Omaha daily bee., 1897-11-01

ment It was made a second mortgage. the
company being authorized to issue its own
bonds to an amount equal to the govern
ment as a first mortgage on the line. The
original act provided that the charge for
government transportation should be cred
tied to II In liquidation Cf its bonds, and
that In addition, after the road should be
completed per cent OF the net earnings
should also be applied to the same purpose,
The act was subsequently modified 50 as
to allow the company to retain one-half of
the charge Of tIaasp spGTiatiou on government
service as the cost OF the same, IL also
very generously relieved the company from
paying the per cent OF its net earnings.
The whole available capital Of the road that
was ultimately to cost 100000 600 was only
S2lS 900.
1t is now generally believed that the lib
eral offers of congress were inspired In its
committee on Pacific railroads by Oakes
Ames of Massachusetts, so clel5-headed was
he that though doing - immense private
business guiding the Affairs Of three manu-
featuring concerns and building a couple OF
railroads, he kept no books and employed
no bookkeeper fer his private affairs. He
would have the road built for the good OF
the nation. but he took hold Of 1t for his
own advantage.
PLAN TO MAKE MONEY.
The first object Of Ames and his associ~
ates who saw that the United states wac
Offering more than was sufficient to build the
road was the discovery of some scheme by
which the great profits that would ensue
from the building OF the road might be di-
verted from the road into the pockets of
its stockholders. AS an Investment of money
in railroad stock to be repaid from the fu-
ture earnings Of the road, 1t Is improbable
that any great amount of money would have
been subscribed for railroad from here 10
the Pacific coast. The p ssibiity of the
construction of the road at that time arose
from the profits to be made out OF the lib
era offers of the government Il was known
to Ames and a few friends nat the road
could be built for a smaller sum than the
government was Offering. Chief Engineer
Peter A. Dey OF the proposed road, the man
who surveyed and located the first 100 miles
of the road had already estimated that INC
first 100 miles could be built for less than
the government was Offering. The question
of transferring the excess of values over
the cost of construction from the treasury
of the United tSates was solved by adopt
ing this device: A corporation of a differ
ent name. but owned by the same parties
should build the new road That other cor
poration should receive all the profits and
divide them among it's stockholders, who
were also stockholders in the Union Pacific,
but who as such could not legally receive
them. Such was the ingenious plan devised
and later carried out. BY it Oakes Ames
c. S. Bushnell, J. B. Alley, T. C. Durant
and others built the road and divided among
themselves all funds not used in its construc-
tion. The corporation they used for this pur-
plse was first chartered as "The Pennsyl-
vana Fiscal Agency" and after heing re-
moved to New York was rechristened "The
Credit Mobilier of America" The stock
holders of the Union Pacific railroad sub
scribed for the same amounts of stock in
the Credit Mobilier that they held in the
railroad.
The first 100 miles we're contracted for by
II. NJ. Hoxie, confidential agent cf l.. C.
Durant When Chief Engineer Dey found
out that this part of the road was to be let
to HoXie at $4,000 per mile for work which
ho thought could be done for $50 900, he re-
signed his position. In letter to John A.
Dix, president of the road he said: MY
views of the Plcfc road are, perhaps, pecu-
liar. [ lcok upon its managers as trustees
of the bounty of congress. You are doubt
less informed how disproportioned the
amount to be paid is to the work contracted
for. | need not eXpatiate on the sincerity of
my course, when you reflect upon the fact
that | have resigned the best position in my
profession this country has ever offered to
any man
The history of the letting of one contract
in the building of the great Overland Route
is practically the history of all. A summary
of these contracts is as follows