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THE
CREDIT MOBILIER
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The Credit Mobilier of America.
THE
CREDIT MOBILIER
OF AMERICA
ITS ORIGIN AND HISTORY
ITS WORK OF
CONSTRUCTING THE UNION PACIFIC RAILROAD
AND THE RELATION OF
MEMBERS OF CONGRESS THEREWITH
By J B. CRAWFORD
!
BOSTON
C. W. CALKINS & CO., PUBLISHERS
1880
GENERAL LIBRARY
University of
MICHIGAN


Entered according to Act of Congress, in the year 1880, by
C. W. CALKINS & CO.
In the office of the Librarian of Congress, at Washington, D. C.
Press of C. W. Calkins & Co., BOSTON.
MAL
h
Σ
:M.
PREFACE.
In presenting this book to the public the author has
been led by the hope that it might, in a measure, clear
away much of the misunderstanding that has always
existed regarding the objects and accomplishments of
the Credit Mobilier. For years it has been received,
as a fact beyond dispute, that the work of this cor-
poration was one of fraud upon the Government and
the people of this country. It has been talked about
by almost every one. It has been commented upon in
the press and before the public until its name has
become a familiar sound in almost every household in
the land. In all this controversy there has been one
uniform opinion, and that opinion has been entertained
almost unanimously by the the public. Not less was
the author at one time impressed with this same
general idea.
He, in common with nearly all others,
believed that those who had carried on this work had
used their power and influence to grow rich at the
expense of the government. As he read the reports,
which had been submitted to Congress by the com-
mittees of investigation, still more firmly did he find
vi.
PREFACE.
that opinion impressed upon his mind. A careful
reading of the testimony upon which those reports
were based, led to the conviction that an almost fatal
error had been committed, and that the judgment
which had been rendered by the public was one not
supported by the evidence, and which would never
have been pronounced had an opportunity been given
for the consideration of the truth. The judicial inves-
tigations that have been accorded by the courts have
done much to remove the doubts of many, and to
give a clearer insight into the true relations of the
most gigantic achievement of the present century.
Time had in a great measure overcome the feeling
against the Credit Mobilier, but during the past few
months the interest has revived and the public were
anxious to know the truth. The object of this book
is to furnish that information. How well that object
has been accomplished the public must judge. The
author has attempted to deal impartially, to give credit
only where it is due, and censure only where merited.
The work is not designed as a political work in any
sense; the great blessings that have accrued to the
nation through the construction of that great highway
have carried the work of the Credit Mobilier above
and beyond the sphere of politics, and it is hoped that
when the truth shall become known the public will
not alone comprehend but approve that work.
Oct. 15, 1880.
J. B. C.
CONTENTS.
THE ORIGIN OF THE COMPANY
I.
· 9
II.
THE ACT OF INCORPORATION
III.
THE UNION PACIFIC RAILROAD COMPANY
IV.
THE AMES CONTRACT AND ASSIGNMENT
17
• 24
38
V.
THE ASSIGNMENT TO SEVEN TRUSTEES
55
VI.
THE DIFFICULTIES OF CONSTRUCTION
· 73
VII.
THE DISAGREEMENT WITH MR. MCCOMB.
. 88
viii.
CONTENTS.
VIII.
121
THE POLLAND COMMITTEE
IX.
DEFENCE OF OAKES AMES
. 186
X.
THE VOTE OF CENSURE
214
XI.
THE CREDIT MOBILIER OF TO-DAY.
220
THE CREDIT MOBILIER
OF AMERICA.
I.
THE ORIGIN OF THE COMPANY.
SOME eight years ago the country was startled
by the announcement of the grossest corruption
in our national legislature, arising out of the building
of the Union Pacific Railroad, and which involved
the names of many of the most prominent men in
Congress-men whose reputation had before been
above suspicion men whose record had always
been spotless. The news came with terrible force
upon the community. The time-that of a presi-
dential election was one well calculated to add
force to the calamity that had seemingly overtaken
our country. The name of "Credit Mobilier," un-
til then almost unknown and unheard of except
among a few, now came into most wonderful promi-
nence, and to this day, though spoken of by every-
one, has remained a mystery. The name, with its
foreign sound, was one well calculated to raise
9
ΙΟ
THE CREDIT MOBILIER
additional alarm, and was one which politicians
could handle with ease to instil into the minds of the
people ideas of great corruption. Why should such
a name be selected if the purposes of that corpora-
tion were honorable? and they who wished to use
it lost no opportunity of doing so; and yet it is safe
to say that not one in a thousand of those who dwelt
upon the infamy of the Credit Mobilier had the
faintest conception of what it really was, what were
its objects, or what it had accomplished. But that
could not deter them in their argument; they knew
its purposes were not honest, and that was enough
for them. It was as the cloud, small at first, but
soon the tempest that arose was sufficient to destroy
all that came within .ts reach. Reputations which
had been towers of strength were suddenly over-
whelmed and covered with infamy; they who had
been the leaders of public opinion and of public
morals were swept away in the maelstrom of public
condemnation, never again to regain their position.
So great was that condemnation by the people of
the acts of these men that in an evil moment they
sought to regain their lost positions by denying all
connection with, or interest in, the Credit Mobilier ;
not stopping to consider whether that connection was
good or evil, but listening only to the clamors of
the present, they sought to shield themselves behind
the armor of their hitherto unquestioned word; but
alas! when revelation came, and that word was
found to be false, the last defence was gone, and
they fell. Years have passed, but still those names
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II
have been enshrouded by the mystery in which they
had fallen. Time has indeed cleared away much of
the superstition that was created; but the people, as
a mass, remain in ignorance of the real object and
workings of the Credit Mobilier. What was it?
What did it accomplish? These are questions that
are daily and hourly asked by the many. Let them
but go out beyond the Missouri, upon the Great
American Desert of a score of years ago, and behold
the mighty empire that has sprung into existence
there; behold the towns and cities teeming with
population, farms that supply the world with bread,
homes provided with every comfort and luxury of
life; behold on every side the school-houses where
children grow up amid the influence of popular edu-
cation, and as they behold this happy, contented, and
enlightened people, strong in their love of freedom
and equality, firm in their faith and allegiance to
their country-there they may see some of the re-
sults that have been accomplished through the influ-
ence and instrumentality of those who guided and
governed the Credit Mobilier. In a word, the Credit
Mobilier and the Union Pacific Railroad Company
were one and the same. The men who governed
the one, governed the other. Whatever was done
under the name of Credit Mobilier may not be
known to the world in its true light, but we hope
that the facts concerning it may be made to appear
upon a perusal of this work. It is not our inten-
tion to accuse or apologize for any one, but only
to set forth as clearly as we can the history of the
I 2
THE CREDIT MOBILIER
Credit Mobilier of America and its connection with
the building of the Union Pacific Railroad, and the
relation of members of Congress with it.
The excitement of the past is gone, in a great
measure, and the people of the present are prepared
to far more impartially judge of the merits or the
evils of its operation, and to decide whether the
actions of those men were right or wrong. That
any crime was ever committed was not a necessary
conclusion to be drawn from the revelations that
have been made public. Time, and time only, can
effectually clear away the clouds of suspicion that
have so long hung over many a once-honored name,
and only the impartial judgment of history can give
complete vindication to those who have been ac-
cused. A new generation is fast appearing upon
the arena of life, which will be prepared to judge
without the feelings of prejudice that have, and may
long continue to control public opinion.
Only a short time ago there appeared in the press
throughout the country a statement by the sons of
Oakes Ames in relation to the association of their
father with the Credit Mobilier, which, in connection
with the present political campaign, has centred
upon this matter an interest before unfelt, and has
created an almost universal desire on the part of the
public to know more concerning the history of that
corporation. Was it a work, as they allege, of such
great importance? Was it so largely beneficial to the
country that, instead of the odium and disgrace that
was cast upon its principal character, a monument
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should be erected to his memory by a grateful
people? No fact is, or can be made more plain,
than that no man had so much to do with the success
of the building of the Union Pacific Railroad as did
Oakes Ames. To his wonderful exertions, to the
great sacrifices which he made, is due the building
of that road. He assumed the responsibility, and
shirked not the ordeal through which he passed.
The road was completed, the whole country was
benefited, and the union of our states made more
strong than ever before; but to Oakes Ames the
result was disastrous in the extreme. He was cen-
sured by the Congress of which he was a member,
and the disgrace which was placed upon him ended
his life in a few short months.
A proper study of the Credit Mobilier will make
necessary a consideration of the circumstances which
called it into existence; and to do this, we shall be
compelled to go over the history of the building of
the Union Pacific Railroad. The Credit Mobilier,
as it came into prominence, was the construction
company that took the contract for building the road.
Owing to the same parties being the stockholders in
the road and the stockholders in the Credit Mobilier
it could not well take the contract direct from the
Railroad Company, but the contracts came through
the intervention of a third party. All this will be
seen in the pages which follow, and need not be fur-
ther alluded to here. Upon the organization of the
Union Pacific Railroad Company, under the act of
Congress of 1862, and as amended by act of
14
THE CREDIT MOBILIER
Congress in 1864, an attempt had been made by that
company to construct the road, which effort proved
to be a failure, not only because of the lack of con-
fidence which the public had in the scheme, and
refusal to invest in the bonds and stock of the
company, but their own lack of means, and the
responsibilities which such construction cast upon
those who undertook it. It was impossible for the
company to obtain any individual to take a contract,
as no one was willing to shoulder so great an obli-
gation as he must. It was therefore necessary that
some means be used by which there could be
a combination of capital and at the same time a limit
to the liability of losses. It was therefore deter-
mined to use the influence of a construction com-
pany. Questions of course arose, as to the legality
of the proceedings as contemplated, but under the
instruction and advice of the most eminent counsel
in the world the plan, as carried out, was com-
menced, carried on, and finished.
The Credit Mobilier of America, which was the
name adopted for the company selected for the
work, was fashioned after the Credit Mobilier of
France, which had long been known in that country.
The Credit Mobilier of France was a joint stock com-
pany founded in Paris November 18, 1852, under the
lead of the brothers Emile and Isaac Péreire, and on
the principle of limited liability, for the transaction of
general banking business, to facilitate the construc-
tion of public works, and to develop internal indus-
try. Its capital was 60,000,000 francs, divided into
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15
shares of 500 francs. It was authorized to hold
public and other securities, and to issue bonds of its
own to an amount equal to its subscriptions and
purchases, and after its original capital was all
taken, to issue bonds to ten times that amount. The
profits of the company were at first very large, a
dividend of forty-one per cent. was declared in
1855, and from that down to five per cent. In 1867,
having for some years paid only slight dividends
(though the average annual dividend for fifteen
years was seventeen per cent.), it lost confidence,
and the stock fell to twenty-eight per cent. of its par
value, and the company soon went into liquidation.
The managers retired with immense fortunes. The
High Court of Appeals decided (August 1, 1868,)
that the brothers Péreire and other directors were
responsible for their acts, and that damages should
be given to the stockholders. Among the enter-
prises achieved by the Credit Mobilier of France
may be mentioned the construction of the Paris Gas
Company, the Paris Omnibus Company, the crea-
tion of the company of the Grand Hôtel du Louvre.
and of the Maritime Company of Clippers, and im-
mense railway operations in Austria, Spain, Russia.
and Switzerland, together with heavy loans to
French railway companies. The company met
with much opposition, and was at times called the
greatest gambling house the world had ever seen.
The Credit Mobilier of America was originally a
company organized under the laws of the State of
Pennsylvania, in the year 1859, and was then known
16
THE CREDIT MOBILIER
by the name of The Pennsylvania Fiscal Agency.
Under this name, however, it languished, and was
not, until shortly previous to its purchase by the
principal parties interested in the Union Pacific
Railroad, even organized as a corporation. And
after its final organization it never called any of its
powers or functions into action while it retained its
first name. The powers granted to it were of a
peculiar nature, and were what were so much needed
in the field in which it was soon to appear, that
every necessary object was amply provided for.
That a full understanding of its provisions may be
had, the act in full will be given.
/
II.
THE ACT OF INCORPORATION.
AN ACT TO
INCORPORATE THE
FISCAL AGENCY.
PENNSYLVANIA
Be it enacted by the senate and house of representa-
tives of the Commonwealth of Pennsylvania in
general assembly met, and it is hereby enacted by
the authority of the same:
SECTION I. That Samuel J. Reeves, Ellis
Lewis, Garrick Mallory, Duff Green, David R.
Porter, Jacob Ziegler, Charles M. Hall, Horn R.
Kneass, Robert J. Ross, William T. Dougherty,
Isaac Hugus, C. M. Reed, William Workman,
Asa Packer, Jesse Lazear, C. S. Kauffman, C. L.
Ward, and Henry M. Fuller, be, and they are
hereby, appointed commissioners to receive sub-
scriptions and to organize a company, by the name
and style of the Pennsylvania Fiscal Agency; and
the owners of the shares herein authorized to be
issued, when the company is organized, shall, under
the name and style aforesaid, have perpetual succes-
sion; and may purchase, hold and acquire, by any
lawful means, estate real and personal, and the
same may use, sell, lease, let, mortgage, transfer,
and convey, and otherwise dispose of; and may sue
and be sued, plead and be impleaded, contract and
be contracted with, and have and use a common
seal, and the same may change at pleasure; and
B
17
IS
THE CREDIT MOBILIER
may make by-laws and regulations for the govern-
ment of their affairs, and may have and use all the
rights, powers, and privileges which are or may be
necessary for them to have as a company incorpo-
rated for the powers herein stated: Provided, that
the said company shall not at any time hold, in this
State, more land than may be requisite for the con-
venient transaction of their business.
SEC. 2. That the purpose of this act is to organ-
ize an incorporated company, and to authorize them,
as such, to become an agency for the purchase and
sale of railroad bonds and other securities, and to
make advances of money and of credit to railroad.
and other improvement companies, and to aid in
like manner contractors and manufacturers, and to
authorize them, as a company, to make all requisite
contracts, and especially to receive and hold, on
deposit and in trust, estate, real and personal, in-
cluding the notes, bonds, obligations, and accounts
of states, and of individuals, and of companies, and
of corporations, and the same to purchase, collect,
adjust, and settle, and also to sell and dispose thereof
in any market in the United States, or elsewhere,
without proceedings in law, or in equity, and for
such price and on such terms as may be agreed on
between them and the parties contracting with them,
and also to endorse and guarantee the payment of
the bonds and the performance of the obligations of
individuals, of corporations, and of companies.
SEC. 3. That the capital stock of said company
shall consist of fifty thousand shares of $100 each;
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19
and the commissioners aforesaid, or a majority of
them, may, in person or by proxy, open books of
subscription at such times and places as they deem
expedient, and when five thousand shares shall have
been subscribed, and five per cent. thereon shall
have been paid in, the shareholders may elect five
or more directors; and the directors of the said com-
pany, when it shall have been organized, may, and
they are hereby authorized and empowered, to have
and to exercise, in the name and behalf of the
company, all the rights, powers, and privileges
which are intended to be herein given; and may,
from time to time, increase their resources by bor-
rowing money on a pledge of their property, or
without such pledge, or by new subscriptions, not
exceeding fifty thousand shares; and any citizen or
subject, company or corporation, of any State or
county, may subscribe for, purchase, and hold shares
of the said company, with all the rights, and subject
only to such liabilities as other shareholders are
subject to; which liabilities are no more than for the
payment to the company of the sums due, or to
become due, on the shares held by them; and when
new subscriptions are made, the shares may be
issued at par, or sold for the benefit of the holders
of the shares heretofore issued.
SEC. 4.
That the by-laws shall prescribe the
manner in which the officers and agents of the com-
pany shall be chosen, and designate their powers
and duties, and their terms of service and compen-
sation; and the principal office of the company shall
1
20
THE CREDIT MOBILIER
be in Philadelphia, but the directors, under such
rules and regulations as they may prescribe, may
establish branches and agencies in Europe and
elsewhere, and may deal in exchange, foreign and
domestic; but the said company shall not exercise
the privileges of banking, nor issue their own notes
or bills to be used as bank-notes or as currency.
SEC. 5. That three-fifths of the directors of said
company shall be citizens of the United States, and
the majority of the whole shall reside in this State.
SEC. 6. That the said company shall pay to the
State treasurer, for the use of the State, a bonus of
one-half of one per cent. on the sum requisite to be
paid in previous to the organization, payable in four
equal annual instalments, the first payment to be
made in one year after the payment on the capital
stock shall be made, and also a like bonus on all
subsequent payments on account of the capital stock
of the said company, or any increase thereof, paya-
ble in like manner; and, in addition to such bonus,
shall pay such tax upon the dividends exceeding six
per cent. per annum as is or may be imposed by
law.
W. C. A. LAWRENCE,
Speaker of the House of Representatives.
JNO. CRESWEll, Jr.,
Speaker of the Senate.
Approved the first day of November, anno Domini
one thousand eight hundred and fifty-nine.
WM. F. PACKER.
OF AMERICA.
2I
Such is the original act of incorporation of the
famous Credit Mobilier of America, and under this
act the organization of the company was concluded,
and officers duly elected. The first election of
directors took place on the 29th of May, 1863, and
the first officers of the corporation were Jacob
Zeigler, president; Oliver Barnes, secretary; and
Charles M. Hall, treasurer. The history of the
company under this organization was not of great
importance, but it was destined soon to assume a
place in the national history of our republic, and
call to itself the attention of the whole world.
On the third day of March, 1864, Thomas C.
Durant, then vice-president of the Union Pacific
Railroad Company, purchased the charter of the
Pennsylvania Fiscal Agency for the purpose of using
the company for the construction of the Union
Pacific Railroad. But great changes were in store
for the Fiscal Agency. On the twenty-sixth of
March, 1864, only twenty-three days from the pur-
chase, the following act passed the Pennsylvania
legislature :
AN ACT TO CHANGE THE NAME OF THE PENN-
Аст
SYLVANIA FISCAL AGENCY.
Be it enacted by the senate and house of represen-
tatives of the Commonwealth of Pennsylvania,
in general assembly met, and it is hereby enacted
by the authority of the same:
That from and after the passage of this act "The
Pennsylvania Fiscal Agency" shall be named
22
THE CREDIT MOBILIER
instead thereof "The Credit Mobilier of America",
with all the powers, privileges, and authorities they
had under their former name, and be subject to all
the restrictions and liabilities to which they were.
subject under the same.
HENRY C. JOHNSON,
Speaker of the House of Representatives.
JOHN P. PENNEY,
Speaker of the Senate.
Approved the twenty-sixth day of March, anno
Domini one thousand eight hundred and sixty-four.
A. G. CURTIN.
But the change in name was one of slight
importance with what followed. Under the pro-
visions of the charter an agency was established
in the city of New York, and when subscriptions to
the Company were made it was upon the express
condition that the full powers of the board of direc-
tors should be given to the New York agency; it
was also stipulated that a railroad bureau should be
established at the New York agency, of five man-
agers; three to be directors of the Company, who
should have the sole management of railway con-
tracts, subject however to the approval of the presi-
dent of the Company. The number of managers
was afterwards increased to seven. By these means
the Pennsylvania corporation, with name changed,
removed itself, so far as the management of its
OF AMERICA.
