The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1871-01-28
The Most Stupsndous 5windle of
the AGE.

Such is unqusstionably the Pacific Railroad
The recent refusal of that road to pay the in.
terest on the bonds loaned it by the govern.
ment, has led to an ovsrhsuling of the con.
Germ, when something like the following state
of facts presents itself on the surface: The
Pacific Railroad was built by two companies,
one building the read from Omaha westward,
and the other from San Francisco eastward.
Each, ON organizing, issued certificates of
capital stock to the amount of S25,0oO,00O,
We believe. Then the government gave them
$35,OOO,oOo more each, or SO, 600, 900 in all, of
Its bonds, enough in itself to build the road }
and in addition granted to the road the alter
nate sections of land of strip eleven miles
wide the whole length of the road. The hold
ers of the $5O,OOO,OO capital stock were a
close corporation, consisting of Cakes Ames,
Qadical NJ. c. from Massachusetts,) f. D..
Morgan, (radical U. S. Senator from New
York; Simon Cameron, few leading Wall
street gamblers, and dozen or two of other
members of congress whose votes it was found
necessary to buy to help the swindle through.
OF the $5O,O0O,6OO capital stock probably not
million was ever paid in. The contract
price for building and equipping the road
was about 100000, which was fall double
what it was worth; but the "close corpora
ton" OF stockholders were themselves the con
tractors, and of course doubled their money.
The $l50,000,O00 to pay the contractors were
raised from the $70,OO0,O0O bonds given
them by the government, and $150OO,0O0 of
mortgage bonds issued by the company
the close corporation aforesaid, and lands
sold along the road. 1t was stipulated in the
charter OF the company, however, that the
S7O,0OO,O0O given them by the government
were to be a loan, on which the company it.
self should pay the interest, and for tue re-
payment of which the government was to
have first mortgage on the entire road. For
year or two, while the government held this
first lien, the interest on the bonds was
promptly paid, Tin transportation, small
swlndle in itselfD but the company get
ting tired Of this, got a bill through congress,
providing that where the company borrowed
money from third parties the latter should
have first lien on the road in spite of the
first lien of the government. Then the stock
holders (close corporation aforesaid) organ
lied what they called a "credit mobler,"-a
ssrt of hank, in Which they had deposited
the enormous gains they had made as con-
tractors, and loaned them to the company,
taking in return first mortgage bonds of the
company. These bonds were sold back to
the corporators, who thus got possession of
the governments first lien. What followed
this operation was most natural The COM
pany declared itself bankrupt, and made an
assignment, or was turned over to, the hold
ers of these first mortgage bonds, who now
own the read, having swind!ed the govern
out of its $4,000, 600 bonds loaned the COM
pany, and got possession Of the road, its
lands, equipments, &c, &C., clean steal of
$4,000, 600 and now the government must
not only pay principal and interest of the &c.,
100000 bonds it loaned the company, but
must pay for its transportation over q rail.
road built by its own money Talk about
the great John Law swlndle or the famous
South Sea bubble. They are the veriest tri-
files compared to this magnificent steal.
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