The Wheeling daily register. [volume] (Wheeling, W. Va.) 1864-1878, 1873-02-03
From the New yatk world
What is the Credit Mobilier 2

What is the Credit Mobilier
Ss,sss .ssy.. ~. Y,
COngressmen Invefved fn III
Transactions.
The story of the Credit Mobilier il
somewhat complicated, but BY attend
ing only to the salient points sui.
ficiently ineligible comprehension O
the great scandal which has involved
90 many prominent men may be OBJ,
tanned. The fact are about these: g.
By Act of Congress approved July l.
1862, a number Of persons were incor
porated into q company known az
1.-THE Union Pacific Railroad Compa.
ny" for the purpose OF constructing a
railroad and accompanying telegraph
line from point on the one hun
dredth meridian Of longitude west from
Greenwich, between the south margin
Of the valley OF the Republican river
and the north margin OF the valley OF
the Platte river, in the Territory as il
was then1 of Nebraska" this point
being afterwards settled upon as 0ma.
ha-to the western boundary OF Nevs-
da. To assist this enterprise the act
gave the company FIVE alternate Sec
tons of the public lands per mile on
either side the road, and lent the COM
pany six per cent. United States bonds
payable in thirty wears after date, to
the amount OF sic, 900 per mile for
track laid on plain land or prairie,
$32, 900 per mile for rollingn and $4S,-
600 per mile for mountainous land.
These bonds were to be delivered the
company as sections of forty miles
of the line were put in operation and
approved as properly constructed by
Government Inspectors, and "the issue
OF said bonds and delivery to the Com
pany shall ipso facto constitute a first
mortgage on the whole line Of the rail.
road and telegraph, together with the
rolling stock, fixtures and property OF
every kind and description" Further
more, "all compensation for services
rendered for the Government shall be
applied to the payment of said bonds
and interest until the whole amount is
fully paid" Under these provisions
the Union Pacific had, Of course, no
money from the Government to begin
operations with. The lands could not
be sold until a railroad made them &C
cessible; the United States bonds could
not issue until the road was at least in
part in practical operation and, finally,
it was difficult, if not impossible, to
procure popular subscri ptions to the
compauy's stock as long as the Govern.
ment had first mortgage on the COM
pany's property. Under these circum-
stances an effort was soon made to pro.
cure further favors from Congress-, and
on the ID of July. 1864, another act
was approved by which the Government
gave up its fret mortgage on the road
and accepted a second mortgage as secu-
rity for the bonds loaned the Company.
and consented that only hall the com
pensation for services rendered the Gov
eminent. blythe company should be re-
ouired to be applied to the payment OF
the bonds loaned. The company was
therefore enabled to sell its own bonds
by giving a first mortgage as security
to the purchaser, and anticipated being
able to pocket halt the compensation
for services rendered, though out OF this
latter matter grew controversy, OF
which hereafter. The act OF July z
1864, not only allowing the company
United States bonds, but permitting 1t
10 issue its own first mortgage bonds to
an equal amount, the question OF con-
structing the road began to attract at
teptiou. Some Of the shrewder stock.
holders determined to get the contracts
for building the road themselves. and
by virtue of their interest in the COM
pauy, to make those contraots as favor
able TO themselves as possible. The
idea may be better understood, perhaps,
by surprising that five men, A, b, T. u
and E, are 10 partnership, and the part
nership business needs store. A, b
and C. enter into an outside partnership
To build the store in order thereby to
reap the profits Of the transaction, and
then by virtue OF their position and In
fluence in the original partnership lei
the contract in the name OF that part
uersbip to the outside partnership they
have formed. Thomas c. Durant, orig
ipally Vice President of the Union "a
c,fic, seems to have been at the head o.
this move. There was in Pennsylvania
sort of speculatipgcompan incorporated
by the l. legislature OF the State under the
name of "The Pennsylvania Fisca
Agency" and this affair, which had
charter allowing it to do almost any
thing. Mr.. Duraut and his ASSOCIATED
bought, changing the title to The
Credit Mobilier OF America. OCTOBER
7 1854, this transformation took place
and forthwith Mr.. Durant and asso'
c;ates az stockholders and officers o
the Union Pacific Railroad Company
contracted with themselves az tn
Credit Mobilier. to build the Unior
Pacific rosd. AZ the Union Pacific
was receiving miIlions from the Govern
ment in the shape OF United States hond'
and other millions from the sale of it
own first mortgage bonds and from the
nroceeds of stock sold, money to pa.
The Credit Mobilier for its labors wa
abundant. and Mr.. Dursnt and triend'
Iadled it out from the Union Pacih'
treasury to the Credit Mobilier treas
ury, 1. e, into their own pockets, II
great quantities and with much zesl
Everything coming into the unlo'
Pacific above the bare cost ofconstr4c
ton being paid over to the Credit MO
| bilier, the dividends o. that compsn!
were miraculously large. In the isl
Ioes 40 .fter the Credit Mobile