23
affairs was concerned, entirely from the state of
Pennsylvania, maintaining there only its corporate
existence, and with the extraordinary powers con-
ferred upon it by that state, took upon itself the
construction of the Union Pacific Railroad Com-
pany.
At this time the outstanding stock of the Union
Pacific Railroad Company amounted to $2,180,000,
upon which there had been made to the Railroad
Company a payment of ten per cent, or $218,000.
This stock was purchased by the Credit Mobilier, by
repaying to the stockholders the amount advanced
by them that is $218,000. When the Credit
Mobilier purchased this Union Pacific stock the par
value of the shares was $1000. By act of Congress
of 1864, this stock was cancelled and a reissue was
made to the stockholders of the Credit Mobilier in
shares of $100; and thus the stockholders of the
two corporations became identical; the stockholders
in each taking pro rata with his interest in the other,
and thus the persons composing one corporation,
who were to take a contract to build the road, were
the very same persons who held complete control of
the corporation for which the road was to be built.
t
III.
THE UNION PACIFIC RAILROAD CO.
LET us turn for a few moments to a consideration
of the status of the Union Pacific Railroad at this
time, and to do this it will be necessary to investigate
briefly the circumstances which made that work a
national necessity. Twenty years ago had any one
advocated the building of such a road, he would
have been looked upon as insane. Yet we find that
the discovery of gold on the Pacific coast attracted
there a large population who, separated as they were
from the influence of the rest of our country, were
gradually acquiring a sentiment of independence
toward the common country; and the conclusion
was coming slowly but surely that their interests,
separated by so great a distance from the East, could
be best protected in a nation governed by their own.
peculiar laws; and at the breaking out of the great
civil war, there was danger of our losing that
valuable territory west of the Rocky mountains
unless some means could be devised to place them
in closer communication with the East; and to do
this it would be necessary to construct a railroad
across the entire country and thus, by placing them
in easy access to the East, strengthen the bonds
24
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25
of union between the Atlantic and Pacific coast,
develop the immense resources of the central portion
of the United States, and open a new route for com-
merce from the Atlantic and Europe, to the Pacific
and Asia. This was an idea that came uppermost
in the minds of the government during even the first
years of the great war. Every effort was made to
secure this end; every means was tried to induce
capitalists to embark their fortunes in the undertak-
ing. The government in July, 1862, incorporated
the company, giving them vast grants of land along
the entire route, loaning them government bonds to
a large amount per mile of the road, and asking
only that its loan should constitute a first lien
upon the road when completed. Books for sub-
scriptions to the stock were opened throughout the
country, but the undertaking was too hazardous and
novel to secure the co-operation of any responsible
persons, and during the following two years only
$2,180,000 of the stock was subscribed for, and
only ten per cent. of that amount was actually paid in
in cash. Thus it will be seen that, in spite of all the
concessions and aid that the government tendered,
only $218,000 had been raised to complete this vast
work. One restriction which the government had
imposed, was that the capital stock of the com-
pany, which was placed at $100,000,000, should
not be sold at less than par, or $100 per share. In
order to have enabled any company to obtain the
control of the road would have required an invest-
ment of some $51,000,000.
26
THE CREDIT MOBILIER
In July, 1864, Congress deemed it necessary to
increase the inducement for capital to embark in this
great enterprise, and therefore it doubled the land
grant, and authorized the company to issue an
equal amount of first mortgage bonds, having pre-
cedence over those of the government; thus in
reality reducing the lien of the government for the
bonds advanced by it, to a second mortgage. This
course led to practical action. In the meantime
however, attempts had been made to build the Union
Pacific Railroad. Immediately after the first organ-
ization of the company in 1862, they went to work
and commenced to build the road themselves by
putting men and laborers on. This was continued
through the fall and winter of 1863 and 1864, by
which time the company had expended upwards
of $600,000, leaving the company in debt beyond
the subscriptions received by them, of $281,000, to
the amount of more than $300,000. They found
it impossible to proceed with the work; parties
would not take the stock, and they were forced to
sell some of the materials, cars, &c., which they
had bought; and yet they did not entirely abandon
the work.
May 12, 1864, a committee was appointed with
authority to receive proposals and let the work of
building the road to private parties. A contract was
made with H. M. Hoxie, August 8th, 1864, for the
construction of one hundred miles of road, commenc-
ing at the city of Omaha, at the rate of $50,000 for
each and every mile so completed; the contractor
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to receive the securities of the company in payment.
It was but a short time after Hoxie had taken this
contract that he found he could not go on with
it, and he assigned his contract to the Credit
Mobilier, which corporation only a few months
before had been obtained by the principal stockhold-
ers of the Union Pacific Railroad for the very pur-
pose of taking the contract of constructing the road;
and doubtless the contract to Hoxie was only for the
purpose of having it assigned. The date of that
assignment was March 15, 1865; but as early as
October 7, 1864, an agreement was made between
said Hoxie and Thomas C. Durant, president of the
Credit Mobilier, and who was also vice-president of
the Union Pacific Railroad Company, that such an
assignment should be made to such party or parties
as said Durant should name. One condition of the
contract of Hoxie was that he should subscribe for
the capital stock of the Union Pacific Railroad to the
amount of $500,000. Only three days prior to the
agreement to assign, and at a time when Hoxie had
virtually abandoned his contract, if indeed he had
ever taken it in good faith, the following correspond-
ence passed between the two parties:
NEW YORK, October 4, 1864.
To the President and Executive Committee of the
Union Pacific Railroad Company:
On condition that your railroad company will extend
my contract from its present length of 100 miles, so as to
28
THE CREDIT MOBILIER
embrace all that portion of the road between Omaha and
the 100th meridian of longitude, I will subscribe, or
cause to be subscribed for, $500,000 of the stock of your
company.
H. M. HOXIE,
By H. C. CRANE,
Attorney.
The above proposition is hereby accepted for and on
behalf of the Union Pacific Railroad Company.
October 3, 1864.
JOHN A. DIX,
C. S. BUSHNELL,
GEO. T. M. Davis,
45
Special Committee.
Thus the Hoxie contract was made to embrace all
the road between Omaha and the one hundredth
meridian, a distance of 247 miles, and three days
later this contract was virtually assigned to the
Credit Mobilier, though in form the assignment was
made in the following March, and the Credit Mo-
bilier, under this assignment, completed the contract
on the fifth of October, 1866.
It was alleged by some of the witnesses before
the Congressional committee that this contract cost
the Union Pacific Railroad Company $12,974,416.24,
and that it cost the Credit Mobilier 7,806,183.33,
being a profit to the Credit Mobilier of $5,168,-
232.91. This alleged profit, it should be borne in
mind, was in stock and bonds of the Union Pacific
Railroad Company estimated at par, while the
OF AMERICA.
29
market value of the stock was only about thirty
cents, and of the bonds about eighty-five cents on
the dollar. The facts concerning this profit will be
spoken of further on.
σ
The contract with Hoxie having been completed,
a new agreement was made by Thomas C. Durant,
vice-president of the Union Pacific Railroad, with a
Mr. Boomer, for the construction of 153,3 miles of
road west from the one hundredth meridian. Under
this agreement Boomer was to receive $19,500 per
mile for that portion of the contract east of the North
Platte, and for that portion of the contract west of
the river $20,000 per mile-the bridge across the
river, station buildings, equipment, etc., to be addi-
tional. This contract was never ratified by the
company, although some fifty-eight miles of the
road had been completed. It has been impossible
to ascertain what these fifty-eight miles cost the
company, but from the evidence of Mr. Durant, the
only evidence attainable, it appears that it did not
exceed $27,500 per mile, including station houses,
equipments, etc. Yet in view of all this, and with
the facts clearly before the company, on the fifth of
January, 1867, the board of directors, by a resolu-
tion, extended the Hoxie contract over these fifty-
eight miles, thus proposing to pay to the Credit
Mobilier -the Credit Mobilier being in reality them-
selves—$22,500 per mile for these fifty-eight miles
(amounting to $1,345,000) without any consideration
whatever, the road already having been completed
and accepted by the government.
•
30
THE CREDIT MOBILIER
The following is a copy of the resolution, of date
January 5, 1867.
Resolved, That the Union Pacific Railroad Company
will, and do hereby consider the Hoxie contract extended
to the point already completed, namely, 305 miles west
from Omaha, and that the officers of this company are
hereby authorized to settle with the Credit Mobilier at
$50,000 per mile for the additional fifty-eight miles.
This resolution was not carried out on account of
the protest against it by Thomas C. Durant, al-
though, as will appear hereafter, this road, fully
constructed and accepted by the government, cost-
ing in its construction, according to the statement of
Mr. Durant, though no record of it could be found
on the books of the railroad company, complete,
with station houses, equipment, etc., not over
$27,500 per mile, was included in the Ames con-
tract, which will soon be outlined, and paid for there
at the rate of $42,000 per mile.
The reader will more clearly understand the true
relations of this extension of the contract, and the
position of Mr. Durant concerning it, when he has
been informed that, at about this time, Mr. Durant
had been removed from the board of directors of the
Credit Mobilier, and that a desperate quarrel had
ensued, in which he openly made his boasts that the
Credit Mobilier should never have another contract
from the Union Pacific Railroad. The dissensions
that arose concerning this were of long duration, and
entailed immense difficulties upon both companies.
OF AMERICA.
31
From the evidence that has been produced, it has
also appeared that the contract with Boomer, just
alluded to, never had any, existence, except in the
mind of Mr. Durant; that the work upon these fifty-
eight miles had, in fact, been performed by the
Credit Mobilier, under the expectation of receiving
the contract for its construction. The Credit Mobil-
ier had gone on with the work, had expended its
money in its construction, and, when it became ap-
parent that the opposition of Durant and his party
was strong enough to prevent the execution of the
contract, the board of directors of the railroad, in
doing what they supposed to be only just and fair,
voted to extend the Hoxie contract over these fifty-
eight miles, in order that the Credit Mobilier might
receive returns for their expenses. Mr. Durant then
protested against this action of the board, for the rea-
son, as it afterwards appeared, of having it a matter
of record, to which he could subsequently refer, to
show the purity of his motives, should any investiga-
tion ever be made. In spite of the failure of this ex-
tension of the contract, owing to the friendly attitude
of the railway company toward the Credit Mobilier,
and the promise to give them a contract as soon as
possible, the Credit Mobilier continued to construct
the road, even beyond the fifty-eight miles above
spoken of.
On the first of March, 1867, another contract was
made, for building the road west of the one hun-
dredth meridian, to J. M. S. Williams. This con-
tract was to cover 267 miles, at a cost of $50,000
5
)
32
THE CREDIT MOBILIER
per mile, and included that portion which was al-
ready completed; but at this time the completed
portion of the road west of the one hundredth merid-
ian, to be included in this contract, extended over
ninety-eight and one-fourth miles. This proposi-
tion was accepted by the company with the proviso:
"That $7,500 per mile be reserved out of the pay-
ment." At the time of making this contract, Wil-
liams had made an agreement with the Credit
Mobilier that he would assign his contract to them.
Thus in reality making the contract between the
Union Pacific Railroad and the Credit Mobilier ;
that is, a contract to the Credit Mobilier, by which
they were to receive payment for the road which was
already completed, at the same rate as under the
Hoxie contract. This contract of Williams was not,
however, carried out, owing to the protest of Mr.
Durant, which protest can best be understood by
reading the same, which is in the words following :—
UNION PACIFIC RAILROAD OFFICE,
March 27, 1867.
To the Directors of the Union Pacific Railroad Com-
pany:
GENTLEMEN,I protest against the resolution of the
board of directors, passed at your last meeting, which pro-
poses to give the contract of the road of this company,
commencing at the one hundredth meridian of longitude,
for the reason that a section of road, already accepted, is
included in the contract, and it does not appear that this
company derives any benefit adequate to the price paid
over the cost of construction, and does not in future
OF AMERICA.
33
require, as an essential point in the contract, the completion
of the road within the shortest possible time, and for other
reasons named in a previous protest, in relation to the
Hoxie contract.
I beg to call your attention again to the fact that part
of this work has been done for weeks, and that contracts
have been made, and merchandise delivered, for nearly
one hundred and fifty miles of road, which the company
has paid for, as shown by the books.
Respectfully,
THOMAS C. DURANT.
The next important step in the history of this
transaction is the Ames contract, the most important,
perhaps, of any that was made during the construc-
tion of this great road. But, before touching on
that, it may be well to dwell a little on the relations
of these different corporations, that is, the Union
Pacific Railroad and the Credit Mobilier.
It must be borne in mind that the stockholders of
the one and the stockholders of the other were iden-
tical, and that whatever contracts were made by the
one were known to the other. The first large con-
tract that was made was with H. M. Hoxie, and it
may be interesting to inquire, who was Hoxie? The
contract which he had taken implied not merely an
expenditure of many millions of dollars in the con-
struction of the road, which was to be repaid him in
the securities of the company, but a subscription of
$500,000 in stock of the Railroad. These securities
could not easily be converted into cash, even far
below par, thus making it an outlay of cash
essentially.
C
34
THE CREDIT MOBILIER
Who was this man with such unlimited means?
The testimony of Mr. Oliver Ames before the Con-
gressional committee is that Hoxie was a man of
no responsibility; that he was an employé of the
road, and had charge of the ferry over the Missouri
river at Omaha; that it was never expected that he
would carry out the contract; that he was simply a
figure-head; a party to whom the contract was to
be let with the view of his turning it over to some
one else. That some one else proved to be the Credit
Mobilier—the very parties who under the guise of
a different name, let the contract to him. The same
is also true of the contracts with Boomer, and the
one made later with Davis. Was it all the same
with the immense contract of Mr. Ames, which
was next to follow? We shall have occasion to con-
sider this farther on. Up to this time, then, there
had been built over three hundred miles of this
road, and the construction was by the Credit
Mobilier. Where did this corporation get all these
means? They took their pay from the Union
Pacific Railroad Company, in the stocks and bonds
of the road, and it became necessary to convert
these into cash. They could not buy, nor could the
directors of the railroad sell the stock of the road
for less than par; and when it was placed upon the
market it would not bring more than thirty cents on
the dollar, and few sales could be made even at that
or any other price.
The road could not issue it for less than par, and so
the Credit Mobilier must lose at least seventy dollars
OF AMERICA.
35
on every share of the stock that they purchased.
It must appear upon the records of the Railroad
Company that this stock was paid for in cash; that
was required by the articles of incorporation. They
could not use it to pay for the construction of their
road. The act of incorporation required that it
should be sold for cash at not less than par. But
through the influence of the Credit Mobilier, they
were enabled not only to evade one of these require-
ments, but both. They not only by this means used
the stock and bonds of the road, but also sold the
stock of the same far below par. The plan of oper-
1
ations, briefly stated, was that when any payment
was to be made on account of work done, the Rail-
road Company would give its check to the Credit
Mobilier for the amount, and thereupon the Credit
Mobilier would pass the identical check back to the
Railroad Company, receiving from them the stock
and bonds. This they called a cash transaction ;
and yet the Union Pacific Railroad Company had
no money, except as they sold their stock or bonds,
or converted the government loans into cash! The
Credit Mobilier had no money, except as they sold
these stocks and bonds; for their capital, originally
of $2,500,000, afterwards increased to $3,750,000,
was soon used up in the construction of this road.
But to all intents and purposes, the two companies
were one and the same. Even this position was
claimed by Thomas C. Durant, the president of the
Credit Mobilier, and this was one ground of his
objection to the extension of the Hoxie contract.
1
36
THE CREDIT MOBILIER
Durant was opposed to the Credit Mobilier, as a
corporation, having any further contracts with the
Railroad Company, and it was not strange that such
should be the case. Gradually large amounts of the
stock of the Railroad Company had been absorbed
by the public, and unless some means were taken to
secure to themselves the benefits of these great con-
tracts, they might lose their advantage. Some
more stringent means must be used; something
must be done by which the control of the two cor-
porations should remain undisturbed and secure,
until the mission of the Credit Mobilier should be
accomplished, and this was done most effectually in
the next great move in the history of this road.
After the proposition of J. M. S. Williams was
made, no great change occurred in the situation of
affairs. In spite of the allegations to the contrary,
the testimony of the many witnesses before the Con-
gressional committee was, that work was constantly
being done upon the road, and by the 16th of
August, 1867—the date of the Ames contract—one
hundred and thirty-eight miles of the road west of
the one-hundredth meridian had been completed
and accepted by the government, and this construc-
tion had been done at an expense, on an average,
including equipments, of about $27,000 per mile, to
the Company. Still let us bear in mind that the
only evidence of the cost of this portion of the road
rests on the testimony of Mr. Durant, and that the
books of the Railroad Company do not give any evi-
dence of this cost.
OF AMERICA.
37
The Oakes Ames contract, of which we shall now
speak, was for the construction of 667 miles of road,
commencing at the one-hundredth meridian, at
prices ranging from $42,000 per mile, for the first
hundred miles, to $96,000 per mile. It has been
alleged by some, that there was an understanding
between the officers of these two companies, that
this contract, known as the Ames contract, should
be assigned by him for the benefit of the Credit
Mobilier. By others it was claimed that it was only
an implied understanding. But the facts show that
reliance was placed solely upon the honor of Mr.
Ames to make the assignment for the benefit of all.
However this may be, whether the understanding was
expressed or implied, or whether there was no under-
standing at all, it is hardly material; for within two
months from the signing of the contract by Mr.
Ames, it was assigned to seven persons as trustees,
for the benefit of the stockholders of the Credit
Mobilier. We shall consider the nature of this
assignment a little further on. These trustees were
among the principal stockholders and directors of
the Credit Mobilier and the Union Pacific Railroad
Company, and under their direction, that portion of
the Union Pacific Railroad embraced in the Ames
contract was completed.
That this contract may be fully understood, as
well as the assignment to the trustees, they will each
be set out in full.
}
IV.
THE AMES CONTRACT AND ASSIGN-
MENT.
THE OAKES AMES CONTRACT.
AGREEMENT made this 16th day of August,
1867, between the Union Pacific Railroad Com-
pany, party of the first part, and Oakes Ames,
party of the second part, witnesseth
That the party of the first part agrees to let and
contract, and the party of the second part agrees to
contract, as follows, to wit:
First. The party of the second part agrees and
binds himself, his heirs, executors, administrators,
and assigns, to build and equip the following-named
portions of the railroad and telegraph line of the
party of the first part, commencing at the 100th
meridian of longitude, upon the following terms and
conditions, to wit:
Ist 100 miles at, and for the rate of $42,000 per mile.
2d 167 miles at, and for the rate of $45,000 per mile.
3d 100 miles at, and for the rate of $96,000 per mile.
4th 100 miles at, and for the rate of $80,000 per mile.
5th 100 miles at, and for the rate of $90,000 per mile.
6th 100 miles at, and for the rate of $96,000 per mile.
38
THE CREDIT MOBILIER.
