The Republican journal., 1873-01-02
What Is Credit MobiIier :?

What Is Credit MobiIier?
The name and purposes of this associa-
ton, which Is now so prominently before
the country, are not generally understood,
and perhaps a word of explanation will
be proper. The plan and name originated
in France. Credit Mobilier, signifies, as
nearly as anything, capital made active,
the idea lying at its foundation being the
Old maxim that 1.-The nimble six pence is
better than the slow shilling" A Joint
stock company with this name has for
twenty years transacted an immense bust
ness in France, with capital of twelve
millions of dollars. 1t operated in almost
everything; aided public works and in.
dustry; bought and sold public stocks,
built railroads, dug canals, worked mines,
run omnibus lines, and gas companies,
and kept hotels. OF course such COM
pany depends tor its profit upon the sagac-
ity. and skill of its mana"n''s '-!i, ont
nroror employment of the immense CAPT.
tai at their command. The Credit Mobilier
OF Paris was very profitable before the
German war. A kindred institution is
the Credit Foncier, intended to operate in
the same way, but deriving its capital from
the mortgage OF landed property instead
| OF cash subscriptions to stock The plan
by which man pledges his farm or
dwelling for certain amount, and in
vests the money IN some active business.
thus deriving a double income, is plausi
Die but deceptive. Our neighbors over at
STOCKTON, who mortgage1 real estate to
engage in the insurance business, created
a Credit Foncier, and found it deusion
and a snare
| The association of the Credit Mobiiier
with the Union Pacific Railroad came
| about in this way. An attempt had been
made to start Credit Mobiler scheme in
this country, and a charter obtained from
the Pennsylvania Legislature It did not
secure public confidence, and subscrip-
tons to its capital We're lacking While
1t lay thus dormant, the Pacific Railroad
Company. having secured from the GOV
erhiheHt Naiuao'o si'."os ...-~ r--.--~ g.,
was casting about for the practical build
ers Of the road, being debarred from
doing the work themselves Contractors
were shy OF SO large a venture, and the
company had perplexing doubts concern
ing the trouble they might experience
with contractors as to the manner and
time OF performing the work. AT length
the idea was hit upon OF buying the fran
chise OF the Credit Mobilier filling up, as
individuals, the subscriptions to its stock,
and taking the contract to build the road
This was done-that is the owners and
managers of the railroad contracted with
the Credit Mobilier for the work, being
themselves the owners of both corpora
tons. The stock of the Credit Mobilier
was apportioned pro rata among the hold
ers Of the railroad stock, who had the
they did not care to take the whole
amount, and offered it to their friends.
who were in some instances members of
congress. A transaction like this involved
no corruption. Still there might have
been corrupt transfers of this stock, as
there might of other valuable considera-
tons but these were not necessarily so.
The object of the present investigation is
supposed to be the laying open of these
transactions-an object which the sitting
with closed doors is by no means calcu-
lated to facilitate. 1t is we'll known that
the scheme which was thus shrewdly and
reciprocally worked between the two
companies was immensely profitable; but
the amount of criminal practices or bribery
that it involved, if any, can be conjectural
only, until an honest and thorough nvesti-
cation can be had.
Long before any bribery charges had
been publicly made in connection with
these matters, Mr. Charles Francis Adams.
Jr., in one Of his Chapters of Erie" thus
spoke of the way in which the Union
Pacific Road was built
The eastern division (of the Pacific Rairoad)
was built bv an organization known as the
Credit Mobilier. which received for so doing all
the unissued stock, the proceeds OF the bonds |
sod the government bonds, and the earnings
of the road-in fact, all its available assets. Its
profits were reported to have been enormous, |
and they made the fortunes of many. and per- |
haps Of most of those connected with il. Who |
then, constituted the Credit MobilIer? 1t was
but another name for the Pacific Railroad ring. |
The members of it were in Congress; they were |
trustees of the bond.holders, they were direc- |
tors, they were stockholders, they were con-
tractors; in Washington they voted the SUBJ
sides. in New York they received them, upon |
the plains they expended them, and in the |
Credit Mobilier they divided them. Ever shift |
ing characters, they were ubiquitous, now |
engineering a bill, and now bridge, they re-
ceived money into one hand as a corporation, |
and paid into the other as a contractor. As |
stockholders they owned the road, as mort |
gagees they had lien upon it, as directors they |
contracted for its construction, and as members |
of the Credit Mobilier they built it. What is |
the community to pay for il? At the close of |
1910. with $103, 100000 of their capital yet I'M
subscribed, and thus reserved for issue, should |
the earnings of the road at any future period |
make watering practicable; with this amount |
ofsock in reserve, the two companies operated |
2,OS3 miles of road, represented by stock and |
debt to the amount of $240 600 600. Thus the |
last results of Vanderbilts genius had been sur
passed at the very outset OF this enterprise. The
lines from Chicago to New York (watered by |
Vanderbilt) represent now but 100000 to the |
mile, as the result of many years of imitation,
while the line between Omaha and Sacramento |
begins life with the cost Of $4,000 per mile. |
1t would be safe to say that the road cost in |
money considerably less than one-half this sum. |
The difference is the price paid for every vicious
element of railroad construction and manage |
ment costly construction, entailing future |
taxation on trade; tens of millions of fictitious |
capital, road built on the sale of its bonds, and |
outlay reckleSSlY eXaQQeratad. and the whole