Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1873-02-10
ALEyA. GAZETTE / VIRGINIA ADVERTISER.
The Story of the Credit Mobilier.

A correspondent suggests that many persons
would understand the drift ofthe Credit Mobil-
ier investigation much better if they could only
get clear idea, to start with, of the origin OF
the credit mobilier, and of the manner in which
it became connected with the Union Pacific
railroad. 1t is perfectly true that an intelligent
notion of this first step in the affair is neces-
sary to full appreciation of all subsequent
ones; and it is also true, fortunately, that
though the whole story would be very long
Que, the facts necessary for the purpose just al
luded to can be put in tolerably brief compass
Something like twenty three years ago our
legislature at Harrisburg granted charter to
certain ''fiscal agency" in which the most
prominent figure was Mr.. Duff Green. The
heirs of MIR. Duff Green sold this charter, after
his death, for small sum to Mr.. 6. +. Tram
and others, by whom its name was changed,
under legislative act, to the Credit Mobilier. .
Under this and it's former title various acts
regarding it we're passed but it is enough to
say that the company was financial 10 char
acter. and, as need hardly be added, it was
not originally formed for the object to which
Mr.. Cakes Ames afterward utilized it. For,
it was more than dozen years later that dur
ing the winter of lS62'63, Congress passed the
first trarscontinental railroad act, incorporating
thereby the Union Pacific railroad company.
authorizing it to hold hundred millions capt.
tai, and granting the right of way, heavy ad-
ditional land grants in alternate sections along
the proposed road, and, finally, large govern
ment loan in six per CT bonds for the construc-
tiun OF the road, the amount per mile varying
in different sections according to the estimated
difficulties of construction. Liberal and almost
lavish as these provision we're, they proved to
be Inadequate to achieve the object, probably
on account of the unt ertainties of the war then
prevailing, which made capital timorous re-
garding investment In new enterprise OF such
magnitude, in times so perlous. 1t was found,
as Mr.. Cakes Aames has testified, practically
impossible to procure the enormous amount OF
paid up capital which the act of incorporation
required Congress, therefore, in the winter of
1854 'G5 let down the bars, and while it re-
laxed the striugency of its own safeguards on
the one hand, it offered much higher induce
ments to capitalists on the other. 1t doubled,
for example, the quantity of land grants, and
made its own claim for the reimbursement of
It's loan only second mortgage, thus allowing
a first mortgage to be inserted prior to its own,
on which contractors for the construction of the
road could rely with more security.
Mr.. Ames, Congressman of large fortune,
accumulated in business, who had become
greatly attracted by this gigantic railroad pro-
pushing it through. For the purpose of secur-
ing the great beuefts, while avoiding the great
risks Of the undertaking, he devised the plan
OF constructing the road at a large profit, under
the name of subordinate company, who
should also have such a controlling influence in
the Union Pacific railroad company as to pay
themselves handsomely out Of the enormous
Congressional grants. The directors of the
latter company were prohibited by law from
being interested in contracts for building the
rad. He accordingly purchased the fran.
chlses of the Credit Moblier (which seemed as
good for his purpose as any existing corpora
ton, having large general powers, and the
Union Pacific company then proceeded by in
direction Through convenient subterfugel to
award TO the Credit Mobiiier the contract for
constructing the road and even transferred to
it the profits on part of the road then already
constructed.
This was the way in which these two enter
prises became connected. How, then, did the
congressional scandal arise? In the first place,
as we already limited, the managements Of the
two companies were, for all practical purposes
one and the same. There were some trifng
individual exceptions, but the leading spirits
and the great stockholders such as Cakes
Amcs, Oliver Ames. McComb, Durant and
Alley, were at different epoohs, found in both
companies, so directing each as to dovetai with
berS getting little inkllDg Of this secret con-
nectou, agita,ed in Congress for adverse legis-
iauon, apparently for the purpose of extortiDg
b'ackmall To counteract this influence, and
TO IKE Congressman disposed to legislate ia
Vorably, an arrangement was made for the sale
u |rcdlt Mobilier stock to Congressman, at
much less than its market value, which stock
:lr. Ames says he placed where he thought
II would do the most good" So matters went
on tlll NlcComb and Ames Quarrelled, when
.ie former filed a bill in equity in the Supreme
NSart OF our State for the recovery ofthe value
OF Two hundred and fifty shares of Credit Mo-
'''ler stock, which NlcComb alleges he had
PAID Tor. and which Mr. Ames, in reply, said
mat be had placed" as already stated
FROM this point start the congressional in
designations, which, as we need not explain,
nave resulted in full exposure of the con.
srsSSmen concerned in the matter. The first
suspicious point in the purchase" Of Credit
MMOoller stock by various congressman from
iT, r. Ames was that it was acquired at less than
haif Its market value, and that dividends on it,
amounting to two or three times the price paid
ny them, came back 10 the form of cash and
'nlon Pacific stock in the course of fifteen
months, while In all cases cash dividend of
SIXTY per cent. was paid within ten or twenty
uayS OF the purchase, accompanied, Mr. Ames
says with his personal assurance that the divi.
uends We're SO large as to require no paying up
III money of the stock. 1t was only long after,
"hen the case came before the courts. that the
members protested their innocence Of suspect
III that there was anything wrong about the
matter or any effort to influence their legisla-
uoo. We may add that the testimony given
before the Wilson committee day or two Since
shows that the clear profits of the Credit Mobil-
Her company were upward of $35 5OOO, 900 for
nulidlng the road No wonder that the stock
was considered lucrative at the time when
congressman took it, and took it, with what
sohie OF them now have the assurance to claim
was sort of childlike innocence, never dream
ing that it was anything more than an everyday