Morning journal and courier. [volume] (New Haven [Conn.]) 1848-1894, 1881-02-25
sollrual a1ro Courier.
Friday Morning, Feb. 25, 1881.
THE CREDIT MOBILIER AGAIN DE-
E0ENnnn

| 1
Friday Morning, Feb. 25, 1881.
THE CREDIT uoBILIER AGAIN DE-
Tended.
A new defender of the Credit Mobilier has
arisen. This is Mr.. Rowland Hazard, a
highly esteemed manufacturer in Rhode
Island, and the son of the distinguished r.
g. Hazard, favorably known by his letters
to J. s. Mill, and other essays in philosophy.
Mr.. Hazard, in paper read before the His
torical Society of Rhode Island this week,
traced the history of the Credit Mobilier in a
manner calculated to show that it was not a
vast swindle and that those connected with
it were not swindlers. His argument is a
| powerful one and deserves general circula-
| ton.
| Mr.. Hazard first calls attention to the ra-
pidity with which the Credit Mobilier con-
structed the Pacific railroad Previous to
September 25, 1865, only eleven miles of
| track had been laid. On October 5, 1866,
the first contract was finished and 247.4 45
| miles of road were complete, and on May
| 10, 1869, the last spike was driven. Noyem-
Der s. 1869, has been fixed by judicial deci-
the continent was legally completed, but the
work was done six months before In about
/, ,14o working days 1854 miles of railroad
had been constructed, an average of over
mile and third per day for the entire work
ing time. This is an achievement unparal-
leled in the history of railroads This state
ment, however, includes the work of the
Central Pacific.
In the next place the great advantage
which the government has derived from the
railroad is pointed out, and it is intimated
that the government has. received very fair
equivalent for its Investments. Mr.. Hazard
says: During the first years it (the profit to
the government) was certainly not less than
$5, 600, 900 per year. This capitalized at 5
per cent. makes 500, 100000. Certainly
one-half of this sum would be a low estimate
of what the government has made out of the
building of the Pacific railroad, and besides
this direct profit, it has all the collateral ad-
vantages of the connection between its wide |
ly severed States. For this great saving |
what did it give? It invested no capital. 1t |
gave half of tract of land for which it had |
no use and which had little value, and it OBJ |
tanned on the half reserved added value |
many times greater than that which the |
whole had before. In addition it loaned its /
credit for term OF years upon security of
its own. choosing and which proves to be |
ample. i
The verdict of the Poland and Viii son com
mittees is pronounced unjust, Mr.. Oakes
Ames is defended, and some comment is
&ha Of In
premises As far as this action touched fnan-
cial property it was contested in the courts,
and Mr.. Hazard states Fortunately for our |
the judicial mind did not take the
same view that the politicians had done.
Before the court of claims, and then before |
the Supreme Court, on the appeal of the
United States, the Union Pacific Railroad
Company recovered the half of the govern
ment transportation wrongfully withheld by
act of Congress fhe stockholders of the
Credit Mobilier were subjected to the dis
honor and modification of a suit by the
United States on charge of fraud. They |
we're obliged to answer at much trouble and |
expense in the district of Connecticut. After
IN elaborate opening by the attorney general |
Williams) the court (Justice Hunt) decided |
hat no case had been made out. The
United States appealed, and the Supreme
Court has sustained the decision. 1t has de-
ided that there is nothing whatever upon |
which the government could found claim |
gainst the Union Pacific Railroad, or against |
he stockholders of the Credit Mobilier. Il
The following concerning the profits dis
ributed among the shareholders of the l
,redit Mobilier is especially interesting, as s
he matter is one concerning which there has
een much dispute: After nearly four years {
f investment, they received 60 per cent. in | I
ash, so per cent. in first mortgage bonds
nd 75 per cent in income bonds. Taking
hese securities at their current prices, by T
heir sale, and the cash dividends, each | e
5ockholder would receive, for.the four years | a
lvestment, his money back and nine-tenths
much more-that is, 30 per cent. paid for
our years. investment at the end of the |
me. Add the bonus bonds, and it will be G.
ss than 120 per cent. Besides this, the |
stockholders of the Credit Mobilier received |
ock in the Union Pacific either by dividend y
by purchase. On this matter Mr.. Hazard | u
Fers the following calculation This (Union | n
acifc stock at the time had little or no n
arket value. It was sold at and 10 in |
$685. but soon after the completion of the | 1
,ad it went up to 80. It is now worth over | u
)0 Those who held this stock, of course, b
ade large profit, but at the time it was 81
vided its value was almost purely sPecula- G.
We. Looking back from the present stand 1t
,int, we can see that at that time it was
orth to hold about SO. On this basis the to- o'
profit received by the stockholders of the al
cedit Mobilier was about $15, ,0oO,O0O on an n
penditure of about $40, ,0OO, 900, or little al
rer 20 per cent. This is a high estimate, tt
ID is probably more than was realized by al
eat majority of stockholders. fairer @
iterion would be to take the value of the So
ock as estimated at the time. This value, m
personally know, was very uncertain. I hi
quired of the best informed directors, and pl
me to the conclusion that ten was a high ps
1ue to place upon it. On this basis the at
tai profit would be about Sc, O00, 900, or th
rs than 9 per cent. on the expenditure. pc
Wherever MFR. Hazards argument is read w
viii strengthen the belief, which we be- ra
We to be now quite general, that Congress pc
ted somewhat hastily and unjustly towards ia
.kes Ames and his associates. They did a w
and work and took great risks, and fair he
owanee for those risks should be made in | th
y judgment concerning their acts which th
re condemned do
5sf | va