39
Second. At least 350 miles shall be, if possible,
completed and ready for acceptance before the 1st
day of January, 1868, provided the Union Pacific
Railroad Company transport the material. The
whole to be constructed in a good and workmanlike
manner, upon the same general plan and specifica-
tions as adopted east of the 100th meridian of longi-
tude. The party of the second part shall erect all
such necessary depots, machine-shops, machinery,
tanks, turn-tables, and provide all necessary ma-
chinery and rolling-stock, at a cost of not less than
$7,500 per mile, in cash, and shall construct all
such necessary side-track as may be required by the
party of the first part, not exceeding six per cent. of
the length of the road constructed, and to be con-
structed under this contract. The kind of timber
used for ties, and in the bridges, and in its prepara-
tion, shall be such as from time to time may be
ordered or prescribed by the general agent, or the
company, under the rules and regulations, and
standard as recommended by the Secretary of the
Interior of the date of February, 1866.
Third. Whenever one of the above-named sec-
tions of the road shall be finished to the satisfaction
and acceptance of the Government Commissioners,
the same shall be delivered into the possession of
the party of the first part, and upon such portions of
the road, as well as on that part east of the 100th
meridian now completed, the party of the first part
shall transport, without delay, all men and material,
to be used in construction, at a price to be agreed upon
40
THE CREDIT MOBILIER
by the party of the second part, his heirs, executors,
administrators, or assigns, and the general agent,
but not less than cost to the party of the first part.
Fourth. The party of the second part, his heirs,
executors, administrators, or assigns, shall have the
right to enter upon all lands belonging to the com-
pany, or upon which the company may have any
rights, and take therefrom any material used in the
construction of the road, and may have the right to
change the grade and curvature within the limits of
the provisions of the act of Congress, for the tem-
porary purpose of hastening the completion of the
road, but the estimated cost of reducing the same to
the grade and curvatures, as established by the chief
engineer, or as approved from time to time by the
company, shall be deducted and retained by the
party of the first part, until such grade and curva-
ture is so reduced.
Fifth. The party of the second part, his heirs,
executors, administrators, or assigns, is to receive.
from the company, and enjoy the benefit of all
existing contracts, and shall assume all such con-
tracts, and all liabilities of the company accrued or
arising therefrom for work done, or to be done, and
material furnished, or to be furnished, for or on
account of the road west of the 100th meridian, cred-
iting, however, the party of the first part on this
contract all moneys heretofore paid or expended on
account thereof.
Sixth. The party of the second part, for himself,
his heirs, executors, administrators, and assigns,
OF AMERICA.
4I
stipulates and agrees, that the work shall be prose-
cuted and completed with energy and all possible
speed, so as to complete the same at the earliest
practicable day, it being understood that the speed
of construction and time of completion is the essence
of this contract, and at the same time the road to
be a first-class road, with equipments; and if the
same, in the opinion of the chief engineer, is not so
prosecuted, both as regards quality and dispatch,
that then the said party of the first part shall, and
may, through its general agent, or other officer
detailed for that purpose, take charge of said work,
and carry the same on at proper cost and expense
of the party of the second part.
Seventh. The grading, bridging, and super-
structure to be completed under the supervision of
the general agent of the company, to the satisfaction
of the chief engineer, and to be of the same char-
acter as to the workmanship and materials as in
the construction of the road east of the 100th merid-
ian.
It is, however, understood that all iron hereafter
purchased or contracted for, shall be of the weight
of not less than fifty-six pounds to the yard, and to
be fish-bar joints.
Eighth. All the expenses of the engineering are
to be charged and paid by the party of the second
part, except the pay and salary of the chief engineer
and consulting engineer, and their immediate assist-
ants, and the expenses of the general survey of the
route.
42
THE CREDIT MOBILIER
Ninth. The depot buildings, machine-shops,
water-tanks, and also bridges, shall be of the most
approved pattern, and they, as well as the kind of
masonry and other material used, shall be previous-
ly approved by the general agent and chief engineer
of the company, and all tunnels shall be of the
proper width for a double track, and shall be
arched with brick or stone, when necessary, for the
protection of the same.
Tenth. Payments to be made as the work pro-
gresses, upon the estimates of the chief engineer,—
in making which the engineer shall deduct from each
section its proportionate cost of the equipment not
then furnished, station-buildings, superstructure, and
cost of telegraph; but all materials delivered or in
transit for the account of the company, may be es-
timated for.
Eleventh. Payments hereon shall be made to the
party of the second part, his heirs, executors, ad-
ministrators, or assigns, in cash; but if the govern-
ment bonds received by the company cannot be
converted into money at their par value net, and the
first mortgage bonds of the company, at ninety cents
on the dollar net, then the said party of the second
part, his heirs, executors, administrators, and assigns,
shall be charged herein the difference between the
amount realized and the above-named rates; pro-
vided the first mortgage bonds are not sold for less
than eighty cents on the dollar; and if there shall
not be realized from the sale of such bonds an
amount sufficient to pay the party of the second part,
OF AMERICA.
43
his heirs, executors, administrators, or assigns, for
work as stipulated in this contract, and according to
the terms thereof, then such deficiency shall, from
time to time, be subscribed by said party of the sec-
ond part, his heirs, executors, administrators, or
assigns, to the capital stock of said company, and
proceeds of such subscriptions shall be paid to said
party of the second part, his heirs, executors, ad-
ministrators, or assigns, on this contract.
Twelfth. On the first one hundred miles on this
contract, there shall be added to the equipment now
provided for, and intended to apply on this section,
as follows, viz.: six locomotives, fifty box-cars, four
passenger-cars, two baggage-cars, and a proportion-
ate amount of equipment of like character, to be
supplied on the second section of one hundred miles
after the same is completed.
Thirteenth. The amount provided to be expend-
ed for equipment, station-buildings, &c., shall be
expended under the direction of the party of the first
part, and in such proportion for cars, locomotives,
machine-shops, station-buildings, &c., and at such
points as they may determine. The party of the first
part to have the full benefit of such expenditures
without profit to the contractor, or they may, in
their option, purchase the equipment, and expend
any portion of said amount provided, at any point
on the road where they may deem the same
most advantageous to the company, whether on
the section on which said reservation occurs or
not.
44
THE CREDIT MOBILIER
Fourteenth. The telegraph line is included here-
in under the term "railroad," and is to be construct-
ed in the same manner, and with similar materials,
as in the lines east of the one hundredth meridian.
The said parties hereto, in consideration of the
premises and of their covenants herein, do mutually
agree, severally, to perform and fulfil their several
respective agreements above written.
This contract having been submitted to the execu-
tive committee by resolution of the board of direct-
ors, August 16, 1867, and we having examined the
details of the same, recommend its execution by the
proper officers of the company with the Hon. Oakes
Ames, the party named as the second part.
(Signed)
OLIVER AMES,
C. S. BUSHNELL,
SPRINGER HARBAUGH,
THOMAS C. DURANT,
Executive Committee Union Pacific
Railroad Company.
This contract was adopted by the executive com-
mittee on October 1st, 1867, and one condition of its
being adopted was that it should receive the written
assent of all the stockholders of the Union Pacific
Railroad Company. All this time the outstanding
stock of the Railroad Company was continually in-
creasing, and now amounted to about $5,000,000.
This had been sold almost entirely among the
OF AMERICA.
45
stockholders of the Credit Mobilier, and of this,
nearly, if not quite, eighty-five per cent. remained
in the hands of such stockholders. But it was
necessary that the control should be so absolutely
in the hands of a few of the principal stock-
holders, that the management of the two concerns,
until the completion of this immense contract, should
not be changed. This was the next step to be
settled, and it was settled beyond all controversy.
It might become necessary before the completion of
the contract, to place upon the market large amounts
of the stock of the railroad company. This might
pass into the hands of those hostile to the present
directors; might, indeed, end in dissensions, and
even jeopardize the successful completion of the
road. Indeed, at the last election of directors pre-
vious to the making of this contract, the election was
a very close one, and nearly resulted in a change of
directors. The mighty responsibility that Mr. Ames
had assumed in signing this contract, was too great
to allow anything to stand between him and com-
plete success. He had obligated himself, his heirs,
executors, and administrators, for more than $47,-
000,000, perhaps the largest obligation ever assumed
by a single individual in the United States, if not the
world. Any error committed to defeat it, would
ruin him for ever, and all those associated with him.
Every point must be protected, every obstacle must
be removed. The calculations had all been made;
the initiatory steps had already been taken. Every
avenue through which defeat could come had been
46
THE CREDIT MOBILIER
guarded, and when the contract had been ratified by
the stockholders, the machinery was all ready for
operation. An assignment of this contract was
made, not to the Credit Mobilier direct, but to cer-
tain trustees for the benefit of the stockholders of the
Credit Mobilier, but not to all, but only such as
being stockholders in the Union Pacific Railroad,
should have made and executed powers of attorney
or proxy, irrevocable, to said trustees, empowering
them to vote upon at least six-tenths of all the shares
of stock of the Union Pacific Railroad Company
owned by said shareholders of the Credit Mobilier,
and upon six-tenths of all that might come to them
through any dividend resulting from said contract.
This assignment is in the following words, viz. :—
ASSIGNMENT OF CONTRACT TO T. C. DURANT AND
OTHERS.
MEMORANDUM of agreement, in triplicate,
made this 15th day of October, 1867, between
Oakes Ames, of North Easton, Massachusetts,
party of the first part; Thomas C. Durant, of the
City of New York, Oliver Ames, of North
Easton, Massachusetts; John B. Alley, of Lynn,
Massachusetts; Sidney Dillon, of the City of
New York; Cornelius S. Bushnell, of New
Haven, Connecticut; Henry S. McComb, of
Wilmington, Delaware; Benjamin E. Bates, of
Boston, Massachusetts, parties of the second
part, and the Credit Mobilier, of America, party
of the third part.
"
OF AMERICA.
47
That, whereas the party of the first part has
undertaken a certain large contract, for the con-
struction of a certain portion, therein named, of the
railroad and telegraph line of the Union Pacific
Railroad Company, over the plains, and through
and over the Rocky Mountains, which will require a
very large and hazardous outlay of capital, which
capital he is desirous to be assured of raising, at
such times and in such sums as will enable him to
complete and perform the said contract according to
its terms and conditions; and
Whereas, the Credit Mobilier of America, the
party of the third part, a corporation duly established
by law, is empowered by its charter to advance and
loan money in aid of such enterprises, and can con-
trol large amounts of capital for such purposes, and
is willing to loan to said party of the first part such
sums as may be found necessary to complete said
contract, provided sufficient assurance may be made
to said party of the third part therein, that said sums
shall be duly expended in the work of completing
said railroad and telegraph line, and that the pay-
ments for the faithful performance of said contract
by said railroad company, shall be held and applied
to reimburse said party of the third part for their
loans and advances, together with a reasonable in-
terest for the use of the money so loaned and ad-
vanced; and,
Whereas, said party of the third part fully believes
that said contract, if honestly and faithfully execu-
ted, will be both profitable and advantageous to the
48
THE CREDIT MOBILIER
parties performing the same, are therefore willing
to guarantee the performance and execution of the
same, for a reasonable commission to be paid there-
for; and,
Whereas, both parties of the first and third part
have confidence and reliance in the integrity, busi-
ness capacity, and ability of the several persons
named as parties of the second part hereto, and con-
fidently believe that said persons have large interests,
as well in the Union Pacific Railroad Company, as
in the Credit Mobilier of America, they will execute
and perform the said contract, and faithfully hold the
proceeds thereof to the just use and benefit of the
parties entitled thereto :
Therefore, it is agreed by and between the said
parties of the first, second, and third part hereto, as
follows, that is to say:
That said Oakes Ames, party of the first part
hereto, hereby, for and in consideration of one dol-
lar lawful money of the United States, to him duly
paid by the party of the second part, and for divers
other good and valuable considerations herein there-
unto moving, doth hereby assign, set over, and
transfer unto the said Thomas C. Durant, Oliver
Ames, John B. Alley, Sidney Dillon, Cornelius S.
Bushnell, Henry S. McComb, and Benjamin E.
Bates, parties of the second part, all the right, title,
and interest of, in, and to the said certain contract
heretofore made and executed by and between the
Union Pacific Railroad Company and the said Oakes
Ames, bearing date the 16th day of August, 1867,
OF AMERICA.
49
for the construction of portions of the railroad and
telegraph line of said railroad company, to which
contract reference is herein made, for them, the said
parties of the second part, to have and to hold the
same to them and their survivors and successors for-
ever in trust.
Nevertheless, upon the following trusts and con-
ditions, and limitations, to wit:
First. That they, the said parties of the second
part, shall perform all the terms and conditions of
the said contract, so assigned, in all respects, which
in and by the terms and conditions thereof, is under-
taken and assumed and agreed to be done and per-
formed by the said party of the first part herein
named.
Second. That they, the said parties of the second
part, shall hold all the avails and proceeds of the
said contract, and therefrom shall reimburse them-
selves and the party of the third part hereto, all
moneys advanced and expended by them, or either
of them, in executing or performing the said con-
tract, with interest and commission thereon, as here-
inafter provided.
Third. Out of the said avails and proceeds, to
pay unto the parties of the second part a reasonable
sum as compensation for their services as such trus-
tees for executing and performing the terms and
conditions of this agreement, which compensation
shall not exceed the sum of three thousand dollars
per annum, to each and every one of the parties of
the second part.
D
50
THE CREDIT MOBILIER
Fourth. To hold all the rest and residue of the
said proceeds and avails for the use and benefit of
such of the several persons holding and owning
shares in the Capital stock of the said Credit Mobilier
of America, on the day of the date hereof, in propor-
tion to the number of shares which said stockholders
now severally hold and own, and for the use and
benefit of such of the several assignees and holders
of such shares of stock at the times herein set forth,
for the distribution of said residue and remainder of
said avails and proceeds, who shall comply with the
provisions, conditions, and limitations herein con-
tained, which are, on their part, to be complied
with.
Fifth. To pay over, on or before the first Wednes-
day of June and December in each year, or within
thirty days thereafter, his just share and proportion
of the residue and remainder of the said proceeds
and avails as shall be justly estimated by the said
trustees to have been made and earned as net profit
on said contract, during the preceding six months,
to each shareholder only in said Credit Mobilier of
America, who, being a stockholder in the Union
Pacific Railroad, shall have made and executed his
power of attorney or proxy, irrevocable to said sev-
eral parties of the second part, their survivors and
successors, empowering them, the said parties of the
second part, to vote upon at least six-tenths of all the
shares of stock owned by said shareholders of the
Credit Mobilier of America, in the capital stock of
the Union Pacific Railroad Company, on the day of
OF AMERICA.
51
the date hereof, and six-tenths of any stock in said
Union Pacific Railroad Company, he may have.
received as dividend or otherwise, because, or by
virtue of having been a stockholder in said Credit
Mobilier of America, or which may appertain to any
shares in said Union Pacific Railroad Company,
which had been so assigned to him at the time or
times of the distribution of the said profits as herein
provided; and this trust is made and declared upon
the express condition and limitation that it shall not
inure in any manner or degree to the use or benefit
of any stockholder of the Credit Mobilier of America,
who shall neglect or refuse to execute and deliver
unto the said parties of the second part his proxy or
power of attorney, in the manner and for the purpose
hereinbefore provided; or who shall in any way, or
by any proceeding, knowingly hinder, delay, or in-
terfere with the execution or performance of the trust
and conditions herein declared and set forth.
Then follow other conditions, that said trustees
shall act with the majority of said trustees; that
all their votes should be recorded; that an office
should be kept in the city of New York; meetings
of said trustees to be called by the secretary; that
such secretary should be appointed by the trustees,
and should keep the accounts and vouchers of all
transactions, his books to be open to the inspection
of any trustee; that said trustees should cause a
monthly statement, showing amount due from the
railroad, to be made to the Credit Mobilier: also, in
}
52
THE CREDIT MOBILIER
case of a vacancy in the board of trustees, the va-
cancy to be filled by remaining trustees; in case of
wilful neglect or fraud of any trustee, he was to be
deprived of his trusteeship, and all interest through
or under the contract. The trustees agreed to accept
the trust, and faithfully perform its conditions. The
Credit Mobilier agreed to advance the necessary
funds at seven per cent. interest, and to guarantee
the performance and execution of the contract, and
to hold harmless and indemnify the parties of the
first and second part, from any loss through said
contract, for a commission of two and one-half per
cent. of the money advanced by it, and a further
agreement that the net profits of the work finished
on the first hundred miles prior to January 1, 1867,
should be paid to the Credit Mobilier.
This assignment is signed by Oakes Ames, by
each of the seven trustees, and by the Credit Mobil-
ier of America by Sidney Dillon, president.
Such is the contract and its assignment; and in
what respect does it differ from the contract of
Hoxie, except in its magnitude and difference in the
parties. The one was given to an irresponsible
person, who, it was never intended, should complete
the contract, but was used as a figure head to trans-
fer the contract to the Credit Mobilier-in other
words, back to the Pacific Railroad. And it is in-
deed understood and claimed by many, even of those
who have paid the subject much attention, that the
other, though a man of large means, of great execu-
tive ability, took the contract simply for the purpose
OF AMERICA.
53
of turning it over to a board of trustees composed of
the officers and directors and principal stockholders
of the two corporations, who should then hold the
absolute control of both corporations, and who, by
this means, could use for their own exclusive benefit
the extraordinary franchises, and concessions, and
loans which the government had made to push
forward the building of the Pacific Railroad; but
this is a position which cannot be maintained by
any one who will give the subject a careful con-
sideration, and try to arrive at a true understanding
of this contract and its assignment.
We are ready to affirm-and we believe this
contract and assignment will bear us out-that
the Credit Mobilier, as a corporation, had nothing
whatever to do with this contract or its execution.
We have before alluded to the hostility of Mr.
Durant toward the Credit Mobilier. No contract
could, by reason of that hostility, be made to the
Credit Mobilier, or to any one who would assign
it to that company. As matters were standing, the
construction of the road must soon be brought to an
end. The Credit Mobilier had indeed been con-
structing a part of the road without any contract,
but this was a dangerous proceeding, and might end
in total loss. Efforts were made to get some con-
tractor to take a contract, but in all the country
there was no man so foolish. At last efforts for a
compromise were made, and rather than see the
road fail, rather than see that project, to which his
life was devoted, brought to an inglorious end,
54
THE CREDIT MOBILIER
Mr. Ames was prevailed upon to take the contract.
In taking it his motives were high, honorable, and
patriotic. The road was a public, a national neces-
sity. To falter now, the consequences might be the
abandonment for generations of any attempt to cross
the continent by means of a railroad. Mr. Ames
considered well the responsibility he assumed. He
believed also that by proper management the road
could be built at the contract price, so that a small
profit could be realized to the contractor, and he
firmly believed that when the road was once com-
pleted the increase of business along its line would
make its securities valuable. There was one con-
dition he imposed, and that was that the contract
must receive the assent of every stockholder of the
Union Pacific Railroad, in writing When the
question was raised as to the manner in which this
mighty contract was to be executed, Mr. Ames
insisted that he must take the contract untrammeled
by any promise, agreement, or understanding. He
could tell no man what he would do. "Of course,"
said Mr. Ames, "I must have associates, but no
man shall be wronged, no one shall be deprived of
his rights. I am an honest man, and I will see that
every man is protected.”
