, 1872-12-13

A"~~"" --~----~~ -
public debt
HOW RAILROADS MAY BE BUILT.
4 Washington correspondent OF the Cincin-
natl Commercial has been able to reveal some
OF the mysteries Of the origin and progress OF
the celebrated Credit Mobiler with the aid of
papers in a chancery suit, which was brought in
District Of Wyoming. The story has an addi-
tional interest at this time, the Congressional
Investigation into the alleged bribery cases con-
corning this notable corporation is just begin
ming. The suit was brought in 1870, by one
james ". Davis, to recover money claimed to be
due him for work done on the Union Pacific
Railroad, in which the defendants we're Oliver
Ames, John Duff, ]. Ii. s. Williams md Benjamin
E. Bates, Of Boston; Sydney Dillon, Cornelius
8. Bushnell, and Thomas c. Durant Of New
York, and Henry S. II M'Comb, Of Delaware, all Di-
1ectors Of the Union Pacific Railroad. Inmaking
out his case, Mr. Davis found it necessary to ex-
pose what he called tho "cunningly conceived
and unscrupulously ly-executed devices" by which
these Directors, Trustees, and agents appropri-
ated the property Of the Union Pacific Railroad
to their own use. Tho process, as Davis de-
scribes it, was in substance as follows:
On the 18th day OF October, 1857, about 450
miles Of the road had been completed out Of
total Of $40 miles. At that date, Oliver Ames,
the President OF the Union Pacific, made con-
tract for the Company with his brother, Oakes
~, 1n%4 k~ ~
the whole line OF the road, assuming such con-
trncts as the Company had already made. Oakes
Ames Was to receive pay at rates varying from
$4,000 to $4,000 per mile, as the work WAS &C.
cepted by the United States or, in lieu Of money,
first mortgage bonds Of the road ut 80 cents, Gov
eminent bonds and other securities. But, accord
ing to Mr. Davis, Oakes Ames, before he obtained
this contract, had given bond to Oliver Ame5,
Durant, M'Comb, and the others who have been
named, by which he had bound himself to trans
fer his contract with the Union Pacific to these
gentlemen in their individual capacity. The
contract with Oakes Ames WAS, consequently,
nothing more than vehicle through which
Oliver Ames, Du1ant, and the rest, as Directors,
let the building OF the road to themselves, and
| fixed their OWL prices. Mr. Davis further
charged that this contract was dated back to
| April 16, go that these gentlemen also enjoyed
the large difference between the actual cost Of
SO much OF the road as had been already con-
! structed and the contract price which they
had f1ed,-a difference which Davis says
amounted to 100000. For the purpose
of further concealment and additional facil-
I tiles, the bill charges that another
contract was made which was called "Tripli-
cate Agreement" The parties to this contract
we're Oakes Ames, party Of the first part; Oliver
Ames, MI Comb, Durant, and the others parties OF
the second part and ''The Credit Mobilier Of
America" a corporation organized under q
charter from the State Of Pennsylvania, the
party Of the third part. By this contract, the
parties OF the second part assumed to advance
the money and do the work necessary to fulfil
the contract which Oakes Ames had with the
Union Pacific, and, after reimbursing thom-
selves, to divide the residue among the stock-
holders OF the Credit Mobiier, upon certain
conditions. Those conditions were, that the
stockholders in the Credit Mobilier should also
be stockholders In the Union Pacific, and should
give the parties OF the second part
(O1iyer Amos, M'Comb, Durant, and the
others,) tho power to vote on si1-tenths
Of all the Union Pacific stock which they might
have or receive as dividends in tho Credit Mobi-
1ier. This arrangement placed the entire con-
troll in the hands Of the seven gentlemen who
hare been named. Mr. Davis then says that
the railroad charged against these gentlemen
$4,000 mile IS the actual cost OF construc~
tion, and paid them at the rate Of $50, 600 PEI
mile in Government and first mortgage bonds,
table of Credit Mobi1ior dividends shows TINT
Mr. Durant made 81, ,06o, ,865, Oliver Ames s377,-
500, oakos Ames s366,562, and so On, the aggre-
gate dividends amounting to $50 per cent In
receipting for their dividends, the stock.
holders in the Credit Mobi1ier expressly
agreed to hold Durant, Ames, and
their associates free from all liability
personal or otherwise. There WAS also stipu.
lation that tho stockholders, having received
their dividends, would pay back, pro rata, any
sum that might be- required to finish the road
and pay for the work. When this emergency
arose, however, they refused to comply with thu
stipulation, and hence this suit brought by Mr.
Davis, and similar suits brought by othert
, against the Credit Mobilier, to recover pay fo1
( | work done on the road. The Davis suit VA
J compromised and withdrawn.
. The conclusion drawn by Mr. Davis in his bill
, from those facts VAS. TINT tha gentlemen namet