Year: 1873

Union Pacific Railroad.


The House Committee on the
Union Pacific and Credit Mobilier
enquiries Of which Hon. J. NJ. vii
son is chairman, reported on Thurs
day on the aspects of the sWindle of
the Ames combination upon the
government, and presented 3 bill
providing for a suit on the part Of
the government against the Union
Pacific company for the recovery Of
the moneys, land, and mortgage
right, out Of which the government
has been defrauded. The report is
important as collateral to the find
ings of the Poland Committee IS to
the participation Of Congressman in
the Credit Mobilier, and gives 8
definite practical point to the invest
igations which must result in some
positive advantage to the public,
whatever may or may not be done in
the way Of purifying politics.


The Wilson Committee find, with
the Poland Committee, that the
Credit Mobilier was q frst-elass
sWindle from beginning to end.
They show that the cost of the road
was, in round numbers, fifty million
dollars, which was wholly met by
the government bonds and first
mortgage bonds; and that the build
ers realized from stock subscriptions,
land grant bonds and income bonds,
q cash value of at least twenty-three
millions, all clear profit, being about
48 per cent. on the total cost Of the
road. This use of money borrowed
either from the government or on
first mortgage bonds, for distribution
in dividends, is contrary to equity,
and constitutes e fraud, giving basis
for suit for recovery. The lavish
use of it in trust funds by the com
pany in the payment of dividends
and profits on improper contracts,
have so weakened the company that
it is now "helpless and dependent"
and liable before long to fail alto
gether to meet its obligations.


The committee are Of opinion that
the company has forfeited all claim
on the government TO favor or elem
ency; but inasmuch as the rascality
which robbed the road of its resour-
ces was perpetrated by q former
management, they think that it would
be harsh and unjust to proceed to
the forfeiture of all the franchises.of
the corporation, "since many OF the
present stockholders have bought
the stock in good faith and their
rights should be respected. But
they urge that the old stockholders,
that is, the sRindling managers, who
subscribed for the stock but never
paid a cent for it, be sued by the
government to make good the iab1-
ity created by these subscriptions.
They hold also that the managers
who divided the trust funds OF the
road among themselves as profits on
contracts made with themselves,
ought to be compelled to account
for misapplication of the trust fund
to the company whose grant they
were. They also find that the Credit
Mobilier shareholders who received
dividends thereon In Union Pacific
bonds or stock, "are not holders OF
the same IN good faith, and for the
value, but did procure the same ile-
galIY." They do not recommend
that the first mortgage bonds be not
paid or that the mortgage be set
aside; but that persons who received
such bonds fraudulently and Illegally
be sued for their recovery. This
makes all Credit Mobilier stock
holders defendants in the suit to be
instituted by the government.


The bill reported by the COMMITTEES
provides further for the future prop
er management of the Union Pacific
road, by enacting that hereafter no
dividend shall be declared by that
company, except from actual net
earnings, and no new stock issued or
mortgage made without an act Of
Congress, except for funding and
securing the present debt. 1t also
enacts that no director or officer
shall be interested in any contract,
and fixes a penalty Of fine and i'm
prisonment for such ofFense. There
can be no doubt but that the bill
will pass, and the suit be prosecuted
by the Attorney General of the Uni
ted States, as directed in the BILL
Cleveland Leader.