V.
THE ASSIGNMENT TO SEVEN TRUS-
BOTH
TEES.
OTH sides to the controversy which made this con-
tract necessary, placed the utmost confidence in
Mr. Ames, and in the integrity of his character, and
were sure that the rights of all would be protected.
Thus Mr. Ames took this great contract, with no agree-
ment, understanding, or promise. He made none,
and none was exacted of him. Yet all felt a confi-
dence in him that the contract would be so used that
the interests of all should be guarded. The contract
properly belonged to the Credit Mobilier, which had
commenced the construction of the road, and had
continued it up to the date of the contract. Its entire
capital had been absorbed in that work, and not one
cent of returns had been made to the stockholders.
What profit there was, if any had been made, had
been misappropriated by those who had for-
merly held the management. $3,750,000, which
those stockholders had paid for the capital stock of
that company, were now in the Union Pacific road-
bed. That road had reaped the benefit, while the
men who paid the money had nothing to show for it.
This was the view which Mr. Ames took, and he
55
56
THE CREDIT MOBILIER
determined that this contract should inure to their
benefit to them as individuals and not as a corpora-
tion. He therefore made his assignment to seven
trustees for their benefit, provided they would share
with him the responsibility of the contract; and pro-
vided also that they were holders of Union Pacific
stock. It was an assignment for the benefit of cer-
tain specified individuals, those individuals being
also stockholders in the Credit Mobilier. This term
was used to designate them, because of its simplicity,
and had no relation to the corporation of which they
were members. If, instead of the fourth and fifth
clauses of the declaration of trust contained in the
assignment above, the wording had been "To hold
all the rest and residue of the said proceeds and
avails for the use and benefit of (here naming each
individual stockholder of the Credit Mobilier by
name), in the proportion following, to wit, to (here
designate the proportion which each was to have, it
being the same proportion as the stock owned by him
bore to the entire capital stock of the Credit Mobilier,
&c.") By doing this the exact object desired would
have been obtained, and the connection with the Credit
Mobilier unfortunate as it proved to be—would
have been avoided. Then could have followed the
condition about giving proxies, and everything would
have been precisely as it was, without the compli-
cations that afterwards arose. At this time there
were about one hundred stockholders in the Credit
Mobilier, and so for convenience the designation of
"stockholders in the Credit Mobilier" was used.
OF AMERICA.
57
Upon these grounds it is that we affirm that the
Credit Mobilier had nothing whatever to do with the
Ames contract. This position has also been affirmed
by the Supreme Court of Pennsylvania, where the
Credit Mobilier was sued for taxes to the amount of
$1,200,000, upon the dividends declared by the
trustees, and it was there decided that the Credit
Mobilier had declared no dividends. Could stronger
arguments be used than that the State of Pennsyl-
vania decided against its own claim to the amount
of more than a million dollars?
Upon this assignment being made, the Union
Pacific Railroad Company released Mr. Oakes
Ames from any personal liability under the con-
tract he had signed. The great liability which
Mr. Ames assumed, in less than two months had
entirely vanished, and again he was as free as before
he signed it. Under that contract he incurred no
liability; he did not even enter upon the fulfilling of
the contract, but for these two months it lay dormant;
in fact, for nearly this entire time it was inoperative.
It needed the written assent of all the stockholders
of the Union Pacific Railroad, and this assent was
not obtained until after the first of October. So that
in fact and in reality, the personal liability of Oakes
Ames under the contract amounted to nothing.
There was, however, a difference in one respect
which should be noticed, and which, indeed, has a
very powerful bearing upon not only the liability of
Oakes Ames, but of every beneficiary under the
contract. One condition which Mr. Oakes Ames
58
THE CREDIT MOBILIER
insisted upon before he would accept the contract
was, that it should receive the assent in writing of
every stockholder of the Union Pacific Railroad.
This was obtained. He then assigned the contract to
the trustees, and then the agreement which all the
stockholders in both companies made, made them
each individually liable under that contract. Though
Oakes Ames was in reality released from personal
liability under the contract by the Union Pacific Rail-
road Company, upon his assigning the contract, he,
in common with all others, again took that liability
upon himself, and no man bore the brunt of that lia-
bility more than did he. His whole immense fortune
was involved in the undertaking; and it came near
wrecking him financially. He was at one time
forced, by reason of the responsibility under this con-
tract, and his investments therein, to suspend pay-
ment in his regular business, and ask for an extension
by his creditors. His liabilities at that time amount-
ed to some $8,000,000. But, with a courage seldom,
if ever equalled, he continued on in this enterprise,
and at last was successful, and saw the road com-
pleted. In time all his creditors were fully satisfied.
From this time forth the control of the Union Pa-
cific Railroad passed from the hands of its directors
and officers, into the hands of the seven trustees who
were constructing the road, and into their hands,
irrevocable powers of attorney had been given by the
stockholders to vote upon their shares, thus enabling
them to hold absolute control so long as they should
desire. Certainly they were not long in understanding
OF AMERICA.
59
the position in which they were now placed. In
fact, had they not long worked for this? Had
they not, by means of the influence of the name
of Oakes Ames among the stockholders, obtained it?
The very day following the assignment, these trus-
tees entered into an agreement among themselves
whereby they bound themselves to vote not only with
their own shares, but with the proxies held by them
for such directors of the Union Pacific Railroad as
should be nominated by a majority of the then exist-
ing board of directors, not appointed by the presi-
dent, and no others; and, in case of a failure to
nominate by such directors, then to vote for the
elected members of the existing board, and, in case
any of said trustees should refuse to stand by this
agreement, he was to forfeit all claims for benefits
or dividends under the contracts assigned to them.
Though Mr. Oakes Ames had assigned his entire
contract; though thereafter he had no more to do
with the contract than any other stockholder of the
Union Pacific Railroad Company; though he had
no special authority, he was not without interest by
any means, for he was one of the largest stock-
holders in each corporation, and upon its success
depended its profits. His liability as a contractor
had ceased (though immediately assumed in anoth-
er form), yet his influence was in a great measure
necessary for the successful completion of the con-
tract. Under this contract no work had been done
prior to its assignment to the trustees, yet work had
been progressing, and the road was being pushed
60
THE CREDIT MOBILIER
L
a
forward rapidly by the Credit Mobilier; and at the
date of the assignment—which is essentially the
date of the ratification of the contract by the stock-
holders—there had been 238 miles of the road
completed, which were embraced in this contract-
in other words, more than one-third of the whole
contract was completed before a stroke had been
done. Yet these 238 miles, which had been com-
pleted at a cost not exceeding $27,500 per mile (in-
cluding equipment) to the company, were paid for to
the trustees at a rate of over $42,000 per mile. This
was a profit-if such a name is applicable to it—of
between $2,500,000 and $3,000,000 under this con-
tract for which no work was needed or ever done,
though all this work had been done by the Credit
Mobiler, or more strictly speaking, by the stockhold-
ers of the Credit Mobiler.
In less than two months after the assignment (viz.,
December 12, 1867,) the first dividend was de-
clared, which was $2,244,000 in first mortgage
bonds of the Union Pacific Railroad Company, and
$2,244,000 in the stock of the company. Consider-
ing the bonds at that time worth eighty-five cents,
and the stock thirty cents on the dollar, would
make the actual cash value of that dividend at
the time it was declared, about $2,580,600; and
this, beyond all question, is the extra compen-
sation paid to these trustees on account of the
road already completed, and to that extent a pay-
ment to the stockholders of the Credit Mobiler for
the work done by them without a contract. From
OF AMERICA.
61
this amount there should be deducted $1,104,000
paid by the trustees to the Credit Mobilier on
account of the road included in this contract, which
had been constructed by that Company. These
trustees continued to work under this Ames con-
tract until it was completed. The work was pushed
forward with wonderful rapidity, and as a natural
consequence greatly increased the cost of construc-
tion. It was asserted by one of the trustees that had
the full time been taken in which to complete the
road, it could have been built at scarcely more than
one-half what it did cost.
Great stress has been laid on the fact that at the
time the Ames contract was made, the estimated cost
of building the road over the mountains was greatly
in excess of what it really cost on account of the
discovery of a new route which was much more easy
and far less expensive. This is set forth as one
excuse why the Ames contract was to include all
from the 100th meridian; that by so doing the con-
tract would be less for the whole distance, and thus
the average expense would be the same, for there
being a large profit upon the first portion, the con-
tractor could afford to take a less sum per mile for
the more difficult portion. But it is a fact well set-
tled that the very route upon which the road was
built was known months before that contract was
given, and the advantages of that route were all
known to the contractor, and were considered by
him in his calculations, and in making these calcula-
tions no one believed that the more difficult portions
62
THE CREDIT MOBILIER
of the road could be built for the price named in
the contract, and had not this portion been included,
the average for the balance must have been neces-
sarily largely increased. But there remains the
other fact, which should not be forgotten, that the
completed work included in this contract had been
performed by the Credit Mobilier; and by the con-
tract and its assignment, the trustees were to repay
the Credit Mobilier for this work, which was done,
and out of the money so received the Credit Mobilier
declared the only dividend it ever made.
It is claimed that the plan of letting this contract
to Mr. Ames, including as it did the finished por-
tion, ignored the right of the government in the
premises, and was calculated to destroy all that in-
terest. The government had given them the right
of way, had granted them large subsidies of money
for every mile of road to be built, and had consented
to take a second mortgage as security; had given
them the privilege of creating a debt equal to the
amount advanced by the government, which should
have precedence; and in return asked that a cer-
tain proportion of the net profits should go to the
government, and that the government should have
the right to regulate the fares when the net profits
should exceed a certain per cent. on the cost of the
road, and that by this vast increase in the cost of the
road the interest of the government was practically
destroyed, and the claim to regulate tariffs made of
no effect. But we shall have occasion to consider
this right of the government further on.
OF AMERICA.
63
The Ames contract was finished, but in the mean-
time another contract had been let and, in a few days
after it was made, was assigned to these same trus-
tees. This, the Davis contract, was for the balance
of the road, from the end of the Ames contract, and
embraced about 125 miles, and it was upon the
same terms and conditions as the Ames contract.
Under these three contracts was constructed the
entire road.
It
The difficulties which were surmounted were such '
as to attract the attention of the world. It was the
greatest enterprise ever undertaken in America.
was the first, and public opinion must be controlled,-
public confidence must be secured; the capitalists of
the country must be induced to put their money into
an enterprise where failure was openly predicted
and by the many firmly believed; there was no se-
curity except the obligation of the seven trustees, and
the bonds of the government, which then were below
par. It was a question open to discussion whether
the road would pay even if completed. The debt
that must be created was large, and seemingly im-
possible to meet; the rate of interest was great, and
would eat up all the earnings of the road. The op-
erating expenses must necessarily be large. The
local business of the road could not be depended
upon for any considerable income, until the country
through which it passed should become settled, and
that country was then believed to be but little better
than a desert, where nothing but the hardy sage-
bush would grow, or else it was through the
64
THE CREDIT MOBILIER
mountains, where even man could not live.
Indeed
the undertaking was a hazardous one; indeed it was
enough to appall the stoutest heart, and to frighten
the most reckless capitalist. Yet these men were
not to be diverted from their course; they had
embarked their names, their fortunes upon its
accomplishment, and the most discouraging events
could not make them abandon the object of their
lives.
• ·
Though they were, many of them, men of immense
resources, though their credit had stood in business
circles the very highest, they soon found their credit
in many places badly shaken, and their ability to
carry on the mighty work greatly impeded. They
were compelled to take the securities of the road and
to hold them, because no market could be found for
them; they were forced to borrow money at most
ruinous rates of interest; they were forced to place
the bonds of the road in pledge for the necessary
capital, and that at times at the rate of three
dollars to one. It needed the most watchful care,
the greatest ability in the country, and the most
extraordinary energy to carry it on, and all this
it had. In spite of all discouragements the road
was completed-completed seven years before the
time limited-and it became at once a national
highway; the country through which it passed was
found to be, a fair proportion of the distance, the
nearest approach to the Garden of Eden now found
on earth. Towns and cities sprang up along the line.
Territories became states, and a happy, prosperous
OF AMERICA.
65
people swarmed over those once desolate plains
to find there homes of contentment and peace.
Business was greatly increased, far beyond even
the expectation of its builders; but there was yet.
much to do.
Much capital was needed, and it was necessary
that the men who had risked their all in its com-
pletion should now stand ready to aid it still with their
means. Even with the success already attained, had .
the support of these men been removed, the road
would have become bankrupt, and the millions that
had been spent in its construction would have been
wasted. At the completion of the road the company
found itself $6,000,000 in debt, and this burden must
fall upon individuals, to be followed by others neces-
sary to keep the road in active operation until a busi-
ness was created affording revenue sufficient to meet
the running expenses and interest, and this burden
was sufficient to destroy nearly all profit derived from
the building of the road.
What was that profit? Was it so great as to alarm
any thinking mind? Was it such as to call forth the
criticism of the public? Was it such as to convince
the world that great corruption had been used to se-
cure it?
In estimating profit, we should always
consider the outlay, and the risk assumed.
In con-
sidering this portion of the subject, the figures will
be taken mostly from the testimony brought out by
the Congressional committee of investigation, in
1873. From the report of the committee it appears
that
E
66
THE CREDIT MOBILIER
THE COST TO THE RAILROAD COMPANY OF
The Hoxie contract was
$12,974,416 24
Ames contract
Davis contract
Making total cost
1
1
57,140,102 94
23,431,768 10
$93,546,287 28
THE COST TO THE CONTRACTORS OF
The Hoxie contract $ 7,806,183 33
Ames contract
Davis contract
27,285,141 99
15,629,633 62 50,720,958 94
Leaving a profit to contractors - $42,825,328 34
In addition to this, there was a pay-
ment to the Credit Mobilier on ac-
count of fifty-eight miles,
Making the total profit -
I,104,000 00
$43,929,328 34
This profit, it should be remembered, includes the
payments of bonds and stock at par, and not at its
cash value. It is therefore necessary to ascertain
the proportionate value of each of this class of pay-
ments in order to ascertain what was the cash profit
in the construction of the road. The books of the
company show that the profits under the Ames and
Davis contracts were composed of
$3,777,000 first mortgage bonds, worth ninety cents
on the dollar.
$4,400,000 certificates for first mortgage bonds,
afterwards converted into income bonds at above
par.
OF AMERICA.
67
$5,841,000 income bonds, at sixty.
$24,000,000 stock of Union Pacific Railroad Co.
$2,346,195 cash.
The stock of the Union Pacific Railroad, as has
been stated above, was worth about thirty cents on
the dollar. Sometimes the price would advance and
sometimes would fall, but for all their calculations
the average price was thirty cents.
Upon this basis the actual cash profits of the
Ames and Davis contracts would be as follows:
$3,777,000 first mortgage bonds at
ninety
$4,400,000 certificates for first mort-
gage bonds
$5,841,000 income bonds at sixty
$24,000,000 stock at thirty
$2,346,195 cash
-
Making a total cash profit
-
- $3,399,300 00
4,425,000 00
3,504,000 00
7,200,000 00
2,346,195 00
$20,874,495 00
The profits on the Hoxie contract consisted of
$1,125,000 first mortgage bonds at eighty-five, and
$5,147,232 71 stock at thirty, and making the same
reduction as above, we have
$1,125,000 bonds at eighty-five
$956,250 00
$5,147,232 71 stock at thirty
1,544,169 81
As the cash profit of the Hoxie cont'ct
And if to this is added the profits as
2,500,419 81
above
20,874,495 00
Making total profit of the whole road 23,374,914 81
68
THE CREDIT MOBILIER
In this connection attention is called to the aid
which the government extended to the road, in its
own bonds, and in the first mortgage bonds which
the government had allowed the road to issue and
to make a lien upon the road prior to the claim of
the government.
First mortgage bonds issued -
Sold at a discount of
Net proceeds
-
Government bonds issued
Sold at a discount of
Net proceeds
་
-
1
-
$27,213,000 00
3,494,991 23
$23,718,008 77
-
$27,236,512 00
91,348 72
The net proceeds of the two classes
of bonds
- $27,145,163 28
- $50,863,172 05
We have seen that the actual cost of
the whole road to the contractors
was
-
Value of the bonds over cost of con-
struction
50,720,958 94
142,213 11
In other words, the net proceeds of the govern-
ment and first mortgage bonds were sufficient to pay
for the construction of the entire road, and from the
stock, the income bonds, and land grant bonds, the
contractors received in cash value at last $23,000,000
as profit, being about forty-eight per cent. of the
whole cost. This profit, which certainly is a large
one in whatever light it may be considered, it is
claimed by the directors of the Credit Mobilier is
not the correct statement of the case, but that the
OF AMERICA.
69
actual profit received by them is far less than this-
that it did not, in fact, aggregate more than about
fifteen per cent. ; but how any such conclusion can
be reached from the figures presented by the com-
mittee is far more than the ordinary intellect can
understand. The claim is made, and with some
force, that at times the stock which they took was
worth far less than thirty, and that sales were made
even as low as nine cents on the dollar; but even
considering that the entire issue had been sold at
that rate the cash profit would have reached at least
$16,000,000, or about thirty-two per cent. on the cost.
But the evidence of all parties was that the average
net price of the stock was thirty cents on the dollar.
This is the reasoning of the committee on investi-
gation in Congress, but it seems to us as a most wil-
ful perversion of figures, an unauthorized use of
those figures to prove a proposition which had been
in their minds at the start, and which they were de-
termined to maintain and prove, it mattered not by
what means. This estimate made by the committee
leaves out from the cost of the road a large number
of items, which were expenditures of the Credit
Mobilier, but which might not enter into an estimate
of the "actual cost" of building the road. Every
man who has done any business knows full well that
there are always expenses that could not be calcu-
lated as items of this "actual cost." Such was, in-
deed, the testimony of the witnesses before this
committee, but that testimony was utterly ignored by
the committee in their report. It would tell against
70
THE CREDIT MOBILIER
their argument, and the bias which it is manifest they
entertained from the beginning of the investigation.
Again, the committee refused to take notice of the
testimony of losses, amounting to millions of dollars,
which the Credit Mobilier sustained, notably the loss
of their entire capital of $3,750,000, which had been
paid in in cash, and was entirely used up in the con-
struction of the road, and which should properly be
deducted from the profits shown. The committee
also have recorded as profits the transfer of money
from one account to another; as an instance, the pay-
ment by the trustees of $1,104,000 to the Credit
Mobilier. The committee cite it as a payment by
the Union Pacific Railroad Company. Again, the
committee have figured as profits actual losses, as
may be seen in the bonus which the Credit Mobilier
was compelled to give in order to get the additional
capital subscribed for. As an inducement to the sale
of these additional shares, the Credit Mobilier gave
$1,000 in first mortgage bonds for each $1,000 sub-
scription to the stock. In this way $1,125,000 of
these bonds were disposed of, it being a loss to the
company of that amount, but which the committee
have set forth as a profit. Nor have the committee
noticed the great losses which the Credit Mobilier
and the trustees sustained in their endeavors to find
a market for the securities they had taken.
