be found in the details...

As Bernstein said to Woodward (Watergate) "follow the money trial". As per contemporary Court writings (The People Ex Rel Crowell vs. Lawrence), the tunnel was thought by the Court to have been removed for the $130,000, with E.B. Litchfield's shill company the Brooklyn Central & Jamaica Railroad becoming the Assignees of the assessment money and contractor for its removal. Note the Brooklyn Central & Jamaica RR then assigned all the assessment monies to E. B. Litchfield personally, with E. B. Litchfield's brother E. Darwin Litchfield becoming the tunnel closing Assessment Collector (as per Litchfield vs. Vernon). (See pg 190 lines 6 and 7 here).

The way E. B. Litchfield enticed some of the property owners to pay him the Assessment money, was that in exchange for paying the Assessment, Litchfield gave them undisclosed amounts of stock in his railroad (watered the stock). He was able to collect only about one half of the Assessment in this way. The other half of the property owners refused to pay, on the basis that the removal of the LIRR's steam power and the tunnel was ruinous to their property and businesses, and that the Tunnel Act itself was unconstitutional. These land owners then went to the Courts for relief. (See Source)

According to the Court records (People Ex Rel Crowell vs. Lawrence), the tunnel was assumed by the Court to have been "filled up"- that's the actual term they used. On the face of it, the basis of the sum they came up with, $130,000 made perfect sense, as it cost the LIRR $66,000 to build it, so it followed that it would cost about as much to "fill it up". The other half of the assessment was damages for the loss of the right to use steam. As anyone who has been on the tunnel tour can tell you, it never was all "filled up" (See pg 142 here).

The primary way in which E. B. Litchfield enticed the LIRR to assign him their rights to the tunnel and steam power "removal" assessment money, was he cobbled together for them their new East River access route from Jamaica to Hunters Point- track he newly built from Jamaica to Winfield Jct (NY & Jamaica RR), thence along the preexisting Flushing RR to Long Island City- which E. B. Litchfield already controlled. (See pgs 254, 265, 240 and 241- 242 here.  Also this Brooklyn Daily Eagle article, of May 10, 1861 pg 2 fully explained the LIRR's new East River access route from Hunter's Point to Jamaica.

A contemporary of E. B. Litchfield's described him as "Flagrantly and Monumentally Impudent". This was an understatement. After bilking residents out of $130,000 under the pretense of removing steam power and closing the tunnel, Litchfield turned around only two years later (1863) and attempted to partially repeal his "Tunnel Act" of 1859, thereby restoring steam locomotives to Atlantic Avenue. This bill was actually passed by the State Legislature, but then "Copperhead" Governor of New York, Horatio Seymour, ally of "Copperhead" spokesman Rep. Clement Vallandigham of Ohio and New York City's (Manhattan) Secessionist Mayor, Fernando Wood of the notorious Mozart Hall, failed to sign it into law. It's noteworthy that Gov. Seymour also vetoed a similar steam traction bill for Manhattan's Broadway- upon the advice of Brooklyn affiliated politician and ill starred Presidential candidate Samuel J. Tilden (See Source).

In 1863, Atlantic Avenue residents finally grasped the scope of what E.B. Litchfield had perpetrated, and began referring to the entire affair as a "Corrupt Swindle". (See Source)  In 1885, the Brooklyn Daily Eagle published the following article, in which "Deacon" William Richardson of the Atlantic Avenue Railroad Co. fully exposed the chicanery of the Litchfields in the Tunnel Act of 1859 and the hijacking of the Assessment money. Note- apparently, Richardson didn't realize that it was E. B. Litchfield aka "Pro Bono Publico" that initially instigated the Brooklyn political problems of the LIRR in the first place. (See Source).
 
As for the operational fraudulence of the New York State "Tunnel Act" of 1859 itself, note that in order for it to become operative, a Petition of a Majority of Property Owners within the special assessment district created therein, was required to have been made to the Brooklyn Common Council, which would then trigger the tunnel closure and assessment process- as it turns out, there never was any such petition of property owners. Notice in the following Brooklyn Daily Eagle article, that in 1860 Mayor Powell complained that a resolution was brought forth in the State Legislature to require the City of Brooklyn to pay the tunnel assessment.

Faced with this mutiny among the local property owners who were not forthcoming with the required triggering petition to the Common Council, Mayor Powell himself, in typical 19th century corrupt political machine boss style, fraudulently verified the required though non existent land owner's petition via the Common Council to the NYS Supreme Court, thereby falsely triggering the tunnel closure and assessment process. See pg 183 paragraph 2 and pg 184 of the original circa 1862 trial of Litchfield vs. Vernon here and the following Brooklyn Daily Eagle article here and Litchfield vs. Vernon, as cited below.

