Litchfield enquirer., 1880-08-19
The Credit Mobilier.

the Pacific railroads. These. his cons. in the
aro1ozv they have sent to the press for publ.
czrisa. have very skilfully sci FORTH They
have shown hsw necessary to the public inter-
ct the building of the Pacific railroads was
considered sy far-seeing men like President
Lincoln, vet how impossible il seemed to per-
susd< men Of capital to invest their money in
the enterprise For years after the extraordi-
nary aid voted il by congress. the scheme
ssoud sill O. staggered along feebly waiting
tke impulse Of some man of sufficient courage,
capital, and enterprise, TO push it forward. Ii
the government Was. Is now seems, too gener-
ou8 the business men of that day did not
thirk 50: and, say the sons of Mr.. Ames, the
sutg-zrise might have waited indefinitely but
for the public spirited efforts by which their
father was abe to bring il to successful con-
elussoa- Il was because his plan was so sue
eszszfuI that the hue and cry was raised against
the man who made # q success.
In order that the matter may be fully un-
d-zSscod il Is perhaDs necessary to recapitu-
Iate some Of tie facts 50 familiar to every in
trITiseuR American six or seven years ago.
The Cniua Psci6c Railroad Company had
been granted tine most liberal government aid.
Not oaIy were there liberal land grants but
HtseraI aid in money was voted, to be paid az
the work progressed Finally, as security for
these heavy cash advances, the government
sgrueSi TO take second mortgage and wait
generziio1 even. before payment of interest
Was enacted This gave the company the op-
pEtuniiy Of issuing FIRST mortgage bonds TAX
Ing precedence. zs . security, of the govern
uens Eazn- II i difficult to believe, with
c.uuszsssi Pacific railroad line before us, thai
there c0ald have been any difficulty in obtain
Ing ia construction on such terms. But it
proved practically impossible Capitalists re-
fused 10 buy the cOmpany's first mortgage
bouds except al q heavy discount. The Credit
NshiIiex, q Pennsylvania corporation, was
t4l1xht UP and made = wheel within wheel
Io ezAbBe the managers of the road TO become
the contractors fOr baiIding it,
Even thea. till Ozkes Ames took hold of
is Affairs. little could be accomplished. The
very magnitude Of the scheme made it i'm
practicable OaINs Ames made the railroad
q s<sccesa, and the Credit MObilier an immense
success So far ID to his credit. How he
ma1e the Crwdit Mobilier success, and how
he made il stock q terrible temptation to his
fellsW members Of Congress, is a very differ
ent matter His large private means, unim-
pe~ch1bIe business integrity, and his repute as
. man Of shrswdness and energy, enabled him
10 espe successfully with the magnitude of
the undertaking. Bonds were taken by the
millioa. nj gOcd prices. Shrewd capitalists
were convinced that there was money in the
Credit MobiIier, and the building of the road
was pushed with unprecedented rapidity.
The pxudts Of the Credit MobiIier came
about in this wise: The Union Pacific r. r.
Co, co1rrxcted with Oakes Ames to build 667
miles Of their road fog al, 600, OOO This con-
tract Wa taken of his hands by the Credit
Aobjlier composed, in point of fact, of the
officers and managers of the company itself.
The price contracted was very high-so high
that the Credit MobiIier, with a capital stock
of less than four millions, cleared some twelve
millions Of their contract. In other words,
the government and the first mortgage bond
holders gave the company enough money to
build the road, and leave some twelve millions
over which the managers Of the company in
the Credit MObilier ring put into their own
pockets When We consider the fact that the
government, by accepting second mortgage,
ran the chief risk of the undertaking, and
that, whatever might be the fate of the Union
Pacific bonds Of any description, the Credit
MObiiier ring was securing 9 certain profit of
three hundred per cent on their capital, it be-
comes evident how gross was the fraud prac-
tied not only on the government, but on the
Company itself by its own officers OF the
dishonesty of this proceeding the Poland in
yestigating committee speak in the following
plain terms:
Congress had chartered the Union Pacific
rOad, given to it liberal grant of lands. and
promised liberal loan of Government bonds.
IO lie delivered as fast as sections of the road
were completed As these at,ne might not
be sufficient TO complete the road. Congress
authorized the company to issue their own
bonds for the deficit, and secure them by
mortgage upon the road, which should he
lien prior 10 that of the Government Con.
greSs never intended that the owners of the
road should execute a mortgage on the road
prior to that of the Government, to raise mon
ey to put into their own pockets, but only to
build the road.
The men who controlled the Union Pacific
seem to have adopted as the basis of their &C.
h. aw2.N axns a.
gage prior 70 that OF the Government to the
full extent, whether the money was needed for
the construction Of tie road or net
IL was clear enough they could not do this
directly and in terms, and therefore they re-
sorted TO the device of contracting with them.
selves TO build the road, and fix aprice high
enough 20 require the issue of bonds to the
full extent, and then divide the bonds or the
proceeds OF them under the name of profits ON
the contract. All those acting in the matter
serm to have been fully aware of this and
that this was to be the effect of the transac
tiOn. The sudden rise of value of Credit
MObilier stock was the result of the adoption
of this scheme. ANY undue and unreasonable
profits thus made by themselves were as much
fraud upon the Government as if they had
sold their bonds and divided the money with
out going through the form of denomlnating
them profits On building the road.
But Mr.. Ames did worse than cheat the
government, he took the shrewdest measures
for preventing congress from Interfering with
the fraud he was practicing on the nation.
BY the time Congress met in December 1867,
he had got the construction grab in beautiful
working order. The Poland committee find
that, at that time, Credit Mobiler stock was
worth double its par value. Yet Mr.. Ames
not only disposed of considerable amounts of
stock at par to prominent congressman, be
even allowed them to hold it without pay
ment, and to wait till the enormous dividends
coming in, paid for the stock and entitled the
helder to cash besides. Moreover, one of the
greediest Of all the statesmen of the period for
Credit Mebilier stock was James Brooks, a
government director Of the Union Pacific