It was
clearly in evidence that more than $5,000,000 of
Union Pacific stock was sold by the Credit Mobilier
at $4.50 per share, because it could be disposed of
in no other way.
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71
But now the actual profit earned by the Credit
Mobilier and the trustees was in evidence before the
committee, but in their report they made no allusion
to it; let us do that, and then we may understand.
There was never any question raised but that all the
profits made under these contracts were divided. In
fact, the committee states that such was the case.
Below will be found the date of each dividend, the
amount and the cash value of each, reckoning the
bonds at 85 and the stock at 30:—
$2,543,208 First mortgage bonds,
2,543,208 Union Pacific Stock,
-
748,000 First mortgage bonds,
2,201,204 Cash,
1,112,768 Cash,
-
2,804,050 First mortgage bonds,
7,500,000 Union Pacific Stock, -
$2,161,726 80
726.962 40
635,800 00
2,201,204 00
1,112,768 00
2,383,442 50
Dec. 12, 1867,
Dec. 12, 1867,
Jan. 3, 1868,
June 17, 1868,
July 8, 1868,
July 3, 1868,
Dec. 29, 1868,
2,250,000 00
Dec., 1867,
420,000 12 per cent. div. Cr. Mob.,
420,000 00
19,872,438
11,891,903 70
3,750,000 00
Deducting the loss of the Credit Mobilier capital,
(which was an entire loss),
-
Leaves as the net profits, cash value,
8,141,903 70
To this there should, perhaps, be added the pres-
ent value of the Credit Mobilier stock. But that
value is uncertain, and if the utmost that is claimed
by some should be realized, there might be added
about $2,000,000 to this as the total profits. But
these claims are very uncertain.
This being all the profit realized from an expen-
diture of about $70,000,000 or about 12 per cent. But
not counting at all this loss of capital, the profit would
72
THE CREDIT MOBILIER
or not.
be but little over 16 per cent. upon the cost.
This
conclusion coincides with all the testimony before the
committee, and to an unprejudiced mind shows the
bias of this committee, and the determination to un-
earth some gigantic fraud, whether it existed there
From this report were derived nearly all the
arguments that were made before Congress upon
this subject, and which arguments have tended to so
large an extent to influence the public mind, and
prejudice the public against the operations of the
Credit Mobilier. But how changed is the result!
The immense profits of $43,000,000 which have
been paraded before the country, have dwindled
down to less than ten millions, upon an expenditure
of some $70,000,000. Certainly this is a profit that
may of itself sound large, but it was the result of
some four years work, and of great expenditure.
The profit was not larger than that which some of
our merchant princes were making at the same time
and against whom no thought of wrong was ever
entertained, but whose industry and skill were
highly commended.
4
VI.
THE DIFFICULTIES OF CONSTRUC-
WE
TION.
E must at all times consider the risk, and the
circumstances under which that risk was
taken. It should be remembered that there was no one
else willing to undertake so great a contract, no one
who would be willing to risk all he had in such an
endeavor. He must feel sure that he could recover ·
himself from his great outlay, and this no one could
do. The company had tried to build the road itself
and had wholly failed, so that it became necessary
to even sell their rolling stock to pay their debts.
Whatever was done must be done under the greatest
disadvantage. All materials used in construction
had to be transported overland or by means of the
Missouri River, which was exceedingly expensive.
The people were afraid it would not succeed, and at
times could not be induced to buy its bonds, and thus
indeed the capital necessary for its completion could
not be obtained. Under all these discouraging cir-
cumstances this construction company took hold of
the work and pushed it forward to completion. Why
73
74
THE CREDIT MOBILIER
was a construction company necessary? It was
necessary in order to limit the liability in case of
loss. Individuals engaging in it might find them-
selves involved as partners to the full extent of all
debts contracted, while the liability of the construc-
tion company was limited to the amount of its capi-
tal. But this was only one reason. There were
others more powerful. By the charter under which
the road was built, it was provided that the capital
stock was to be $100,000,000, and that the books for
subscriptions to stock were to remain open until the
whole amount should be subscribed. To have e ena-
bled any company or set of men to obtain control
of the road would have rendered necessary a sub-
scription of some $51,000,000. Such a subscription
was an utter impossibility. Every effort that could
be made was made at the beginning, and in two
years the total subscriptions amounted to only a
trifle over $2,000,000. No man or company could
be induced to engage in such a gigantic scheme
unless they could be assured that, when the work
was in progress, and success assured, they were to
remain secure in their hope of profit. Supposing
that a subscription of $36,000,000 (the amount of
stock finally issued,) had been made, and the work
Here there would have been no chance
gone on.
for any profit to be made from construction, for the
work would then be done by the road itself, and the
only chance for any profit from this investment
would be in the running of the road after its com-
pletion. When the work was so far along that its
OF AMERICA.
75
successful completion was assured, another party of
capitalists might come forward, and by new sub-
scriptions, for the books must still remain open, could
obtain control of the road, while those who had built
the road, who had borne all the risk of the enterprise,
who had staked their money on the work, who had
risked their fortunes on its construction, would be
deprived of all voice in the management or control
of the road, by those who had borne no risk at all.
It was this fact that rendered it impossible to obtain
subscriptions, and build the road as the charter sug-
gested. By means of the construction company, all
these dangers were avoided. Under no other con-
ditions could the road have been built at all, and
under this plan every right of the government was
amply protected, and the interests of every stock-
holder fully secured.
The greatest point that is made against this pro-
ceeding is that the construction company, as organ-
ized, consisted of the same men who directed the
other company with whom they contracted. While
this may have been, under most circumstances in
which the government was interested, against policy
and good faith, there was certainly no law forbid-
ding it there was no question as to its technical
legality; and it is a serious question whether a better
contract could have been made by or with any other
company, though wholly separate and distinct in
interest from the other. None save those who
were intimately interested in the success of the road,
could be induced to touch such a contract.
It was
76
THE CREDIT MOBILIER
not as though other roads had reached across the
continent, demonstrating beyond a doubt that such
an enterprise was possible of success; it was not as
though the certainty of its accomplishment had in-
spired the confidence of the public in it, and had made
it plain that it would be safe for capital to invest.
Like all first experiments, it had all these obstacles
to overcome and subdue. It was like the pioneer
who goes far into the wilderness to prepare a foot-
hold for the more timid to follow. The success of
the first endeavor has made it easy to inspire public
confidence in other similar endeavors, and now in
the popularity of such undertakings we are apt to
lose sight of the circumstances surrounding the first.
The first was completed, and has been in successful
operation for more than eleven years, but to this
day, though various lines have been started, and
have received the same fostering care and assistance
of the government, not one in this length of time
has opened a line to the Pacific, and will not for
some years to come. They certainly do not have
so great difficulties to surmount. Public confidence
has been established, and it has been demonstrated
that such roads can be built, and that when built,
are, or can be made, paying investments. However
great may be the cry against the immense profits
that the Credit Mobilier made in the construction of
the Union Pacific Railroad, all this cry has arisen
out of the fact that certain members of Congress
became interested in the stock of the Credit Mobilier,
and political capital was made out of it for the
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77
It
purpose of controlling elections. Other roads have
been built in the same way, and are still being built
in the same manner. How many people are there
now to whom the name of Credit Mobilier is per-
fectly familiar, who have ever heard of the Contract
and Finance Company? and who, if asked to-day,
could tell when or where such an organization ever
existed? And yet it is a corporation almost identi-
cal with the Credit Mobilier, so far as its purposes
and organization are concerned, and in the work
which it did. The Contract and Finance Company
was organized under the laws of the State of Cali-
fornia, and was used for the purpose of constructing
the Central Pacific Railroad from San Francisco to
its junction with the Union Pacific Railroad.
was in operation at the same time that the Credit
Mobilier was at work on the eastern side of the
Rocky Mountains, and was composed of the prin-
cipal stockholders of the Central Pacific Railroad.
This company had a contract to build some six
hundred miles of the road, and the profits that arose
from that construction were very large-far larger
than those of the Credit Mobilier—and this profit,
instead of being divided among the stockholders of
the Central Pacific Railroad, as were the profits of
the Credit Mobilier among the stockholders of the
Union Pacific Railroad, went into the pockets of a
very few individuals. In effect these few individuals
took the contract of building the road, of themselves
as representatives for that road, at an immense.
profit. The government was interested in the road
78
THE CREDIT MOBILIER
the same, and to the same extent, as in the Union
Pacific Railroad. But how changed the circumstan-
ces when a few members of Congress happened to
own a few shares in the one. The one has been
condemned unmercifully; its officers, and those inter-
ested in it, have been branded as felons; its name.
has become a by-word for infamy, while the other,
pursuing the same plan, only not half so liberal to
the general public, has gone free, and its name,
even, is almost unheard of outside of special circles.
Was the government defrauded by the one? then
also was it by the other. Was its principle wrong?
then so was that of the other. Is the one to be
condemned? then so must the other.
of hate be inaugurated against the
must it against the other. Must the one be held
up for public condemnation? then so must the
other. They meet alike on common ground. They
were each actuated by the same motives. The
public has received the same great and wonderful
advantages from each.
has been constructed.
Must a policy
one? then so
A great national highway
The union of our common
country has been cemented by ties that can never
be broken; and even though the loans made by the
government should never be paid, already has the
government saved enough to more than repay all
the outlay.
Whether all this has been the result of the labors
of the Credit Mobilier it is hard to say, and cer-
tainly as hard to deny. The interests of the Union
Pacific Railroad and the Credit Mobilier are so
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79
interwoven with each other that it is impossible to sep-
arate them. Certain it is that, without the interven-
tion of a construction company, the Union Pacific
Railroad would never have been built. But whether
it was absolutely necessary that that construction com-
pany should be identical with the Railroad Company,
is the only question that can be raised against the plan
of its operations. It is claimed that this combination
was against equity and good conscience, and that the
directors of the Union Pacific Railroad Company had
no right to make a contract with themselves, though
under the guise of another corporation, by which they
would make for themselves a profit from the funds of
the Railroad Company; but that they must, even in
that capacity, be regarded as trustees for the Railroad,
and whatever profit was made through their contract
must inure to the benefit of the Railroad. While this
may all be true, the question would naturally arise, for
whom, in that capacity, would they become trustees?
The answer must be, for the holders of the stock of
the Union Pacific Railroad. What was the nature of
the agreement by which they held their trust? It was
that all the profits arising from the contract should
be paid to the holders of the stock of the Credit
Mobilier, and those stockholders were identically
the same as the holders of the stock of the Union
Pacific Railroad. It was clearly in evidence that
such was the case, and where there were any who
would not sign the agreement giving to the trustees
their irrevocable power of attorney or proxy to vote
on their shares, their stock was bought as far as it was
80
THE CREDIT MOBILIER
possible, so that no stock should be unrepresented
in the division of profits. It should also be remem-
bered that every stockholder agreed in writing
to the Ames and Davis contracts, and thus cer-
tainly no advantage was taken of their position.
Was the government a party who should have been
consulted? What was the interest of the govern-
ment? The government gave the right of way on
the condition that the road should be built; it gave
on the same condition large subsidies of land. It
also loaned the road a certain amount of its bonds,
consenting that its claim should be a second lien on
the road, subject to an equal indebtedness, to be
created by the Railroad Company, those bonds to be
paid by the Railroad at the expiration of thirty years;
and, in case of the net profits of the road exceeding
ten per cent. of the cost of the road, the government
to have the right to regulate the rates of fare, and
reserved to itself the right to appoint certain direct-
ors of the road, and the right to legislate upon the
charter as granted. Have any of the conditions
which the government required been unfulfilled?
The road was completed as required, a first-class
road, and was completed some seven years before it
was required. Upon the completion of the road the
grants of land and right of way became absolutely
the property of the road, and the government had no
cause to complain. In fact, the government became,
by the early completion of the road, a great gainer,
and saved, by that event alone, millions of dollars.
every year. Was the cost of the road greatly
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81
increased by the manner in which it was built? and by
that means were the future claims of the government
rendered of no account? Was it the duty of the
company to build the road by using as little of the
loan of the government as possible, or had the road
the right to use all of the loan which the government
granted? And if the company, in building the road,
let the contracts to themselves, did they thereby stand
in such a relation to the government that they must
account for all the profits they received? If any
question should arise as to the accounting to the
shareholders of the Union Pacific stock, those ques-
tions are fully answered in the fact that an equal
division of all profits was made with the holders of
that stock; they not only all agreed to the contracts
and arrangements, but themselves received whatever
profit arose from the execution of those contracts.
But could the road have been built at a less price
than it was? Suppose that the $36,000,000 repre-
sented by the stock, had been paid into the treasury
in cash, it is even probable that, under such circum-
stances, the road could not have been built at all.
Economy and frugality, under such circumstances,
could not have been expected. The country at
large, seeing that the work was sure to go through,
urged, in every way possible, the utmost speed of
construction; and more, Congress had given to the
Central Pacific Railroad Company the right to build
its road until it should meet the Union Pacific, and
thus set the two great companies on a race across
the continent. At this time there was no road across
F
82
THE CREDIT MOBILIER
the State of Iowa, and all the materials must be
transported overland, or by way of the Missouri
River, from Saint Louis to Omaha, at immense
cost. At the commencement of the building of the
road no satisfactory route had been selected across
the mountains. It was building a railroad across a
country without timber, without fuel, without water,
(all of which must be transported), with gold at 160
and iron $160 per ton, with gangs of men at work
both day and night, with half the force engaged in
keeping the Indians from killing the other half; and
all these working together would have created a
spirit of extravagance that would have wasted the
entire capital of the company, and left the road un-
finished. As these men undertook the enterprise, it
seemed to those careful capitalists of the country a
wild waste of money, in the most favorable light.
There was a spirit of adventure about it, of loyalty
and courage, such as were never before seen in the
history of railroad enterprise. The conditions were
utterly inconsistent with anything like prudence or
economy. Had all that money been in the treasury,
the road would necessarily have been built by day's
work, for no responsible contractor could have been
found to take a contract when he had to freight his
materials at such vast expense, and where he had to
keep a standing army to protect his workmen from
the Indians; and it has been asserted by those well
qualified to judge, that the contract assumed by
Mr. Ames was the wildest contract ever made by a
civilized man.
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83
In taking this contract as they did, these men were
forced to exercise as great economy as possible in
order to realize any profit at all, and the costs, outside
of what appears as the actual cost of construction, were
enormous; and beyond all, it is a fact that even with
as much economy as could have been used, all the
money invested in the enterprise would have been
wasted except for the accidental discovery of coal
along the route. At the time the road commenced
operations they were paying from nineteen dollars
to twenty dollars per cord for wood that was not the
equivalent of more than one third or one fourth of a
ton of coal. The cost of the road, then, as it was
built by the Credit Mobilier, is less than would have
been the cost could it have been possible to have
built the road otherwise. The intervention of the
construction company was necessary. The interest
which the stockholders had in the success of the
railroad is all that made it possible for the road to
be built. The government has not been wronged.
Every obligation which the road was to perform has
been performed. The government paid no money ;
it merely lent its credit, and its relation to the road
is that of a creditor to a debtor with a lien. The
government can not be in the slightest injured if the
debt is paid. But it is said the debt has not been.
paid; but it is not due, and the government, the
same as an individual, has no right to collect a debt
before it is due. The security which the government
took is that of its own choosing. It ought not to
complain of that, and the only right which the
84
THE CREDIT MOBILIER
government might assume is to prevent the waste of
its mortgage security, so that the debt may be paid
when due. This right the government has assumed,
And a sinking fund has been established, by means
of which every dollar of the bonds advanced by the
government will be paid at its maturity. Into this
sinking fund the Railroad Company is yearly turning
a large amount of money. But yet the Railroad
Company has really paid no money into this sinking
fund. The amount due the company from the gov-
ernment on half transportation account has been
sufficient to meet any such requirement, without the
payment by the company of a dollar from its other
earnings. How can the government be wronged
by any such showing as that?
The government has everything that it required
of the road, and has assurance that every dollar will
be repaid. The government has never parted with
a dollar, except interest that it has paid on the
bonds, and its security is ample. It has, by this
operation, secured advantages of unlimited value.
The road has been the means of saving it millions of
dollars every year, and has increased the value of its
own land through which the road passes, to twice the
former value, and has rendered it possible for that
land to find a market, where before none existed at
any price; and then, above all, the inestimable value
the road has been to the whole country can never
be understood. The internal commerce that has
been created by it is far larger than the most enthu-
siastic advocate of the road had ever dreamed of.
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85
In every respect the government has been the
gainer, and in no respect has it been injured, or can
it be injured.
If, then, there has been any wrong done in
dividing the dividends among the stockholders of
the Credit Mobilier, and that money is to be recov-
ered, to whom would it belong? The answer must
be, to the stockholders of the Union Pacific Rail-
road Company. But they are the very ones to
whom it was divided, the stockholders of the Credit
Mobilier and the Union Pacific Railroad being ident-
ical. We need not dwell upon this longer, for it is
impossible to see how any wrong has been done
any one. In fact none has been done.
In concluding this portion of our subject we desire
to allude to one fact in relation to the different part-
ies connected with the Credit Mobilier in the con-
struction of this road, and the views which were
held by them.
There were two parties in what has been famili-
arly known as the Union Pacfic Railroad ring,
Durant and his friends constituting one and Oakes
Ames and his associates the other. Their objects.
were as opposite as it was possible to be, and upon the
prevailing of one or the other depended the success
or utter failure of the road. The Durant party
worked with the idea of building the road in the
cheapest manner possible, for the purpose of making
the largest profit conceivable from the contracts for
construction, avowing that the road, when built,
could never be a paying investment, and that those
86
THE CREDIT MOBILIER
who looked for any profit in this line were deluded.
They cared not how the road was constructed, so
that it would be accepted by the government, and
the government aid secured. They cared not to
retain the stock of the company, and while this
party was in the ascendency in the control of the
Credit Mobilier, a large proportion of the stock
taken in payment for constrnction was sold for four
and one-half cents on the dollar. It was not con-
sidered by them of any value, for they were con-
vinced that the road would never yield any returns
to the stockholders. Not only was this done, but
in their attempt to get the road accepted as they
completed it, they paid to one government director
$25,000 to induce him to report in favor of its
acceptance.
The object of the Ames party was to build as
good a road as possible, and have it fully completed
and equipped. They did not have any expectation
of receiving large profits from their contracts. It was
their object to have a good road, and in its manage-
ment, after completion, realize their profits. They
believed that the business of the road would, in time,
be large, and would yield large returns above run-
ning expenses. They had great hopes of the
country through which the road was built, and
believed that in a few years the local traffic would
be immense. With this view in mind they retained
as much of the stock of the road-which they took
in payment for their work-as they could. Upon
this they staked all their expectation of profit. The
OF AMERICA.
