The Charleston daily news. [volume] (Charleston, S.C.) 1865-1873, 1873-02-04

mile for meu famous land. These bonds were
to be delivered TO the company as sectlons or
forty miles Of the line were put In operation
and approved as properly constructed 0y gov.
ernment inspectors. and "the issue OF salo
bonds and delivery 10 the company shall ipso
facto constitute first mortgage on The whole
line of the railroad and telegraph, together
with the rolling stock, fixtures aud property
of every kind and description" Furthermore,
.sall compensation for services rendered ior
the government shall be applied to the pay
ment of said bonds and interest until the
whole amount is fully paid" Under these
PROVISIONS the Union Pacific had, OF course,
;noney,from the government to begin ope-
tons With. The lands could not be cold
III ! q railroad made them accesslole; Inc
Um Estates bonds could not Issue until the
road AZ at least in part IN practical opera
lion: AID, hDally, 1t was difficult, II not I'M
possible, 10 procure popular subscriptions TO
The compan's stock, as long as lhe govern
ment had first mortgage on Inc CON-
pan,'s property. Under these circumstances
an effort was soon made TO procure
further favors from Congress, and On the
81 oil July, 1864, another act was approved oy
which the government gave upit hrsl mort
gage on the road ana accepted seco0d
mortgage as security for the bonds loaned the
company, and consented that only nall tne
compensation for services rendered the gov.
to be applied to the payment oil the bonds
loaned. The company was, therefore, enabled
to sell It's own bOnds by giving first mort
gage as security to the purchaser, aud antici-
pated being aole TO pocket half the compensa-
lion for services rendered. though out OF this
latter matter grew controversy, OF Whioh
hereafter. The act of July 2, 1864, not only
allowing the company Unlted States oonns,
but permitting 1t to Issue lis own first mort
! ~
OF constructing the road began to attract at
tentiop, Some OF the shrewder stockholders
determined 10 get the contracts Tor oullding
the road themselves, and, by virtue OF lhelr
Interest In the company, 10 make tnose con-
tracts as favorable to themselves as possible.
rhe Idea may be better understood, perhaps,
by supposing that five men, A, B, Q, ana y,
are In partnership, and the partnership needs
n store, A, B and 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 innu-
ence In the original partnership let the con-
tract In the name oil that partnership 10 tne
G, Duranr, original vice-president OF the union
Pacific, seems TO have been at lhe head OF thls
move. There was In Pennsylvania sort oil
specua!iDg company Incorporated by Inc Leg
islaturs OF that state under the name OF the
..Pennsyvania Fiscal Agency" and This affair,
which had o charter allowing 1t TO 90 most
anything Mr. DuranT l, ana .ns ms cs Sssoe'a,es Me
bllier Of America" October Z, 1864, this
Transformation took place and forthwith Mr.
Dnrapt and his associates, as stocknolders
and officers OF the Union Pacific Railroad
Company, contracted with themselves as Inc
Credit Mobilier, 10 build the Union Pa
cIHc Road. As the Union Pacific was
receiving millions from the government
In Ihe shape of United States bonds,
and other millions from the sale of It's own
first mortgage bonds aud from the pro.
ceeds of sOck sold, money 10 pay the Credit
Mebilier for It's labors was abundant, and Mr.
Dnrant and friends ladled II out from Inc
Union Pacific treasury 10 the Credit Mooiller
treasury; |. e., into their own pockels, In great
quantities and with much zeal. Everything
Coming ,n,o The Union Pacific above the bare
cost OF construction being paid over to the
Credit Mobllier, the dividends Of that com,
papy were mlraculously large. In the fall
of 1865. or after the Credit Mobiller had been
ln business about year, Mr. Oakes Ames ap,
pears as Credit Mobllier stockaolder, and
Immediately began war upon @r. DnIans' Our m
coming the presiding genius OF the grab MIN.
self. DuranL resisted, and fierce conflict
between the Ames faction and the Durant
faction ensued. In July, 1867, compromise
was arrived at, and III the september follow
inc carried into effect. 0akes Ames was to
manage the Credit Mobilier business IN the
East, and Mr.. Durant was TO 60 OUT west anu
watch The Interests of the speculation on the
line of The road. Up to this time the Credit
MobIiier had declaI ed dividends aggregating
27O per cent, and had earned an additional
dividend of about 100 per cent, equal ln money
to about 81, 900, 600. Nj. Oakes Ames having
TINS settled himself in the saddle lost no time
ln gushing Mr.. DuranL, and finally reduced That
gentleman to the position OF mere uDlnnnen-
iial stockhoder. Then, this being, as Will be
borne In mind, about me eno Oh ine year
1867, or near the time OF the annual assem-
bling of Congress, Mr.. Ames went to Work to
place Credit Mobllier stock where 1t would, In
his language. "do good" l. e., procure certain
legislaIlon which was still deemed desirable
on behalf OF the Union Pacific, the OBJECT be-
lag to give that company more money, 10 or
der that the Credit Mobiller might SUCK more
out of 1t. By The act OF July =, 1874, as mas
been mentioned, IL was provided that only
half of the compensation for services rendered
the United States by the Union Pacific should
be applied to the payment of the bonds loaned
lhe road by the government. The act saying
nothing about the interest on these bonds, the
secretary of the treasury Insisted lhat tne
other halt OF the compenSalttn snoon 20
to pay that, whereas iTr ,,, Ine on.1n Mn
Pacific, |. e., really for the Credit MO,
hitler. IL was contended that one.half snonld
To tn nav the bonds and the other half should
he maid over 10 the Union Pacific in money.
To secure an act putting this beyond ques-
iiop, 80 that the secretary OF the treasury
should be compelled to pay, was therefore O
prIme object with Mr.. OIkes Ames, and the
process of securing the requisite Congression,,
al strength TO pass such an act was entered
on. This process was to sell Credit Moblller
stock, then enormously valuable, 10 promi'
nent representatives and senators at par, al
lowing Them The dividends due on The stock
"a set.off on the purchase money. Thus
twenty shares were sold Ylce.President Col.
fax at par and interest; but as dividend OF
eighty per cent. In Unon Pacific bonds was
then due on those shares, Mr.. Colfax was
onlv called on to pay the difference between
lbis dividend and the par of the stock. With
interest added. The difference was 1854 ~,
and by paying this Mr.. Colfax became the
owner OF twenty shares. Oakes Ames
therefore gave him the difference between
1884 70 and $4,000 aud accrued interest, but as
the stock was worth far more than par he really
gave him much more. Thus the STOCK was
really worth at the lowest figure 26O, or $500
for the twenty shares, and the net value OF the
per cent. dividend, which was In bonds
worth 81, being $l552, the twenty shares were
really worth In the market $6752 at the lowest
estimate, and yet Mr.. Colfax got all TINS lor
1884 Y, or really paid not more than per
cent for his stock. In like manner Mr.
Dawes bought ten shares at par, paying $IuuU