The New York herald., 1869-04-05
The Pacific Railroad-The Quarrel for the
Spoils.


The desperate onslaught of Fisk, Jr., to
effect an entrance into the Union Pacific Rail-
road ''ring," and the sturdy defence of those
who have possession OF the spoils, are giving
to the public some developments of rare inte-
rest. To understand the case it is necessary
gigantic concern called the Union Pacific Rail-
road Company. It was created by Congress
in 1862, and in an additional act of 1864 the
stupidity of our Congressional lawyers virtually
placed in the hands Of the company the power
to destroy all government interest in the road
by allowing an issue of first mortgage bonds
to take precedence of the amount per mile
given by the original act. The company,
therefore, in 1864 found itself in possession of
means far more than adequate to the required
purpose of building the road.
In the meantime favored few, principally
originators and directors of the company, had
been permitted to subscribe to the stock, and,
on the surface, q certain percentage Of the
subscription was called in. The resources,
exclusive Of capital stock, were, by the COM
pany's own estimate, as folows:-
United States bonds on 5lI miles, at
$4,000 per mile. ss,272, 900
United states bonds on 4Sa miles, at
e32. 900 per mhe 13, $50, 900
Total. ...................... s2e 8ls, ,ooo
Issue OF first mortgage bonds Of equal
amount: :::..................... 2o32s, 900
81 90 per acre. ACKNOWLEDGEMENTS. 212o, 900
Total. ST9 10000
But these 14,080, 900 acres Of land are and
were worth more than one dollar and fifty cents
per acre, as above estimated; for Congress
itself passed an act refusing to sell its own
reserved alternate sections for less than two
dollars and fifty cents per acre. This price
would swell the above amount to $o3, ,Sj6, 600,
giving ss5, 1923 per mile for the eleven hundred
miles-a little more than twice the cost per
mile Of the railroads Of Massachusetts and
Ohio, cost which the Pacific Railroad should
not exceed, especially as it's maximum gradient
is ninety feet to the mile. From the manner
in which the road has been built it Is probable
that even with the excessive cost of trans
portation, the expenditures have not exceeded
the average cost of roads in the States above
named.
With SSj,323 per mile with which to build
the road, and the stock already clear gain. it
became problem with the directors, or stock
holders, as you please, to devise some method
Of pocketing whatever surplus Of the above
amount there might be after deducting the cost
Of the road. Even with prodigal mana cement.
and estimating the cost at S55, 1922, this surplus
could not be less than $4,000 Per mile, or
about S3G, 900, ,0o0-certainly most tempting
bait for the keen brains that managed it TO
evadc the law and grasp the vast pile. For
president and directors to take contracts signed
by themselves, for themselves, and at their own
prices, would be a manifest breach of law and
Of New York financial morality which even tho
United States government could not stani, cspe-
cially where so few Of its Congressman and OH
cials were interested. The astu.e managers.
therefore, resorted to the French idea of the
Credit Mobilicr, and, TO do .he business quietly
and avoid disagreeable complications and per-
sonal responsibility, obtained charter from the
Quaker State Of Pennsylvania. The incorpo-
rators and stockholders were the same as the
Pacific Railroad Company, and this chameleon
only changed its color that IL might absorb
instead Of reflect the golden light that shone
upon il. To still further stand within the pale
Of the law IT was considered best TO look for
contractor in Nebraska, and Mr.. Hoxie con-
veniently appeared with o contract for 247
miles OF the road. He very naturally, unable
to carry out his contract, applied in due time
TO the Credit Mobilier for aid. This company