87
controlling minds in this policy were Oakes and
Oliver Ames, and to their influence is due the suc-
cessful building of the road.
A decade has shown the wisdom of their faith.
The Union Pacific Railroad is now paying all its
running expenses, all its interest, is making ample
provision, in sinking funds, for the extinguishment
of the government loan at its maturity, and is paying
about eight per cent. dividends upon its stock, which
has ready sale in open market at nearly par.
This result has been achieved by the faith and
honesty of the Ameses, whose influence was strong
enough to control the management of the construc-
tion company through whose instrumentality the
road was built.
IN
VII.
THE DISAGREEMENT WITH MR.
McCOMB.
N the former part of this work we have at-
tempted to show the connection of the Credit
Mobilier of America with the building of the
Union Pacific Railroad, and in so doing we have
found it necessary to go into some detail regarding
the history of that road, the cost of its construction,
&c., as all these matters necessarily came into a
consideration of the workings and purposes of the
Credit Mobilier. The two organizations were com-
posed of the same persons and their interests became,
in a great measure, identical, and it was impossible
to separate them and to study them, except in con-
nection one with the other. To the Credit Mobilier
may justly belong the credit of building the Union
Pacific Railroad, though it is true that to a great
extent that organization did not in fact have the
control, but upon its stockholders rested the respon-
sibility, and to them came what profit there was in
its construction. The great work that was accom-
plished will ever stand as the noblest monument of
the achievements of mankind, and the blessings that
88
THE CREDIT MOBILIER.
89
have come upon the country through which it was
built, by reason of its construction, can never be
told, while coming generations will ever praise those
through whose instrumentality it was built.
It is not natural that works of this character should
ever assume the prominence that has been accorded
the Credit Mobilier, unless some circumstance for-
eign to its main object should be associated with it.
Such indeed was the case of the Credit Mobilier, and
it is that circumstance which it shall be our pur-
pose at this time to set forth. But for the accidental
connection with it of certain members of Congress,
its fame would never have extended beyond the
knowledge of its own stockholders. It mattered not
whether any crime was ever connected with it; it
mattered not how pure may have been the motives
of those who bought or sold that stock; it mattered
not how large or small may have been the profits
realized by the holders of that stock; it mattered not
whether the government was the loser or gainer in
its working; it was sufficient to know that political
capital could be made out of it, and that some who
held high places of trust and honor could be brought
low, and their names forever clouded with infamy.
Quietly the work had been done, an approving peo-
ple had praised, and justly praised, the remarkable
energy which had characterized those under whose
management the work was done, and when that work
was completed, millions joined in the glad shouts of
rejoicing. Yet ere the last rail was laid, ere the
last spike was driven, that riveted forever the band
4
90
THE CREDIT MOBILIER
of union between the East and the West, that ren-
dered the union of our states forever secure, there
could be heard the low mutterings and tremblings of
the volcano that four years later was to break forth,
casting ruin and infamy upon many a fair name.
Dissentions had arisen in the management of the
corporations. Those who had been connected with
the Credit Mobilier from an early period, becoming
discouraged at receiving no returns for their invest-
ments, sullenly held back, until it seemed as though
the whole scheme must prove a disastrous failure;
but when a new life was given the enterprise through
the connection and personal influence of a new class
of men; when it seemed as though success might
crown their efforts; when in fact large returns were
insured them, none more eager than these to step
forward and assert their claims to the profits which
they attempted before to destroy, and which in justice
belonged to others.
As we have seen before, the Credit Mobilier passed
into the hands of the principal stockholders of the
Union Pacific Railroad in the early part of the year
1864, and that it took the active management of
the Hoxie contract, so called, in March, 1865.
Throughout that summer the Company worked upon
that contract, but it soon became apparent to all that
even then the work must prove a failure, and that
the Credit Mobilier could not carry it on to success,
unless new life, new energy, and a great increase of
capital could be secured. This certain failure which
stared them in the face, and which none could avoid
OF AMERICA.
91
comprehending, was the result of the peculations and
jobs that were being carried on by those in charge
of the companies. The object of every one, from Mr.
Durant down to the common workman, was to grow
rich at the expense of the company; and every one
was interested in some manner of job by which the
Durant was a man of
company was grossly robbed.
great extravagance, and he cared not for the ex-
penses incurred, so long as he could reap the benefit
from every payment. His main idea was to make
his profit from the construction; and, to further his
own personal advantage, he discouraged none of
those schemes by which the company was defrauded,
so long as he could share the returns. Under such
management, it was no wonder that failure was cer-
tain. Not only were new life, energy, and capital
necessary, but honesty and integrity as well.
It was thus, while the fate of the Union Pacific
Railroad was trembling in the balance, that, in Sep-
tember, 1865, after the most earnest solicitation and
appeals to his patriotism, Mr. Oakes Ames, of Massa-
chusetts, a member of Congress, was persuaded to
embark in the enterprise. Mr. Ames was a man of
very large means, of undoubted integrity, and pos-
sessed of the most wonderful energy. His entry into
this work was with his whole heart and strength. His
first investment, for himself and family, was more than
a million dollars. From this time forward he became
identified with the building of the road; no labor too
arduous, no sacrifice too great, no risk too hazard-
ous; he felt confident of ultimate success, and he
92
THE CREDIT MOBILIER
lost no opportunity to urge his personal friends to
join him in the enterprise. He desired to have asso-
ciated with him men of means and influence, men
whose names would inspire confidence and give to
the enterprise a stability of character and standing
that would induce others to join with them. He
went to his personal friends and, meeting all their
objections, induced them to put their money in the
road. He went to his friends in Congress and
demonstrated to them the great necessity for the
road, and some did join with him, and others prom-
ised. At this time Congress had no measure before
it affecting the Pacific roads; the last legislation had
been fourteen months prior to the first connection of
Mr. Ames with the Credit Mobilier or the Pacific road.
Every act of legislation they desired had already been
granted; they had nothing to ask of Congress, and
every department of government was so fully in
accord and sympathy with the undertaking that there
was not the slightest cause to fear any unfriendly
legislation. The government was clamorous to
have the work completed, and was ready to grant
any further concessions that might be requisite to
the building of the road. The popular feeling
throughout the whole country was so strongly in
favor of the early completion of the road that no
man would have risked his reputation and standing
among his constituents by having attempted to
retard the progress of the road. Under these cir-
cumstances, Mr. Ames felt no compunction in ask-
ing members of Congress to join with him.
OF AMERICA.
93
Through the years 1865, 1866, and the first part
of 1867, the Credit Mobilier continued to work upon
the building of the road. The original contract of
Hoxie had been extended to the one hundredth
meridian, a distance of two hundred and forty-seven
miles, and the company still continued to work on
the road beyond that point. The Credit Mobilier
had as yet paid no dividends. On the contrary,
their entire capital, amounting now to $3,750,000,
had been swallowed up in the construction of the
road. They had been compelled to take the securi-
ties of the Union Pacific Railroad Company in pay-
ment of work, and no market could be found for
them. Efforts had been made to get contractors to
build the road, without avail. Mr. Durant had
quarrelled with members of the Credit Mobilier, and
had been ousted from the direction of the Company,
and he determined that the Credit Mobilier should
never have another contract for building the road;
and, with his influence, as an officer and stockholder
in the Union Pacific Railroad Company, and the
power of the courts, this he prevented. In August,
1867, a compromise, or at least the nature of one,
was concluded, by which Mr. Oakes Ames took his
great contract for building 667 miles of the road at a
cost of a little more than $47,000,000. Two months
later, as we have seen, this contract was as-
signed to the seven trustees, for certain purposes
and uses. About February, 1867, the capital of the
Credit Mobilier was increased 50 per cent., or from
$2,500,000 to $3,750,000; and it was decided to
94
THE CREDIT MOBILIER
apportion this to the then stockholders pro rata with
the stock they then held. This increase of capital
was deemed so absolutely necessary that, as an in-
ducement to take it, the company gave as a bonus
$1,000 in Union Pacific bonds, for every $1,000 of
the additional stock taken. But so low was the con-
fidence, not only of the public, but the stockholders
themselves, that many declined taking the new
stock, even declaring that they would rather lose.
their present investment than to sink another dollar
in the enterprise. Thus a few shares of the stock.
remained in the hands of the company undisposed
of, there being in all 650 shares. During all the
time intervening prior to the execution of the Oakes
Ames contract, Mr. Ames had been endeavoring to
secure the co-operation of every man of influence
with whom he came in contact, seeking to sell them
an interest in the Credit Mobilier, and he secured
promises from many. After the great contract had
been assigned to the trustees and work fairly com-
menced, and it was seen that large profits would be
likely to accrue, then there became a demand for the
stock. Mr. Ames, on his return to Congress in the
fall of 1867, made arrangements to transfer the
stock, as soon as he could obtain it from the com-
pany, to such as he had agreed should have it, and
also spoke to others regarding it. In the winter of
1867-68, a meeting of the principal stockholders of
the Credit Mobilier was held at the Fifth Avenue
Hotel in New York, at which time Mr. Ames made
the request that the 650 shares of stock then belonging
OF AMERICA.
95
to the Company be transferred to him, that he
might fulfil the obligations he had made with his
various friends. Mr. T. C. Durant stated he also
had made numerous engagements with his friends,
and demanded that the stock be transferred to him.
Mr. H. S. McComb made a demand to have 250
shares transferred to him, together with the 50 per
cent. increase, making 375 shares in all. His claim
was that he had agreed to take 250 shares of the old
stock on March 3, 1866, and that he now demanded
the stock with all the rights which accrued to it.
This was a claim that none of the other stockhold-
ers would recognize, and a great deal of discussion
arose over it. It was finally agreed that the
stock should be divided between Mr. Durant and
Mr. Ames, the former to have 370 shares, and
the latter 280 shares. This arrangement was
agreed to by Mr. McComb, but the president was
unwilling to transfer the stock upon the verbal
assent of Mr. McComb, and so the following
agreement was entered into by these principal stock-
holders:
We, the undersigned, stockholders of the Credit
Mobilier of America, understanding that $65,000
of the capital stock of this company, held in trust
by the president, has been promised certain
parties by T. C. Durant and Oakes Ames, do
hereby consent to advise the transfer of said stock
to such parties as they, the said Durant and
Ames, have agreed upon and designate, say to
96
THE CREDIT MOBILIER
Durant parties $37,000, and Ames parties
$28,000.
JOHN DUFF,
JOHN B. ALLEY,
THOMAS C. DURANT,
C. S. BUSHNELL,
SIDNEY DILLON,
H. S. McCOMB,
J. BARDWELL,
OAKES AMES,
OLIVER AMES.
The undersigned stockholders of the Credit Mobilier
of America recommend the issue to Hon. Oakes
Ames, trustee, of ninety-three (93) shares of the
capital stock of this company at par.
T. C. DURANT,
C. S. BUSHNELL,
OAKES AMES,
OLIVER AMES,
S. HOOPER & Co.
J. BARDWELL,
JOHN DUFF,
WM. H. MACY,
C. A. LOMBARD.
Mr. McComb says he never read this paper which
he signed, but the facts have been clearly shown
that he at first refused to sign it, and stated his rea-
sons, claiming that the paper failed to recognize any
claim which he had made; but at last he did sign it,
fully understanding all that it contained.
This division of those shares shows the manner in
which Mr. Ames secured the shares which he had
sold to his friends, and in taking them from the
Company paid their par value to the Company. They
were then no longer the property of the Company,
but the property of Mr. Ames, and the Company
had no further control.
OF AMERICA.
97
This division did not tend to lesson the hostility
between Mr. McComb and the Credit Mobilier. He
still insisted that the 375 shares of stock belonged to
him, and maintained his demand for that, together
with all the dividends that had been declared upon
it, and before the year was closed he commenced a
suit against the Company and its officers for the
recovery of the stock, to his individual use.
In sup-
port of this claim affidavits were filed, during the
summer of 1872, alleging that the stock had been
set apart by the Credit Mobilier to Mr. Ames for the
express purpose of distributing to members of Con-
gress, with the object of creating in them such an
interest in the road that they could be depended
upon in all cases where legislation should come
before Congress; that Mr. Ames had received the
stock for that purpose, and had used it for the pur-
pose of corrupting members of Congress; that while
he had sold it to those members, he had sold it at a
price far below its actual value, thereby making it
in reality a gift to them to that extent, and in his
affidavits he mentioned a long list of congressmen
who had been selected, and to whom the stock had
been transferred. This list, which he claimed had
been furnished him by Mr. Ames, contained the
names of some who had never been mentioned in
connection with the Credit Mobilier, and who never
became interested in it in any way; and, as additional
evidence upon this claim of bribery, Mr. McComb
filed letters, purporting to have been written by Mr.
Ames, and in which he said he had given the stock
G
98
THE CREDIT MOBILIER
to such and such congressmen, that he had given it
where it would do the most good, and other expres-
sions of like import. It may be important, in what
is to follow, to understand the relations of this suit
which Mr. McComb brought. In the early part of
1866, Mr. H. G. Fant, a banker in Washington, and
a friend of Mr. McComb, concluded to invest
$25,000 in Credit Mobilier stock, and asked Mr.
McComb to subscribe that amount for him, and
draw on him for the money with which to pay for
the shares. On the 3d of March, 1866, Mr.
McComb made the subscription for 250 shares at
par, and gave to the treasurer of the Credit Mobilier
a draft on Mr. Fant for $25,000. A few days later,
Mr. McComb was informed that the draft had been
protested, whereupon he wrote to Mr. Fant asking
an explanation. Mr. Fant replied that owing to
certain losses which he had suffered in his business,
he could not spare the money. He came to New
York in a few days, and requested that his offer be
left open for a short time, and perhaps he would
take the stock. The Credit Mobilier at that time
was in great need of funds, and such an acquisition
would be of the greatest benefit to them, and so they
gladly extended the time. Thirty days passed, but
still nothing was done. Some time after this, Mr.
McComb desired that the draft be returned to him,
and that the whole transaction be cancelled, and
that the stock be returned to the treasury. This
was done; the sale was rendered void, and Mr.
McComb's draft was returned to him. Nothing
OF AMERICA.
99
GENERAL LIBRAR
Univeraity of
MICHIGAN

}
more was heard of this claim for more than a year
and a half after this. When the contract had been
let to Mr. Ames, and his agreement given that the
stockholders of the Credit Mobilier were to share.
those profits, the stock of the Credit Mobilier
became valuable. One day Mr. McComb entered
the office and spoke to Mr. Alley, Mr. Durant, and
another of the directors, and said he wanted a talk
with them upon a certain subject, and asked when
they could hear him. The following day was
appointed, and at that meeting Mr. McComb made
his claim that the old subscription he had made in
March, 1866, was still open, and he proposed to pay
for the stock now, and asked that it be assigned to
him. The proposal was so preposterous that the
others laughed at him, even his friend Durant.
They told him that that had long ago been can-
celled, and that his draft had been given up to him,
and that at his own request all obligations against
him by the Company, by reason of that subscription,
had been annulled. McComb claimed, however,
that the draft had not been returned, and that he
had the right to the stock. Of course, every direc-
tor refused to recognize so baseless a claim. He
threatened suit to recover it; but no heed was taken
of it. At the meeting in New York, in the early
part of 1868, when the stock in the treasury
was divided between Mr. Durant and Mr. Ames,
Mr. McComb was present, and again asserted his
claim to the stock, and saying that he, as well as the
others, had promised the stock to his friends; but
Uor M
IOO
THE CREDIT MOBILIER
finally, as we have seen, he consented to the divis-
ion of the stock between Mr. Durant and Mr.
Ames, thus effectually relinquishing every right to
the stock which he had claimed. But, even after
this, he insisted on having the stock, and still threat-
ened suit unless it was given him. No attention
was paid to him.
During the same year he did commence a suit,
alleging the value of the stock to be very great, and
that he was entitled to the dividends declared. The
dividends which he alleged had been paid were very
largely in excess of all that were declared upon all
the contracts for the building of the Pacific road.
This suit dragged along through the courts until
the year 1872, when more desperate measures were
resorted to to secure a settlement. Mr. McComb,
through his counsel, Judge Black, came to Mr.
Alley, and said that the best thing that could be
done was to settle the suits, as Mr. McComb had
letters from Mr. Ames, which established the proof
of bribery on the part of Mr. Ames, and that if those
letters were made public it would ruin many a man
then high in official position, and bring untold
disgrace upon the country. Mr. Alley replied that it
was impossible that Mr. Ames could ever have
written any such letters- he had too much faith in
Mr. Ames to even consider such a thought—and
refused absolutely to entertain the proposition of a
settlement. Mr. Black came again, and said that
he would settle all matters for $100,000; that he
knew the contents of those letters, and that there
Maou
OF AMERICA.
ΙΟΙ
as
was the most convincing evidence in them not only
against Mr. Ames, but against many prominent men,
and among them one of his dearest friends. So
earnest was he, and so positive, that Mr. Alley laid
the matter before Mr. Ames. Mr. Ames asserted
positively that he never had entertained any thought
of bribery; that he was an honorable man, and that
never had he attempted in the least to influence the
acts of any man in Congress by gifts, or by any-
thing of pecuniary value; whatever he had done he
was perfectly willing the whole world should
know; that he never had written
never had written any letters
such Mr. McComb claimed to hold, nor
was he aware of any expression in any letter
he had ever written which could be tortured
into such an idea, for certainly not the faintest
thought of any such conduct had ever entered
his mind. He told Mr. Alley to say to Judge
Black that he defied him in any such attempt to
blackmail him or those he was associated with.
A third time Judge Black came around, attempted
to effect a settlement on the basis of surrendering the
letters, and ending the suit. So great was the con-
fidence of those associated with Mr. Ames in his
honor that all attempts to arrange a settlement failed.
At last the letters were produced in court, and before
long found their way to the public through the New
York Sun.
We present copies of these letters as they
appeared before the public, and then shall take
occasion to comment upon them.
102
THE CREDIT MOBILIER
It should be remembered that these letters were
all written by Mr. Ames in reply to letters written
him by Mr. McComb, and that all the matters
referred to had been spoken of by Mr. McComb.
At the time that Mr. McComb had assented to the
division of the stock of the Credit Mobilier between
Mr. Durant and Mr. Ames, he made the claim that
he had promised a part of his stock to certain of his
friends, and when he could not obtain the stock, he
wished Mr. Ames to deliver a portion of the stock
assigned to him, to Mr. Bayard and Mr. Fowler;
and now he had written to Mr. Ames to know why
the stock had not been delivered. There was also
much complaint made both by Mr. McComb and
Mr. Durant, and by their friends, that Mr. Ames
was selling this stock very largely among his own
personal friends from Massachusetts, thus seeking
to keep the control of the corporations in his own
hands. This circumstance had, previous to this,
led to many angry assertions, but Mr. Ames had
always declared that such was not his intention. It
was the desire of all parties that the stock should
be distributed over as large a part of the country as
could be, in order that all sections should have an
interest in pushing forward this great national work.
