The Portland daily press., 1873-02-22
Report Of the Wilson Committee.
THE CENTRAL PACIFIC CREDIT MoBILIER FRAU

| The following abstract of the report of the
Wilson Committee was received so late yester-
| day morning that we were unable to present it,:
The report enters deliberately into the history
| of the Union Pacific Railroad, and shows that
| the act incorporating it was not passed to fur
| Their the personal interests of the corporators,
nor for the advancement of commercial inter-
| ests, nor for the convenience OF the great pub
| lie aloue but in addition to these the interests,
present and future. of the government as such
were to be subseryed. The committee also give
history of the Credit Mobilier in connection
with the Union Pacific railroad, based on tes-
| timony already made public.
Speaking of the Eoxie contract the commit
| tee say the interests of the Union Pacific Com
pany were utterly dsregarded. The committee
do not doubt that it was deliberately DONE
| They draw the conclusion from the facts ascer-
tanned that the cost of the road was in round
numbers $4,000, 900, which was wholly reim-
| bursed from the proceeds of government bonds
| and first mortgage bonds, and that from the
stock, the income bonds and land grant bonds,
| the builders received in cash value at least
| S23,000,000 as profit, being about 48 per cent.
on the entire cost Of the road. The committee
show different amounts received by various par
ties, and say
1 "If it was impossible to build the road ac-
cording to the act of Congress, they had no
right to build it. They could easily have re-
ported their difficulty to Congress, which has
dealt generously with them from the beginning
1t may be that all existing stockholders shared
these profits, so that what was in form a con-
tract was in substance a dividend; but nothing
is better settled than that q railroad CORPORA
ton has no right, either as or against its cred
itors OF minority of the stockholders, to dis
tribute any portion of its capital as dividends,
and that court of equity will interfere to
prevent it. There can be still less justifica-
ton for using the proceeds Of money borrowed,
either OF the government or on first mortgage
bonds tor the purpose of adividend. The COM
mittee do not conceive it to be their duty to ex-
press OF to form an opinion as to the degree of
moral blame that attaches to persons engaged
In these transactions except SO far as may right
fully affect the exercise of the discretion of
Congress in dealing with their franchise. Con-
sress cannot accept the general intentions of
persons combined as an excuse for deliberate
violation OF its laws. if it expects them to be
obeyed or respected hereafter"
but we do not" they say, "like to close our
narrative OF this case and pronounce Judgment
upon these illegal transactions without OBJ
serving that there are many persons connected
with the Credit Moblier who held their stock
openly and without coucealment from the be-
glnnlng and who seem to have had no share
IN Its management and no knowledge of wrong
ful use OF its stock or the funds of the railroad
Some of these persons are of eminent charac-
ter, holding high public positions, and it is
difficult to believe that they Were doing wrong,
or saw the effect of the proceedings in the light
in which the committee now state it"
After further remarks the committee say
that the division of the substance of the cor
poration has so weakened it as to make its con-
troll by capitalists and powerful railroad cor
| porations easy 1t is now helpless and depend
ent. Many of the incidents in these transac
l tons have not been investigated as thoroughly
| as was desired for want of time. 1t is proper
| to state that nothing has been disclosed in the
| evidence indicating any Interpretations of
| moneys of the company by the present man
| agement of the railroad. The committee think
| the facts shown would furnish grounds for
| judgment of forfeiture of all the franchises of
! the corporation, but it would be harsh and I'M
just to forfeit the rights of the present stock
holders, a large majority of whom have bought
| the stock in good faith in the market, for the
wrong doing of their predecessors.
| The report concludes as follows: We have
the case of q corporation which is trus-
tee in the management, of persons who have
divided the trust funds among themselves, who
have promised to pay for its capital stock in
cash, which promise they have not kept, and
on which they are still liable and which the
corporation neglects to enforce, and who have
made contracts with themselves in reference to
the trust fund.- the profits on which contracts
they ought in equity to account for to the trust
fund. Upon the most simple principle of equity
a suit can be maintained by any cest,ris que
trust to compel the collection of these assets,
and that the trustee shall hold them hereafter
as part of the trust property. 1t will be no
answer to this statement to say that the ulti-
| mate security of the United States has not
been impaired. This is far from being true,
| and in fact if it were trne the United States
| have right to have the security which they
stipulated for, lift be more than is necessary
| If we are wrong in this opinion there is no
remedy except by resorting to the extreme
power of repeating the act. Those questions are
| judicial questions. AS we have said, we pro-
| pose a simple method of raising and determin-
ing them in one suit, of securing, SO far as we
can, the administration of the fund according
to the law in the future. The committee then
findthat there are persons connected with the
Credit Mobilier- holding such bonds as are con-
templated by the order of the House. They
are not holders of the same in good faith and
for values, but did procure the same Illegally.
We do not recommend that the United States
refuse to pay these bonds or their interest with
out first ascertaining the facts. We think that
| so many persons hold the first mortgage bonds
| of the Union Pacific Railroad in good faith and
tor value that the said mortgage ought not
| to be set aside. We report the facts as to the
| character of the organization known as the
Credit Mobilier. ire
The committee then refer to the testimony
| taken before the Poland Committee, and sub
| init the accompanying BILL and recommend its
passage: e"r
SECT 1. The Attorney General Shall cause
a suit in equity to be instituted in the name of
| the United States against the Union Pacific
Railroad Company, and against all persons who
may in their own names or through any agents
have subscribed for or received capital stock in
said road, which stock has not been paid for in
| full in money, or who may have received, as
| dividends or otherwise, portions of the capital
stock of said road or proceeds, or avais thereof,
| or other property of said road unlawfully ard
contrary to equity, or who may have received
| as profits or proceeds of the contracts for the
| construction OF equipment of said road or other
cont act Herewith, money or other property
which ought in equity, to belong to such rail-
road corporation. or who may, under ,pretence
| of having complied with the acts to which this
| is an addition, have wrongfuly and unlawfully
| received from the United States bonds, MONEYS
or lands which ought, in equity, to be account
| ed for and paid to said railroad company or to
1 the United States, and to compel payment for
said stock and the collection and payment of
| moneys and restoration of such property, or its
| value, either to said railroad corporation or to
| the United States, which ever shall, in equity.
| be entitled thereto.
SECT 2. Said suit may be brought in cir
cult court in any circuit, and all Of said parties
may be made defendants in one suit and de-
| crees may be entered and enforced against any
one or more parties defendant, without await
ing the final determination of case against the
other parties. The court where said case is
| pending may make such an order and decree
and issue such process as it shall deem neces-
sary to bring in new parties or the representa-
tives IF the parties deceased, or to carry into
effect the purposes of this act. On filing the
bill. writs of capias and attachment may be is
sued by said court against any parties defend
ant. which wrts shall run into any district and
shall be served as other like process by the
marshal of such district, on which property,
real or personal, may be attached to abide the
event of the suit as like property may be at
tached on writ issuing from the circuit court
IN such district.
SECT 8. The books, records, correspondence
I.G al other documents of the Union Pacific
ton Sw ~ shall at all times be open to inspec-
person ny az sne Secretary of the Treasury, such
SECT ." !. ne EN- may delegate for such purpose
Sdng for proceedings in banlruntcS S' sa mot
'e MerT 70 apply to such corporation
by said ma u1v h shall hereafter be made
thereof, and no new stock actual net earnings
mortgages or pledges made on the pe issued or
future earnings OF the company withoIpt 1y OF