Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1884-08-01
THE UNION PACIFIC ROAD.
How Senator Edmunds Frightened the
Managers And Charles Francis
Adams Fixed Things.

this morning under the heading of STORY OF
Sydney Dillon's Resignation as President OF
the Union Pacific" How Mr. Edmunds put
Check on Rssc4lity last Spring" Report
never read in the Senate which pnE Adams IN
Dillon's place" Beginning with the history
Of the construction of the road the Times
says:
The actual cost of the road was $50, 72O,
95S. The corporation sold its first mortgage
bonds for s23, us, ,00s and its subsidy bonds
for S27, I45, 1853, so that it received from these
TWO sources Sl42,2l3 more than the entire
cost of the enterprise. Even at the extrava-
CANT prices made by the directors and con
tractors, the whole issue of stock and lesser
bonds represented absolutely no invest
ment
In the winter Of 1872 and 1873 this great
swindle was investigated. A committee
ascertained these facts and reported that the
moneys borrowed by the corporation TO meet
the necessities Of construction had been divid-
ed in dividends, that the stock was issued not
by men who paid for il at par but al not more
than 30 cents on dollar in road making, that
OF the government directors some had neg
lected their duties and others were interested
in these transactions, that at least one of the
commissioners appointed by the President
had been bribed to betray his trust for S25,-
900. that the chief engineer Granville NJ.
Dodge, now director had been largely
interested in contracts for its construction
and that there had been an attempt made to
influence reserve power in Congress by in
ducng influential Congressman to become
interested in the profits of its transactions.
The committee reported that these abuses
warranted the repeal of its charter but
recommended that suits be brought to deprive
h.1 Ia, L
issued at less than par, of their holdings.
This terrific report was signed by J. NJ.
Wilson of Indiana, S. 5. Shellagarger of
Ohio. George F. Hoar of Mass, II. W Sloc-
um of New York, Thomas Swainn of Mary
land, the entire committee. The last is now
dead, Mr.. Slocum is in the House and Mr..
Hoar in the Senate.
Does 1t seem strange to any one that the
law firm OF Shellabarger and Wilson are now
heavily retained attorneys at Washington of
the Union Pacific with all their knowledge
and experience:
BY Jay Gould's connection with the road
and by his scheming, the Union Pacific was
loaded with 100000 of Kansas Pacific
bonds, $1,000, 900 of Kansas Pacific stock,
and 81 900. 600 of Denver Pacific stock The
stock of the Union Pacific was then increased
from $50, ,7G2, 800 to $50, 762. 500 Then to
complete it Gould and his directors issued
$40 237 200 more making a total of SCI 900, =
600 further in direct defiance of the law.
In 1879 and 1888 over $1,000, 600 Union
Pacific were issued and another mortgage of
$4,000, 900 put on the Kansas Pacific, a
total OF S47,000,0 900 of Illegal indebtedness
on which interest has been paid at the gov
ernment's expense.
What was being done by the government
in this case?
An inferior official of the interior depart
ment the auditor of the railroad accounts,
was notified of the issue of new stock. He
replied that no exceptions would be taken and
that this additional capital must undoubtedly
result in increasing the value of all the com
pany's property and thus add to the security
of all its creditors No other officer, neither
the secretary nor the attorney general took
any action. Auditor French was then receiy-
ing meagre salary. Today he enjoys a
large income as regular agent of the
Union Pacific before the government depart
ments.
When called upon last winter to explain
why the law was broken by these issues,
Dillon answered by ignoring the Thurman
act and referring to the laws prior to and
superseded by it.
Mr.. Edmunds went back to Washington
last winter determined to find out whether he
or Gould was the more powerful. The inves-
tigation began by the Senate last winter
resulted in a report showing that not one cent
had been paid by the company into the United
States treasury under the provisions OF the
Thurman act since June IL. 1878, while dur
in the same time over Sl9. 900. 600 had been
divided in dividends This report closed with
resolution asking the President or the
al,
ties prescribed against the Union Pacific
directors for illegally declaring those divi-
dends. to wit. that "such officers shall be liza
BILE to the United States for the amount thereof
and every such officer, person or stockholder
who shall knowingly vote. declare or paw such
dividend shall be deemed guilty of misde-
meanor, and, if convicted thereof, shall be
punished by a fine not exceeding $40 900 and
by imprisonment not exceeding one year.
That was the resolution of the Senate judici-
ary committee and had it ever reached the
Senate that body would have adopted it.
Could these directors have refunded to the
sinking fund the sl9. .000, 900 thus divided. to
saw nothing of the rest of the penalty? The
directors last year were Sidney Dillon, David
Dows, Jay Gould. Russell Sage and A. II
Green of New York, Fred L. Ames, Elisha
Atkins, Ezra II. Baker, A. G. Dexter ard
Charles Francis Adams of Boston, J. A. Rum
rill of Springfield. Mass, Hugh Riddle of
Chicago. 5. II. H. Clark of Omaha, John Sharp
of Salt Lake city and Granville NJ. Dodge OF
Council Bluffs. These names ought to be
good for $40, 900, 900,
Mr. Edmunds had this bombshell ready and
approved by the committee the first week in
May He felt satisfied with his work and
looked forward with comfort to the fact that
Justice was about TO be invoked for the Jay
Gould party which had so long detied the Thur.
man act Mr.. Edmunds intrusted his report
and resolution to Senator Hoar who was to
bring il into the Senate, the date was fixed on
Nav 9th.
These proceedings, however though quietly
conducted. were being watched by the Union
Pacific people. They had a general idea OF
what Mr.. Edmunss was doing within the closed
doors of his committee room.
On the morning that Mr.. Hoar was to make
his report, Charles Francis Adams, Jr. arrived
in Washington and speedily put in an appear
ance at the Senate. He used to be a govern
meut director but 10 lSS2 had succeeded TO the
same place in the corporation. soon after he
made his memorable visit over the Union Pa
cifc and recommended its stock to the people
of New England as a conservative and safe
investment. on which assurance many folks
of moderate means in that section had invest
ed their savings. Mr.. Adams lost no time
He saw Edmands, Hoar, ingalls, and others.