It was a work in which the whole country was
deeply interested. In Mr. McComb's letter to Mr.
Ames, January 23, 1868, he insisted that Mr. Ames
should distribute the stock not wholly to his own
New England friends, but to serve all alike. All
of this stock had long before been sold by Mr. Ames
OF AMERICA.
103
to these parties, and it was for the purpose of ful-
filling his obligations to them that the stock had
been secured by Mr. Ames. These sales had been
agreed upon during the early part of 1867, some
months before the Ames contract had been executed;
but the parties who had contracted for the stock
were not anxious to take it while it was not worth
par- the price which they had agreed to pay. As
soon, however, as the Ames contract had gone
into effect, and work under it commenced, and it
was decided that a dividend be declared, the stock
at once rose in value, and by the end of December,
1867, was considerably above par. Then it was
that Mr. Ames was literally besieged by members
of Congress, who declared that they had agreed to
take the stock, and wanted it delivered. Many,
indeed, came to him in this way, and asserted posi-
tively that he had sold them the stock, when, in
point of fact, the only conversation ever held was
that when Mr. Ames asked them if they would take
some of the stock they replied that "they would
see. When they came forward now, and insisted
on having the stock, it placed Mr. Ames in a diffi-
cult position, and he was forced to decide with
whom his engagements had been positive, and with
whom they had been only spoken of. It was in this
spirit that the first of these letters was written,
intending thereby to so present the case to Mr.
McComb that he should no longer have occasion
to accuse him of favoring any particular section,
or his own personal friends.
104
THE CREDIT MOBILIER
We present the letter in full :
H. S. McComb, Esq.,
WASHINGTON, Jan. 25, 1868.
DEAR SIR:-Yours of the 23d is at hand, in which you
say Senators Bayard and Fowler have written you in rela-
tion to their stock. I have spoken to Fowler, but not to
Bayard; I have never been introduced to Bayard, but will
see him soon. You say I must not put too much in one
locality. I have assigned as far as I have gone to, 4 from
Mass., 1 from N. H., 1 Delaware, I Tenn., 1 Ohio, 2 Penn.,
1 Ind., 1 Maine, and I have three to place, which I shall
place where they will do most good to us. I am here on
the spot, and can better judge where they should go. I
think after this dividend is paid we should make our cap-
ital 4.000.000, and distribute the new stock where it will
protect us-let them have the stock at par, and profits
made in the future; the 50 per cent. increase on the old
stock, I want for distribution here, and soon. Alley is
opposed to the division of the bonds; says we will need
them, &c., &c. I should think we ought to be able to
spare them, with Alley and Cisco on the finance com-
mittee we used to be able to borrow when we had no
credit and debts pressing. We are now out of debt and
in good credit—what say you about the bond dividend?
a part of the purchasers here are poor, and want their
bonds to sell to enable them to meet their payment on the
stock in the C. M. I have told them what they would
get as dividend, and they expect, I think, the bonds
the parties receive as the 80 per cent. dividend; we
better give them the bonds—it will not amount to any.
thing with us. Some of the large holders will not care
whether they have the bonds or certificates, or they will
OF AMERICA.
105
lend their bonds to the company as they have done be-
fore, or lend them money. Quigley has been here, and
we have got that that was Underwood's. I have taken
half, Quigley, and you . J. Carter wants a part of it;
at some future day we will surrender a part to him.
Yours truly,
OAKES AMES.
In interpreting any letter we should always ascer-
tain the style and character of the writer. What
one man would do another would not. One man
may be open and free in his utterances, while
another is guarded and careful in all he says.
Those who have known Mr. Ames will bear out the
assertion that he never stopped to consider the result
of what he said or did. He was not,a finely educated
man - he was not capable of drawing fine distinc-
tions in the meaning of words. To those who knew
him, these letters will show the man-open, plain
and blunt as he always was. When, therefore,
he was accused by Mr. McComb of giving the stock
only to certain personal friends, he naturally replied
that he had" assigned" it to such and such persons,
covering the entire country; he had made his decis-
ion as to whom the stock belonged, by reason of
prior engagements. And he had done this among
men of influence, men whose names would add
dignity, stability and strength to the enterprise ;
whose names connected with it would add confidence
among their constituents, and thus in reality
most good" to the early completion of the road.
ee do
106
THE CREDIT MOBILIER
He wanted the balance of the increase of stock for
"distribution." He had sold it and the parties who
had bought it wanted it, as appears very strongly
from the latter part of his letter, where he says the
"purchasers" want the dividends to meet their pay-
ments on the stock. There was much opposition to
declaring these dividends, and, as Mr. Ames says,
this came from Mr. Alley, who insisted that before
the work was done they might need all their funds-
and in this he was right.
Mr. McComb was well aware of the condition in
which Mr. Ames was situated; he knew that the
stock had been long before sold these parties, at a
time when the stock was in reality below par, and
here certainly no inference was made that he was
selling it below par. The last clauses of this letter
have no reference to the Credit Mobilier, but to a
railroad in the West in which they were both inter-
ested.
The next letter is as follows:
H. S. McComb,
WASHINGTON, Jan. 30, 1868.
DEAR SIR: Yours of the 28th is at hand, enclosing a
letter from, or rather to, Mr. King. I don't fear any
investigation here. What some of Durant's friends may
do in N. Y. courts can't be counted upon with any
certainty. You do not understand, by your letter, what I
have done, & am to do with my sales of stock. You
say none to N. Y. I have placed some with New
York, or have agreed to. You must remember it was
nearly all placed as you saw on the list in N. Y., &
OF AMERICA.
107
there was but 6 or 8 m. for me to place. I could
not give all the world all they might want out of
that. You would not want me to offer less than 1 m. to
any one.
We allow Durant to place 58,000 to some 3 or
4 of his friends, or keep it himself.
I have used this where it will produce most good to us,
I think. In view of King's letter and Washburne's move
here, I go in for making our bond dividend in full. We
can do it with perfect safety. I understand the opposition.
to it comes from Alley; he is on the finance com'ee
and can raise money easy if we come short, which I don't
believe we shall; & if we do we can loan our bonds to
the company, or loan them the money we get from the
bonds. The contract calls for the division, and I say have
When shall I see you in Washington?
it.
Yours truly,
We stand about like this:
OAKES AMEs.
Bonds 1st mortgage, rec'd on 525 miles at 16 m. 8,400,000
66
66
66
66
15
66
66
48 m.
720,000
66
66
66
66
100
66
66
48 m. 4,800,000
13,920,000
10,000,000 sold & to sell, to pay our debts,
10,000,000
3,920,000
80 p'r cent. dividend on 3,700,000 C. M. of A.
3,000,000
920,000
Gov't bond received this day,
960,000
Due for transportation, 400 m., one-half cash,
200,000
2,080,000
In addition to this we can draw Gov't oond for of
the work in advance of track, if we desire it.
108
THE CREDIT MOBILIER
Oakes Ames' list of names as showed to-day to me for
C. M.:
Blaine, of Maine, 3,000.
Patterson, N. Hamp. 3,000.
Wilson, Mass., 2.
Painter Rep. for Inq., 3.
S. Colfax, Speaker, 2.
Elliott, Mass., 3.
Dawes,
2.
Boutwell, "
2.
Bingham & Garfield, Ohio.
Scofield & Kelley, Penn.
Fowler, Tenn.
Feb. 1, 1868.
This list of names attached to this letter is in the
handwriting of Mr. McComb himself, and he says.
he wrote them as Mr. Ames read them to him from
his memorandum-book. It was not pretended, even
by Mr. McComb, in his evidence before the com-
mittee, that this list was written by Mr. Ames,
though in his affidavits in the suit it was set out to
that effect; and it was this list, as well as the letters,
which produced the great commotion through the
country. In no other place in their correspondence
were any names mentioned. But this list is
extremely faulty, containing names of men who
never contracted for a share of stock, even in the
most indirect manner.
The above letter is written in reply to another
complaining letter from Mr. McComb, in which he
referred to an investigation, to which Mr. Ames
merely replies that he does not fear any investigation.
OF AMERICA.
109
He was sure that an investigation could do no
harm, for all transactions had been honorable, and
he was willing they should be known.
In fact, when a motion was made in the House for
an investigation, no particular opposition was made
to it, and especially by those who have been named
as takers of these bribes. The records of Congress
show that of all these men who have been named as
holding the stock, Mr. Brooks is the only one who
was opposed to it, or who did not vote for it, and he
did not, for special reasons which he assigned, but
was not opposed to an investigation. The remarks
which were made to the former letter will apply
here, as to the distribution of the stock. The
Washburne move spoken of was the motion for the
investigation, which we have seen was voted for
by all these men who were interested in Credit
Mobilier.. If, then, this stock was distributed for the
purpose of influencing the legislative action of these
men, how utterly it failed! He "used the stock
where it would produce most good," but that was
among those men who, as said in reference to the
former letter, would add dignity, stability and
strength to the organization. No reference was
intended to legislative action, for none was contem-
plated, none was feared, and had any been made it
would not have received opposition. In this letter
he again refers to the bond dividend, again speaks
of Mr. Alley's opposition to it, but thinks it can be
made with safety, for should they need money, it
could easily be raised with such a man as Mr. Alley
IIO
THE CREDIT MOBILIER
鳥
​on the finance committee, and then says that his
contract called for the dividend, and he wanted it.
He then makes a brief statement, showing how they
would stand after making the dividend.
H. S. McComb, Esq.,
WASHINGTON, Feb. 22, 1868.
DEAR SIR:—Yours of the 21st is at hand; am glad to
hear that you are getting along so well with Mr. West,
and hope you will bring it out all satisfactory, so that it
will be so rich that we can not help going into it. I
return you the paper by mail that you ask for. You ask
me if I will sell some of my U. P. R. R. stock. I will
sell some of it at par, C. M. of A. I don't care to sell.
I hear that Mr. Bates offered his at $300, but I don't want
Bates to sell out. I think Grimes may sell a part of his at
$350. I want that $14,000 increase of the Credit Mobil-
ier to sell here. We want more friends in this Congress,
& if a man will look into the law (& it is difficult for
them to do it unless they have an interest to do so), he
can not help being convinced that we should not be inter-
fered with. Hope to see you here or at N. Y. the 11th.
Yours truly,
OAKES AMES.
The first part of this letter relates to matters.
entirely foreign to the Credit Mobilier. In Mr.
McComb's letter, the question was asked if Mr.
Ames would sell his U. P. R. R. stock. This he
did not care to do, and then he speaks of the price
of Credit Mobilier stock, in reply to Mr. McComb's
questions; as to these values we shall speak further
OF AMERICA.
III
on, only here let us say that while the price of the
stock at the date of this letter may have been as
specified, it is by no means a conclusion that that
was its price before December, when the stock was
sold these members of Congress. The only words
that reflect upon Mr. Ames are in relation to
"friends in Congress," but as we have already
spoken of this, and shall have occasion to refer
to it again, we need here only refer to our former
remarks, asserting that it would be only a natural
consequence, for a man of his bluntness, to make
use of such expressions. Then, too, it should be
borne in mind that these letters were written by Mr.
Ames for the very purpose of quieting the com-
plaints of Mr. McComb, and of showing to him that
the writer was not working for his own personal
gratification, but for the best good of all those with
whom he was associated.
The effect of these letters upon the public mind
was like wildfire. A presidential campaign was in
progress, and most of the men whose names were
given were candidates for office. Without stopping
to consider, they denied all and every connection
with the Credit Mobilier, denied that they had
ever invested a dollar in the enterprise, or ever
received a dollar from such investment, either
directly or indirectly.
These denials are all matters of history, and do
not properly belong to a work of this nature. The
papers of those days were filled with the allegations
of corruption and bribery. The names of those who
II2
THE CREDIT MOBILIER
had stood highest in the national councils were ban
died about and made by-words for infamy. Those
who denied their connection did so boldly, firmly
believing that, when investigation came, as they
knew it must come, Mr. Ames would help them
through, and clear them from all blame. As long
as it was through their connection with Mr. Ames
that they had become involved in these investments,
they calculated that he would stand by them, and
assume the responsibility, and by his testimony cor-
roborate their denials. But they learned that Oakes
Ames would tell the truth, and as a consequence their
denials were found to be false. The denials served
however a temporary purpose, and all was moving
along smoothly, until Congress met in December,
1872, when the whole country seemed to unite in the
demand for an investigation of these charges. There
was a frenzy of excitement over it. The disgrace
which had come upon the country was so great that
it was imperative something should be done to dis-
prove these allegations of corruption in our national
councils, or else to punish the guilty as they deserved.
As soon as the session of Congress which con-
vened in December, 1872, was opened, the Speaker,
James G. Blaine, called Mr. S. S. Cox to the chair,
and, from his position on the floor, spoke of these
rumors that had appeared in the press throughout
the country, and asked that a committee be appointed
to investigate the matters therein alleged. No
objection was made to the motion, which, as passed,
was as follows:
OF AMERICA.
113
Whereas accusations have been made in the public
press, founded on the alleged letters of Oakes Ames, a
Representative from Massachusetts, and upon the alleged
affidavit of Henry S. McComb, a citizen of Wilmington,
in the State of Delaware, to the effect that members of
this House were bribed by Oakes Ames to perform cer-
tain legislative acts for the benefit of the Union Pacific
Railway Company, by presents of stock in the Credit
Mobilier of America, or by presents of a valuable character
derived therefrom: Therefore
!
Resolved, That a special committee of five members be
appointed by the Speaker pro tempore, whose duty it
shall be to investigate and ascertain whether any member
of this House was bribed by Oakes Ames, or any other
person or corporation, in any matter touching his legisla-
tive duty.
Resolved further, That the committee have the right
to employ a stenographer, and that they be empowered to
send for persons and papers.
The following committee was appointed:
LUKE P. POLLAND, of Vermont,
NATHANIEL P. BANKS, of Massachusetts,
JAMES B. BECK, of Kentucky,
WILLIAM E. NIBLACK, of Indiana,
GEORGE W. MCCRARY, of Iowa.
This committee entered upon their duties as soon
as all the preliminaries could be arranged, and con-
ducted their examination each day until about the
middle of the February following, having, in the
meantime, examined every person who had any
knowledge of the subject of their inquiries. Every
member of Congress whose name had been
II
114
THE CREDIT MOBILIER
mentioned as having had an interest in the Credit
Mobilier came before the committee and gave his
testimony. In only a few instances did any of these
witnesses deny having any connection with the
Credit Mobilier, or that they had engaged to take
stock from Mr. Ames. For some time after the
committee commenced their investigation they met
with closed doors, as is the usual practice of such
committees; but owing to the garbled reports
that appeared in the press, and the great interest
which spread through the country, the doors of the
committee-room were thrown open, and from this
time the investigation became public, and full reports
of the proceedings appeared in the daily papers
throughout the land Whatever may be said of the
work of this committee, no one can charge that they
attempted anything, in their examinations of the
witnesses, but to arrive at the exact truth. The
examination was thorough and exhaustive, and on
the 18th of February, 1873, they submitted their
report to the House. Much of the substance of the
report will appear in the following pages, in so far
as it relates to the connection with the members of
Congress.
During the progress of this investigation, at the
time it was proposed to make the investigation open
and public, Mr. Wilson of Indiana, on January 6,
1873, presented the following resolution, which was
adopted:
Resolved, That a select committee of five members
of this House be appointed by the Speaker, and such
of AMERICA.
115
""
committee be, and is hereby instructed to enquire whether
or not any person connected with the organization or associ-
ation commonly known as the "Credit Mobilier, now
holds any of the bonds of the Union Pacific Railroad
Company, for the payment of which, or the interest
thereon, the United States is in any way liable; and
whether or not, such holders, if any, or their assignees,
of such bonds, are holders in good faith, and for value, or
procured the same illegally or by fraud, and whether or
not the United States may properly refuse to pay interest
thereon, or the principal thereof, when the same shall
become due, and whether or not any relinquishment of
first mortgage lien that may heretofore have been made
by the United States with reference to the bonds of said
Railroad Company may be set aside, and to inquire into
the character and purpose of such organization, and what
officers of the United States or members of Congress have
at any time been connected therewith, what connection it
had with the contracts for the construction of said Union
Pacific Railroad Company, and to report the facts to this
House, together with such bill as may be necessary to
protect the interests of the United States on account of
any of the bonds of the class hereinbefore referred to;
and said committee is authorized to send for persons and
papers, and to report any time.
On the following day the Speaker appointed as
that committee
J. M. WILSON, of Indiana,
SAMUEL SHELLABARGER, of Ohio,
GEORGE F. HOAR, of Massachusetts,
THOMAS SWANN, of Maryland,
H. W. SLOCUM, of New York.
116
THE CREDIT MOBILIER
On the 10th January the committee met and
commenced the investigation, and continued that
investigation until the 19th of February, and sub-
mitted their report to the House on the 20th of
February.
From this time on there were two committees of
investigation at work upon the Credit Mobilier, and
its connection with the building of the Union Pacific
Railroad. Their objects were different, but were
intended to cover the entire ground. By an exam-
ination of the resolutions creating them, it will be
seen that the first committee appointed, and gener-
ally known as the "Polland Committee," from its
chairman, had to investigate the connection of the
various members of Congress with the Credit
Mobilier, and discover, if possible, whether any
bribery had been used by "Mr. Ames, or any other
person or corporation," in order to procure the
influence of members of Congress in legislation to
be brought before Congress; while the other com-
mittee, known as the "Wilson Committee," from its
chairman, was to investigate the connection of the
Credit Mobilier with the construction of the Union
Pacific Railroad, and to discover if any illegal means
had been used whereby the government had been
defrauded, and to ascertain whether the government
could recede from the agreement to accept a second
lien for the loan of its bonds to the road.
We have, in the former part of this work, had
occasion to deal almost entirely with the province of
this latter, the "Wilson Committee," and it will be
OF AMERICA.
117
unnecessary now to go over any of the details of
that investigation. The work of that committee
was intended to be thorough, as was that of the Pol-
land committee. Yet, when we come to the report
as written by the committee, we must dissent from
the conclusions reached by them. They could not,
at least they did not, understand the relations exist-
ing between the Credit Mobilier and the seven
trustees, and the Union Pacific road. In this they
were entirely at fault, and it was not surprising that
they should be, for to this day, those who have even
given the subject much close attention, have failed
to understand the nice distinctions that existed. The
Credit Mobilier had nothing to do with the Ames
contract; it never received a dividend from that con-
tract, and no dividend was ever declared by the
Credit Mobilier, excepting one of 12 per cent. from
the money paid it by the trustees. The committee
did not discern that the Credit Mobilier had lost its
entire capital in the construction of the road; or that
it had been cheated and robbed by those who first
had its management; they failed absolutely to under-
stand the relations of the government to the Pacific
roads, and imagined that the government had
loaned them a large amount of money for the con-
struction of the road, when in fact the government
had never loaned them one cent. The utmost that
had been done was to loan them the credit of the
government, it being in reality the same as an
accommodation note, which if paid when due would
be no loss to any one, and to secure this payment
118
THE CREDIT MOBILIER
the government had a second mortgage on the road.
