New Orleans Republican. [volume] (New Orleans, La) 1867-1878, 1876-08-25
THE CREDIT mOBlL1ER FRAUDS.
How the Self Styled Reformer Wa!
Mixed Up With Them.


days ago. In the course of it he referred
in the following terms to Mr.. Tilden's con
nectiOn with the Credit Mobilier fraude, OF
which he was personally made cognizan
by his service upon the congressional com
mittee which investigated them. Mr.. Shell
labarger said;
With the disclosure of this aspect of Mr.
Tilden happen to be personally connected
and know much about 1t. have not time
to state in any detail the complex affairs o,
the stupendOus frauds now cOne to be iu
famous under the name of "Credit Mo
bilier." l will state the substance of that
part which Mr.. Tilden is proved to have, al
least in part, advised and devised. By the
two acts of Congress of July |, 1862, and
July 2, 1864 (see 66 Globe, Appendix 250),
the Union Pacific railroad. on completing
its road as required by said act, was to re
ceive an enormous grant Of land-was to
be allowed to issue as many of its own
bonds as it was entitled to get bonds
from thu United States, which were
to be the first, and the bonds got of
the United States a subordinate lien
on the road-was to get from the United
States, on completion of the road, said
United States bonds of designated amounts
per mile, these to be secured To the United
States by said second mortgage-the stock
of the road to be $l00,00O,OO to be SUBJ
scribed in books kept open at designated
places, till the whole was subscribed-snd
as to the payment of the stock, the act
express words: "And money only shall be
receivable for any such assessment or ss
equivalent for any portion of the capital
stuck hereinbefore authorized" (See 66
Globe, appendix, 25O.) Now, q scheme was
devised to avoid and defy the requirements
of this law in every material particular,
and vet get from the United States every
acre of land and dollar of bonds allowed
BY the act, but allowed only on the faith.
full compliance with the act; and the fol-
lowing are specimen acts done under that
scheme. After said amendatOry act of 1864
was passed and after $2,lS0.000 had
been subscribed, and $2lS, 5000 was paid in,
aud the Union Pacific Railroad Company
was organized, it was decided to buy an
old charter made by the Legislature of
Pennsy lvania-to call it Credit MObilier, to
remove it to New York, to Csc it as the
cover under which to construct this road as
q construction company, and thus shield
the perpetrators of the fraud from personal
liability. This Credit Mobilier purchased
the S2,lS00,00 stock above named, paid
thereon the $2l8,O00 80 paid on it, Cancelled
tho said stock, reissued it, and issued with
out ever opening books anywhere its future
stock to the stockholders of the Credit
Company. Thus the stockholders
of the Credit Mobilier and of the Union
Pacific Railroad Company were made the
same men. Williams, treasurer of the road
(see Wilson's report, 1851, swears thus:
The Credit Mobilier and the Union Pacific
Railroad Company were the same identical
parties. There was not $50, 900
outside interest in it."
When they had. thus made the Credit
Mobilier" Company and the Union Pacific
Company to be composed of the same men,
then theee men began to make with them
selves contracts for building this road,
orders for issuing stock, and land grant
bonds, first mortgage bonds, income bonds.
and tor making dividends, A specimen OF
the contract they made with themselves is
''the Oakes Ames contract" of August,
1867, described in Wilson's report, ninth
and tenth pages. When it was made by
the railroad company with Ames, there
was an understanding that it was made for
the benefit of the shareholders of the Cred
it Mobilier, and it, in pursuance of that un-
was assigned by Ames to
seven trustees for the benefit Of said Credit
Mobilier stockholders: and this before
q particle of work was done under it.
Here, then, We have the spectacle of a
company OF men meeting and entering into
q contract with themselves, and calling
themselves Credit Mobilier" of the one
part, and Union Pacific Railroad" Compa-
nv Of the other part! This, itself, looks
like extraordinary business to be going on
under these acts of Congress. But when
you see what kind of contracts they make
with themselves, the character of the
transaction begins to appear. They let to
themselves (nominally to Ames) 657 miles,
extending west from the 1902 meridian, for
&i7, ,s25, 900, being an average of $7l ,S5l
per mile. When they thus let it to them
selves, l3S miles thereof had been actually
completed by the United States, and the
government bonds issued therefor, as being
wholly complete. And its cost Of
completion was $27 900 per mile, whereas
they relet it to themselves. after compile
ton, at $4,000 per mile. In thus letting
the 657 miles to themselves, they put the
price up to about three times what it was
worth in cash, and their engineer, Day, re-
signed because he refused to obey their
orders to report fictitious fills and embank-
ments, and put up his estimates as cover
for the fraudulent prices at which they let
the work to themselves. Almost immedi-
ately on making this contract with them
selves, to wit, December 12, 1867, they de-
clared a dividend of profits out of the con-
tract of 1924. 900, and their books show
the whole profit on this Oakes Ames con-
tract alone was $29, ,S54,l ,l4l SO (see Wilson q
report, page l3). One great motive for
putting up the price of the work of making g
the road was to defraud the government
out of the benefits of the entire stock of the
road. They decided to pay for the stock in
road work. They could not get for the
stock, when issued to them, over thirty
81, 81 %hox 0af hn m
themselves at about three times it's cash
value, and then paid for such stock as their
contracts required them to take in this road
work dollar for dollar, such work so paid
for stock having been thus put up to three
times it's cash value. This Ames contract
is given as a specimen of the whole scheme.
And now what has been the resulti
First-They have issued to themselves
$37, ,762. 300 of the stock of the road, on
which they have not paid one dollar in
money except that $3.50, 900 paid back to the
first subscribers named above, and thereby
the act requiring money only to be paid was
wholly avoided.
Second-They have received from the
States given them, $27, las, ,163 3S, and for
the first mortgage bonds, secured on prop.
erty given BY the United States (net)
$23, 3,7l8,OO8 II, making the aggregate net
gift from the United States $5O, 1868, ,l72 05,
and the entira cost of the road to the con-
tractors was $5O. .729 ,95S 81, thus leaving to
the contractors, out of what they virtually
got from the government, above the whole
cost of the road, balance of $l42,2l3 IL.
(See Wilson's report, II But besides
these receipts of over $5O,OOO,O 900, arising
from the United States bonds and the first
mortgage bonds, these men received
(besides the land) the proceeds of stock
lat par). $36, ,762, 300; land grant bonds
SIC, 400, 900; income bonds, 1880. 900. AL
of this they have sold and divided az
profits" among them, and have left the
railroad company probably insolvent, and
Indebted to the United States, when itf
bonds shall mature, in sum about equa
to 5000, 100000.
Certainly you will agree with all the