Year: 1873

A BRIEF SYNOPSIS OF ITS HISTORY.


We have received numerous letters from readers
of the paper asking various particulars abouS the
Credit Mobilier. We have endeavOred in response
TO these inquiries TO cOndense that part OF its his
tory which relates to the present exposures at Wash
ington into a few sentences in which all minor de-
tails are purposely omitted.


The Credit Mobilier was appropriately named atter
ono OF the worst organizations under the late French
Empire That, originated by of the intimate and
unscrupulous adherents of Napoleon ILL., made loans on
personal as well real estate OF all sorts. We some
times speak OF chatel mortgage as loan on nova
bes :" a similar usage in French gave the term " Mo
bier to the loans or credits thus extended Money
was thus lent upon the most questionable securities,
principally upon railroad and commercial enterprises
that were barely in the first stages of existence There
would be the stock new enterprise and the stock OF
the Credit Mober which lent credit In the market at
the same time 1t credit built upon credit, and
brought about the widest Of stock gambling France
has ever known. when the inverted pyramid began to
topple the Empire itself shaken TO its center.


The American concern was at first principally an im-
taor in name But IL had in respect the radi
cal popularity its stock Issued on top Of railroad
stock and the exact distinction between the indebted
ness and ownership OF the railroad and Of the Credit
Moblier was in respects rather matter OF form
than of fact The Credit Mober Of America bought


loose charter that had been issued to butnot used by





were also the stockholders Of the Union Pacific Railroad
That Railroad Company endowed by act OF Con-
gress with alternate sections OF land per mile, and
had loans OF $4,000 per mile for about 200
miles thence $4,000 per mile through the Akali
Desert about COO miles, and thence in the Rocky Noun
tains $4,000 per mile. The Railroad Company issued
stock the extent Of about sO0c000 This stock was
received by stockholders on their payment OF hye per
cent OF its face. When the Credit Moblier came on
the scene, all the assets OF the Union Pacific were
turned over 10 the new Company in con
Companys stock and ts agreement to build the road
The Government meanwhile, had allowed its claim for


It's loan OF bonds TO become second instead OF first
mortgage and permitted the Union Pacific road TO issue
first mortgage bonds which took precedence as lien ON
worthless, the mortgage which took precedence
amounted TO all the value of the road The proceeds OF
OF the Credit Mobier, which had nothing to pay out
except for the mere cest OF construction TINS also ex
plains why OF the dividends Of the latter Company
paid in Union Pacific bonds AS result OF these
processes the bonded debts OF the railroad exceeded its
cost By at least $40. 100000.


1t very easy 10 see that under these circumstances
the stock Of the Credit Mobler very handsome
Investment provided it could be purchased at par Here
wherein Oakes Ames such profitable friend 10
COngressmen and Senators. He let them in. as he
phrases IT, the ground floor. They got their stock at
par, and the dividends which ready to be paid
What is called in waist pariance making one hand wash
the other The actual value of the stock thus sold at
800 share would have been to anybody out Of the r
Gle OF Oakes Amess friends not purchasabe for less than
$500 or slOO But there was a film Of decency thrown
the transaction by Mr.. Ames In charging several
months nterestupon the stock at the time II sold TO
the members OF Congress. This interest had accrued
while he holding 1t to see where 1t could be placed
to the best advantage.


quarrel between the prime movers in the bust
six years and with difficulty settled.
In this Oakes Ames got the best OF Thomas O. Durant
who among the earliest promoters OF the undertak
ing. later cause for anxiety originated in claim OF
the State OF Pennsylvania for taxes on the enormous
poration into lawsuit and threatened exposure of its
affairs. But the great quarrel through which the facts
turned upon a demand OF McCOmh for OF this vau
able stock. which Ames was placing where II would DO
scrbed for IL for friend whom he represented Amess
reoinder that be had distributed the stock to mem
this assertion became the first chapter OF the exposure
Itwas intended that this list should have goue out


The recent legislation which Ames's transactions
with members OF Congress had reference to, may be
stated IN few words Secretary Boutwell, insisted that
half the earnings OF the Road in carrying mails and
troops for the Government should be applied TO the pay
ment Of interest the loans that the Government had
made TO the Road The legislation obtained overrled
the Secretary aud enabled the Road to postpone pay
hence 30 sdm Up II may be briefly stated that the
ceeds Of liberal United States apdgrans. OF donations
Of Communities near the Road and the entire subsidy Of
Government bonds as clear profit The proceeds of the
mortgage bonds which displaced the Government lien,
were sufficient to have built the road To the original
stockholders In the Union Pacific, the profit some
thing almost incredible. share bought for 50 subscrp
ton became 500 Credit Mobler, which paid, have
seen In the evidence concerning the legislators who
ceiyed It, dividends that amounted least its
nominal value IL IL Of course evident all legislation
which favored the Union Pacific Railroad sweled the
profits OF the legislators who became stockholders In the
Credit Mobiler The awkwardness of this position was
vastly increased by the thin disguise purchase being
torn away under which the pronbearng stock had been
really the gu OF Oakes Ames. The dental OF tho facts
converted the transaction into u criminal act


POSITIVELY THE LATEST REMEDY FOR CREDIT


MOBILIER.


To the EdttOr OF The Tribune.


SIR: Is not the electoral system failure
VIII money always buy up votest And at best can
call an election OF the for a number OF
years, by fanaticai people, a mistake inasmuch as
such man, by the habit OF power gets at last repre-
sent himself and not his oonstitueutsi Do not men in
socaled republics become the desp0ts practically OF the
people, rather than servants a. Why not make official
duty universally liable To all mon or education ana
moral character after due examination Better the
routine of efficient for short torms with means OF
their and limited salaries than the corrupt control
OF old stagors and ntrsuoTS. making Office OF
fortune, Yours for liberty and good g,yor rnment.


Nsto-Y Fab q