The San Francisco call., 1897-11-02

WAS by the terms Of the act made prior
and super. or 10 the lien OF the Govern
ment for payment OF the subsidy bonds
and interest: The Government subsidy,
with the fl st mortgage and land grant,
made about $50, 600 900 immed a tely avail.
@ahie for the construction OF the railroad
oyer and above the right of way which
was given by the Government.
: Ii was soon discovered hat the availa-
bic money. thus arising wholly !rom the
bounty of the Government vas nearly
double the amount necessary to build and
equip the road. The directors conceived
The idea of diverting this surplusto them
selves by organfzinga CONSTRUCTION COM
pany (of which they should. be substan.
TALLY the only stockhoIders) to build the
road under :couIracts which would absorb
all of. this capital and divide the enormous
profits among he stock older-. The COM
pany was called The Credit MobilieE and
contem plated, in addition. to the purpose
stated, the establishment of: :townsites on
points of tn" line at which the directors OF
the Union Paeific Company would estab-
.lish. stations, thus adding 10 the enormous
profits TO be realized on the construction
of the~road: additional enormous profits
througlI the EN- IAN cement Of fand values
at and around The ic WASTES and in the
colonization of the railroad grant lands.
!. The Credit Mooilier secured enormous
fortunes for. its promoters but came to
grief and 10 dishonest if not unprotita-
bic end by offering, and in many cases
giving. s.stock az bri hes to Congtessmen
and other pub &c officials for favors gran ed
20 II at the expense of The Government.
The resultof th is terri b ::pubiic scandal is
known in history as the ,"Cred t Mobilier"
investigator, W hIch finally led to the
adopt on or The Thurman act.
De- l.
been considerably .demoralizeu, and the
road finally. about tour years ago. fell
into the hands of receivers. By. them it
has been operated apparently MI uch more
successfully than 1t was ever operated by
e com pany, and the road is now in good
CONDITION and paving property.
Tae orr ginal line of the road travarses
the States of Nebraska, Wyoming and
Utah, running for short distance through
the northern part OF Colorado, the east
ern terminus being at Council Bluffs in
the State of Iowa and the western ter
minus being at Ogden, U:ab. a braDch
line runs from Sioux City, Iowa, to The
eastern terminus. In addition TO the
throug1- overland traffic of the road,
drawn from the Central Pacific Railroad,
the Oregon Short Line of the Union. Pa
cihc, now separate road, and the Utah
Northern, it has considera bic local traffic
in the rich agricultural regions of Ne
braskar Colorado and that part of Wyom-
ing through which it passes; ard has a
reasonable prospect of enormous future
traffic resulting from the certain future
development ofthe entire region from
Ogden TO Omaha.
For the past light wears. the Union Pa
citic Company, CO. operating with-its bond
holders. and other capitalists, has heen
s;renuously seeking Congres sionat aid to
AVOID he INN ediate paymentsof its debts
TO the Government through various re-
funding schemes, by which it might be
enab ed TO transfer its whole debt, with
a nominal rate of interest TO the shoulders
of lis patrons in increased transportation
rates, distributing the repayment of the
de bt over a period of from 30 10 100 years.
This scneme, if carried Through on any
of the plans suggested, would have enabled
the original deS Spolfers II the Government
and their successors. In interest to retain
the road with all the diverted assets, oper-
aing it with a profit to themselves and
Saddling the burden OF The refunded in-
debtedness upon the backs of the people
depending upon the roaI for transporta-
ton. -
:. The company and all others interested
IN the reiunding schemes, as we'll as their
friends in both Houses Of Con gress, per-
s!stently and constantly decla red that the
road was not worth much more than the
first mortgage lndebtedner IS; that. any
attempt on the part OF the Government to
enforce payment would result in the saeii-
flee of substantially the whole %of it's claim
against tn road; that it was i'm possible
for the com pany 10 pay. or for the Govern
ment to collect, and therefore that the ins
terests of the Government would be best
served bv accepting the Terms offered Tor
refunding. :~ = .'.':-:
In February last, after the failure of the
D. g.,
Re epresentatives, the Attorney General en-
ter ed the appearance of the Government
in the foreclosure suits that. had prev-
ously been commenced by the first mort
gage bondholders, and ;decreed that de-
cree of foreclosure and sale M ight be en-
tered provided that bid, which including
the sinking fund on hand, amounting TO
a bout $t7 000, COZ, and the earnings of the
company from the Government. amount.
ing to several millions additional, should
cure to the Government at least
$45 900, 000 on account of its Claim against
the road. r. - =: ':.-.
This agreement for minimum bid was
made by what is known as the Fitzgera d
Committee, having in charge the reorgani.
zation of the Union Pacific Company, and
a depos of S., 0Gu, 600 was made as a
guarantee that the minimum bid would
be offered by the company in case OF
foreclosure sale. In Septemb ber last the
Attorney-General refused to- consent to
the sale unless the minimum bid should
be increased so as to bring the Govern
ment $50, 600, 900 on account OF its claim.
To this the COMMITTEES: agreed, and the
stipulation was made for the sale of: the
road on November 2 Subsequently the
Attorney General. believing that a post
ponement OF the sale until after the
meeting of Congress would be OF
advantage to the interests of 1.-The
Government, applied to the United
States Circuit Court Judge Sanborn)
for postponement Of the sale until the
Is h of Decem ber, whereupon the reor-
eanization committee promptly offered to
increase its bid so as TO pay the entire
claim of the Government on the Union
Pacific main line, provided the application
OF the Attorney General for a postpone
ment of the sale should be abandoned.
To this the Attorney General agreed. 1t
was feared that the segregation of the
Kansas Pacific Railroad, running from
Kansas City to Cheyenne by way of Den
yer. only a portion of which is subject to
the Government subsidy lien, woulG cause
serious loss TO the Government. on ac-
count of It's claim against that road, but
the Attorney who is in position
to know, states positively that the whole
of the claim On the Kansas Pacific will be
paid. ~
NIT n TT lrn m ~ reTnTr