Finally, in the Appeal of Litchfield vs. Vernon, the Court held that Mayor Powell's fraudulent Verification (which falsely triggered the Assessment and tunnel closure process) was not worth the paper it was written on. In Litchfield vs. Vernon, the New York State Court of Appeals held in 1869, that "the application to the Common Council of a majority of property owners being indispensable to the validity of all subsequent proceedings under the act [state "Tunnel Act"of 1859]...the petition of the Common Council verified by the Mayor to the Supreme Court, was no evidence thereof in this action... that the finding of the Court below that such majority had applied to the Common Council was, therefore, wholly unsupported by the proofs, and error, for which the judgment in favor of the plaintiff must be reversed, and a new trial ordered". (See the last paragraphs on pg 124 and 127, the upper half of page 130, all of page 136, and the top of pg 137 here)

In my opinion, the best summary of the relevant parts of Litchfield vs. Vernon can be found here (see pgs 201- 202).  We know Electus B. Litchfield and his brothers used the special assessment tax district created for the contrived closure of the Atlantic Avenue tunnel as a financial vehicle to raise money for a real estate project, while Brooklynites were promised the "Atlantic Avenue Drive And Promenade" which never happened. The legend about E. B. Litchfield losing the money buying Confederate War Bonds was in reality a red herring.


Part III : Where did all the money the Litchfields stole from Brooklyn go?

Answer: To an attempt to take over the lands and railroads of the northwestern United States via federal railroad land grants and other financial tools, and then mortgage this wilderness property to unwary European investors at vastly inflated sums.

No doubt E. B. Litchfield used his brother E. Darwin Litchfield, then a London banker, to launder the money hijacked from Brooklyn to acquire all the stock of the St. Paul & Pacific Railroad First Division, their new land and railroad speculation entity in Minnesota, which already owned 307,200 acres (480 square miles) of federal land grants. The Brooklyn loot was likely used as seed money to construct more track in Minnesota, thereby leveraging more massive federal land grants, which in turn enabled E. B. Litchfield to issue more St. Paul & Pacific securities in Holland with these land grants used as collateral.

It appears the Minnesota federal railroad land grants were extremely generous, the initial 307,200 acres were the reward for building only the first 10 miles of track. The total federal land grants accumulated by E. B. Litchfield in the construction of the St Paul & Pacific Railroad First Division would have been much greater, as the land grant for this railroad was increased to 10 sections (10 square miles) of federal land granted for every mile of track built, and the aggregate amount of land grant authorized for this railroad was 5 million acres. This land was unsettled wilderness, but the Dutch investors didn't bother to look.

E.B. Litchfield soon availed himself well of his experience gained in Brooklyn during his fraudulent closure of the Atlantic Avenue tunnel. Essentially, E. B. Litchfield mortgaged to Dutch bondholders for top dollar, the virtually worthless Minnesota wilderness. By late 1869, he had issued securities of the St. Paul & Pacific Railroad First Division to Dutch investors totaling $13 million, with Litchfield allegedly having embezzled some $8 million (a tremendous sum in the 1860's) by faking construction work. See notation for the year 1857, and also page 132 of Veenendaal.

The Dutch investors only became aware of this massive railroad and land fraud in 1873, when they finally sent a representative to physically look at the land grants belonging to the St. Paul & Pacific. The Dutch investors had bought a huge "pig in the poke". (See  Veenendaal pgs 130- 133, as well as the pages cited at this link to Albro Martin).


End Notes & Source Materials:

As a genealogical aside, it should be noted that William B. Litchfield was the son of E. B. Litchfield. In turn, the noted New York City based 20th century architect Electus D. Litchfield was the son of W. B. Litchfield, or rather E. B. Litchfield's grandson.

As a historical aside, where did Edwin C. Litchfield get the exorbitant sum of money required to build his antebellum "Villa" (which still stands inside Brooklyn's Prospect Park) ? Answer: Probably by selling and/or mortgaging Federal land he didn't really own in Iowa ("above Raccoon Fork" aka the "River Grant"), during the 1850's. See Source.

The brothers had been legally "ejected" from their Iowa property in 1859 by the rightful owners, the Dubuque & Pacific RR. Note in the case cited above, the Litchfields were the plaintiff.

It must have cost the Litchfield brothers a good dollar to have Congress pass a Joint Resolution for them on March 2, 1861, a scant two days before the administration of Abraham Lincoln took office. The Litchfield brothers needed their own version of a "pardon" in order to clear up their purported Iowa land titles. They were only one step ahead of the fraudulent land transfer lawsuits. See Source:
 
More info related to E.B. Litchfield  can be found on our webpage: The LIRR's E.B. Litchfield's Unexpected Connections


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