They could not comprehend the mighty difficulties
that encompassed the road on every side during its
construction, but they judged it as though all those
great obstacles had been removed, and the road
was being constructed at the time the report was
being made. They declared that so great had been
the fraud practiced on the government by these pro-
ceedings, that the goverment would have a right,
but for the presence of a few innocent stockholders,
to declare the franchises forfeited. The committee
could not understand the relations of cost and profits,
and in their attempt to show some great fraud,
made out the profits of construction to amount to
more than $43,000,000, with a cash value of some
$23,000,000, when the cash value of the profit
actually made was but a trifle over $8,000,000.
minds of the committee were so evidently biased
that they could see nothing in its true light, could
understand nothing as it actually was, but thought
(probably because so many of their constituents did,
and they were very anxious to be returned to Con-
gress) that there was fraud on every hand, and that
no men could carry through so gigantic a scheme
and remain honest. The committee concluded their
report by recommending the passage of a bill, which
we understand was the product of the able mind
of Hon. George F. Hoar, of Massachusetts, which
instructed the attorney-general to institute a suit
against every one who had ever received any of the
dividends declared from the construction of the road,
The
OF AMERICA.
119
to recover such dividends. The bill is a model for
future generations to follow, and will ever stand as a
most beautiful combination of English words, but it
would require two or three acts of Congress to
understand its objects and intent.
In consequence of this report, Congress, in 1876,
instructed the attorney-general to institute a suit in
equity for the recovery of all property wrongfully
appropriated.
The statute under which the suit was brought
authorized a moneyed decree in favor of the Rail-
road Company for money due for capital stock, or
money or property received from it on fraudulent
contracts, or for money or property which ought in
equity to belong to the company; and it authorized
a decree in favor of the United States or the com-
pany for money, bonds, or lands wrongfully received
from the United States which ought in equity to be
paid or accounted for.
The Supreme Court of the United States in 1879,
has affirmed a decision previously rendered in the
United States Circuit Court of Connecticut, upon
the suit thus instituted, and has decided that
This bill exhibits no right to relief on the part of the
United States founded on the charter contract. The
company has constructed its road to completion, keeps it
in running order and carries for the government all that
is required of it. It owes the government nothing that is
due, and the government has the security which by law it
provided. Nor does the bill show anything which author-
izes the United States, as the depository of a trust, public
or private, to sustain the suit.
120
THE CREDIT MOBILIER.
The Court adds:
The truth is, that the persons who were actually
defrauded by these transactions, if any such there be, were
the few bona-fide holders of the stock of the corporation,
who took no part in these proceedings, and had no inter-
est in the fraudulent contracts. But it is not alleged that
there were any such.
We
We need not pursue the report of the Wilson
committee any further. We have attempted to
show the true relations of the Credit Mobilier and
the Union Pacific Railroad, also the relations be-
tween the Credit Mobilier and the trustees.
hope we have made the subject plain. The compli-
cations were great, the distinctions finely drawn.
But the positions taken by the parties at the time
have been sustained by the highest court of justice
in the world; their position has been declared
impregnable, and no court has been found to declare
that fraud was used against the government in the
construction of the Union Pacific Road.
This was the report of the "Wilson Committee."
The evidence has been alluded to in the former part
of this work. Here we leave this portion of the
subject, and proceed to the work of the other com-
mittee of investigation.
VIII.
THE POLLAND COMMITTEE.
THE first witness examined by the Polland com-
mittee (after the statement of James G. Blaine)
was Mr. H. S. McComb. His testimony was to the
effect that, in conversations with Mr. Ames, admis-
sions were made by Mr. Ames that he had used the
stock of the Credit Mobilier for the purpose of
influencing members of Congress to vote in the inter-
ests of the Union Pacific Railroad; that Mr. Ames
had told him that such was his intention in getting
the stock, and that once Mr. Ames asked him if he
did not consider it a good use of the stock which he
gave to Mr. Colfax, then Speaker of the House, in
view of the decision or ruling made by him on the
Washburne motion. Mr. McComb alleged that, by
some parliamentary ruling, the Speaker had killed
such motion. The evidence was also positive that
Mr. McComb overheard a conversation between
Mr. Brooks and Mr. Alley, in which Mr. Brooks
demanded the giving to him of fifty shares of the
Credit Mobilier stock, and promising, if that was
done, that he would look out for the Democratic side
of the House, in all legislation concerning the Union
Pacific Railroad; and that, in consideration of such
121
122
THE CREDIT MOBILIER
promise, Mr. Alley did cause to be issued to Mr.
Brooks the fifty shares of stock which he demanded.
Mr. McComb's testimony in regard to this was most
positive and direct, and he fixed the time within
fifty-seven days of when it occurred; that there were
several conversations concerning it, but all occurred
within this time, which he could fix by the absence
of Dr. Durant in Europe, and that he always
thought Mr. Alley was taking advantage of such
absence, in giving away this stock.
Mr. McComb also produced the letters which we
have set out, and commented upon them in an unfa-
vorable light; he claimed that the letters were writ-
ten in a manner denoting great confidence, such as
Mr. Ames had always placed in him; that Mr.
Ames had told him many times that he had used the
stock assigned him, for the purpose of influencing
members of Congress, and that that was the purpose
for which the Credit Mobilier had given him the
stock; that though he had offered it for par, it was
at the time offered worth far more than that.
No other evidence was tendered or produced upon
this point, and the entire testimony regarding any
admission by Mr. Ames, or any conversations by
him, was that of Mr. McComb. His testimony in
this respect stands unsupported and alone, except
for what color may be given it by the letters which
he produced, and which Mr. Ames never denied
having written.
A large amount of the testimony
related to the work of the Credit Mobilier, which
we have already considered, and the manner in
OF AMERICA.
123
1
which members of Congress had invested in the
stock; but with the testimony of Mr. McComb, his
assertions stand exactly as he left them, to be met
and overturned by a multitude of witnesses.
Mr. Ames denies, positively, that he ever had
any such conversations with Mr. McComb; denies
that he ever made any such admissions; denies that
he ever entertained a thought of influencing a mem-
ber of Congress, in his legislative action; claims
that he sold the stock to the several members of
Congress at a time when that stock was not above
par, at a time when it was being freely offered to
the public, without finding a buyer, and that it was
sold to those who bought it only upon the represen-
tations of Mr. Ames that it would be a good paying
investment; that he had no thought of corrupting
members, for he had no legislation to ask for, and
had no reason to expect any adverse to the interests
of the Union Pacific road; that the letters which he
had written Mr. McComb were in response to others
written by Mr. McComb, and in reply to questions
proposed by him; and in view of the struggle Mr.
McComb was making to gain possession of this
stock, he naturally addressed him in such language
as would tell him that he was working for the pros-
perity and success of an enterprise in which Mr.
McComb had a deep interest, like himself. The
letters were framed for a specific purpose, and to
accomplish a particular end; their bearings were
not reflected upon or considered; they were written
hastily in the press of business, and in that freedom
124
THE CREDIT MOBILIER
that usually exists between parties embarked in the
same enterprise; that he was never confidential with
Mr. McComb, in fact, was opposed to him, in his
management of affairs. He made no denial of sel-
ling stock to members of Congress, but maintained
it was all sold before there had been any increase
in the value of that stock, and that he sold it at its
full value. Thus the evidence of these two parties
stood directly opposed to each other, and it was to
be decided which was true.
The evidence of all witnesses was to the effect
that the stock was sold by Mr. Ames immediately
after the assembling of Congress, in the winter of
1867-68, or even before that, - certainly not later
than a few weeks after the opening of Congress.
This point we shall refer to further on. The records
of Congress showed that no legislation affecting the
Pacific roads was before Congress at the time, and
that none of importance was brought up for nearly
two years after the road was completed. It was
shown by five witnesses that the conversations
between Mr. Brooks and Mr. Alley could not have
occurred; for at the time which was so positively
sworn to, Mr. Alley was out west on the line of the
road then being built; that Mr. Alley had nothing
to do regarding the issue of the stock to Mr. Brooks,
as that was a matter decided upon by a large num-
ber of the principal stockholders, and all of whom
signed an agreement consenting to its sale to Mr.
Brooks, an agreement which Mr. Alley did not sign,
but which Mr. McComb did; and that agreement
OF AMERICA.
125
was before the committee; and it was shown that
the Speaker, Mr. Colfax, had never made any such
ruling as testified to by Mr. McComb, and conse-
quently Mr. Ames could never have made the asser-
tion attributed to him regarding it.
It would, of course, be impossible to set out here
all this mass of testimony, nor would it be in accord-
ance with the design of this work. We must content
ourselves with a brief review of the testimony con-
cerning each member of Congress whose name was
mentioned as a holder of Credit Mobilier stock.
We shall attempt merely to give the result
regarding each, excepting in those cases where
there were such strong denials of any connection
with the stock, and which denials were proved to be
false, and also where the committee refer to the
evidence in support of their conclusions.
We shall commence with some of the members of
the Senate, and first with
JOHN A. LOGAN, OF ILLINOIS.
In December, 1867, Mr. Logan made an arrange-
ment with Mr. Ames to purchase ten shares of
Credit Mobilier stock upon Mr. Ames' recommenda-
tion that it was valuable. No payment was made in
consideration of the agreement, at any time, and no
stock was ever delivered. In June, 1868, Mr. Ames
stated to Mr. Logan that he had two dividends on
his stock in the Credit Mobilier, one of 80 and the
other of 60 per cent. ; and that, deducting the $1,000
due on the stock, there was a balance in his favor
126
THE CREDIT MOBILIER
of $329, which was paid Mr. Logan by check on the
sergeant-at-arms, which check was paid. On the
10th of July following, Mr. Logan becoming con-
vinced that there might be trouble about it, returned
the money to Mr. Ames, stating he had concluded
not to take the stock, and there the transaction ended,
Mr. Logan having no further interest in it. Mr.
Logan at that time was a member of the House.
ROSCOE CONKLING, OF NEW YORK.
Mr. Conkling does not appear to have been con-
nected in any way with the stock of the Credit
Mobilier or of the Union Pacific Railroad Company,
and consequently could be in no way affected thereby.
HENRY WILSON.
On or about December, 1867, Senator Wilson
contracted for 20 shares of the Credit Mobilier stock
in behalf of his wife, paying in cash therefor $2,000,
receiving a guarantee from Mr. Ames. Mr. Wilson
soon became dissatisfied with the transaction, and
upon the agreement of Mr. Ames, the sale was
thrown up. Mr. Ames returned the $2,000, and
Mr. Wilson returned all dividends he had received,
and also paid to his wife $814, which she would
have been entitled to as dividends. The purchase
money belonged to Mrs. Wilson.
JAMES G. BLAINE.
Mr. Ames requested Mr. Blaine to take ten shares
of the stock, recommending it as a good investment.
Upon consideration Mr. Blaine concluded not to
OF AMERICA.
127
take the stock, and never did take it; never paid or
received anything on account of it; and never had
any interest, direct or indirect, in Credit Mobilier
stock, or stock of the Union Pacific Railroad Com-
pany.
HENRY L. DAWES.
In December, 1867, Mr. Dawes made application
to Mr. Ames for the purchase of a thousand dollar
bond of the Cedar Rapids road of Iowa; but on the
recommendation and guarantee of Mr. Ames he took-
ten shares of Credit Mobilier stock, paid $800 down,
and in a few days the balance. In June, 1868, there
was a dividend of 60 per cent. paid. Mr. Ames
handed him $400, placing the other $200 to his
credit on other accounts between them. Some time
after, hearing of the litigation concerning the stock,
Mr. Dawes desired to rescind the sale, which was
done. Mr. Dawes was allowed 10 per cent. for his
money, and returned the dividends he had received.
He had no other benefit under the contract than to
get 10 per cent. for his money, and after the settle-
ment had no further interest in the stock.
GLENNI W. SCOFIELD, OF PENNSYLVANIA.
In December, 1867, Mr. Scofield applied to
Mr. Ames to purchase some Cedar Rapids stock,
when Mr. Ames suggested that he buy some Credit
Mobilier stock, and explaining that it was a con-
tracting company organized under the laws of
Pennsylvania, and was engaged in building the
Union Pacific Railroad, and said he would like to
128
THE CREDIT MOBILER
see some Pennsylvanians in it, and guaranteed Mr.
Scofield eight per cent. on his investment. Mr.
Scofield, a little later, paid $1,041 for ten shares,
and received upon the same the dividend of eighty
per cent. in bonds, and also the cash dividend of
sixty per cent. Before the close of the session Mr.
Scofield, for some reason, became disinclined to
hold the stock, and made arrangements with Mr.
Ames to rescind the sale, which was done, and
thereafter Mr. Scofield had no further interest.
JOHN A. BINGHAM, OF OHIO.
In December, 1867, Mr. Ames advised Mr. Bing-
ham to invest in Credit Mobilier stock, assuring
him it would pay him good dividends. About
February 1st, 1868, Mr. Bingham purchased twenty
shares, paying the par value thereof in cash. Mr.
Ames received all the dividends, and turned the
most over to Mr. Bingham, retaining some. A final
settlement was made in 1872, and in that Mr. Bing-
ham received all dividends due him, Mr. Ames
retaining the twenty shares of Credit Mobilier, and
accounting therefor. Mr. Bingham was accounted
the owner of the stock, and received all the divi-
dends that were declared upon it.
WILLIAM D. KELLEY, OF PENNSYLVANIA.
In the early part of December, 1867, Mr. Ames
agreed to sell Mr. Kelley ten shares of Credit Mobilier
stock at par and interest from July 1, 1867. Mr.
Kelley was not then prepared to pay for the stock,
OF AMERICA.
129
and Mr. Ames agreed to carry it until he could pay
for it. On the 3d of January, 1868, there was a divi-
dend of eighty per cent. on Credit Mobilier stock in
Union Pacific bonds. Mr. Ames received the bonds,
as the stock stood in his name, and sold them for
ninety-seven per cent. of their face. In June, 1868,
there was a cash dividend of sixty per cent., which
Mr. Ames also received. The proceeds of the
bonds sold, and the cash received, by Mr. Ames,
amounted to $1,376. The par value of the stock,
and the interest thereon from the July previous,
amounted to $1,047; so, after paying for the stock,
there was a balance of dividends due Mr. Kelley of
$329. On the 23d day of June, 1868, Mr. Ames
gave Mr. Kelley a check for that sum on the
sergeant-at-arms of the House of Representatives,
and Mr. Kelley received the money thereon. The
committee were of the opinion that Mr. Kelley
understood that the money he thus received was a
balance of dividends due him after paying for the
stock. In September, 1868, Mr. Kelley received
from Mr. Ames $750 in money, which was under-
stood between them as an advance to be paid out of
dividends. There is, however, an entire variance
in the testimony of these two men as to what the
transaction between them was; but the committee
were unanimous in finding the facts as stated above.
GEORGE S. BOUTWELL, OF MASSACHUSETTS
was among those who have been said to be holders
of stock in the Credit Mobilier; but he never had
I
130
THE CREDIT MOBILIER
any stock, or any dividend thereon; no money was
paid by him for stock, or received by him for the
same.
B. F. BOYER, OF PHILADELPHIA
""
୧୯
was a member of the House from 1865 to 1869. In
his testimony he says: "I took the stock in my own
name, and have so held it ever since, as the books
will show. I held seventy-five shares as my own,
and twenty-five shares for my wife, making 100
shares in all. I always considered it a legitimate
stock operation, and never denied having made the
investment. It did not interfere with my duties as a
member of Congress. No one connected with
the Credit Mobilier, or the Union Pacific Railroad,
ever directly, or indirectly, expressed, or in any
way hinted, that my services as a member of Con-
gress were expected in behalf of either corporation
in consideration of the stock I obtained, and cer-
tainly no such services were ever rendered. " ** It
was, in my judgment, both honest and honorable,
and consistent with my position as a member of
Congress; and, as the investment turned out to be
profitable, my only regret is that it was no larger in
amount.
""
JAMES A. BAYARD, OF DELAWARE
୧୧
was among those mentioned to whom stock was to
be sold. In his letter to Mr. McComb he refers the
whole matter to his son; but finding out afterwards
that it might be an arrangement affecting his action
as a senator he positively declined having anything
to do with it.
OF AMERICA.
131
JAMES BROOKS, OF NEW YORK.
This case differs much from any other already
given. Mr. Brooks was always a warm advocate
of the Pacific roads, both in Congress and in the
public press. After the Credit Mobilier was obtained
for the construction of the Pacific railroad, Mr.
Brooks made efforts in connection with Dr. Durant
to obtain subscriptions to its stock, and also spoke
with Dr. Durant about taking $15,000 or $20,000 of
the stock himself; but no arrangement was made by
which either party would be bound. In December,
1867, after the value of the stock had greatly
increased, Mr. Brooks demanded of the Credit
Mobilier Company the transfer of 200 shares, which
he claimed he had made arrangements for. Some
difficulty arose, but the matter was finally compro-
mised by Mr. Brooks receiving 100 shares of the
Credit Mobilier stock, $5,000 of Union Pacific bonds,
and $20,000 of Union Pacific stock. Mr. Brooks
was, however, a government director of the road,
and, as the law provided that such directors should
not be stockholders in the road, he could not hold
this stock, but had it transferred to his son-in-law,
Charles H. Neilson. The whole negotiation was
conducted by Mr. Brooks, and Neilson had nothing
to do with it except to receive the transfer. The
$10,000 to pay for the hundred shares was paid by
Mr. Brooks, and he received the $5,000 which came
with the stock. The dividends were received by
Neilson, but immediately turned over to Mr. Brooks.
It was claimed that the $10,000 was a loan to Mr.
132
THE CREDIT MOBILIER
Neilson, but there was not the slightest evidence to
sustain this point. When the stock of the Credit
Mobilier, several months before this, had been
increased fifty per cent., this was allotted to such
of the stockholders as desired it pro rata, upon the
payment of the par value thereof.
value thereof. Mr. Brooks
claimed that, under the arrangement by which his
stock came to him, that he or Neilson was entitled
to an additional fifty shares of the Credit Mobilier
stock. Finally, upon the principal stockholders
signing an agreement to that effect, the fifty shares
were transferred to him, and afterwards transferred
to Neilson. Mr. Brooks was not only a member of
Congress, but was a government director of the
Union Pacific Railroad Company. As such it was
his duty to watch over the interests of the govern-
ment in the road and see that they were protected
and preserved. The committee found that he had,
through his official position, procured the stock of
the Credit Mobilier, and bonds and stock of the
Railroad, which he had no moral or legal right to
obtain. And upon this finding they submitted a
resolution for his expulsion from the House.
WILLIAM B. ALLISON, OF IOWA.
·
The committee in their report make no allusion
to Mr. Allison, but in the testimony it appeared that
he had several conversations with Mr. Ames, con-
cerning Credit Mobilier stock, and finally received
ten shares, on which no money was paid down. He
received from Mr. Ames a memorandum, showing
OF AMERICA.
133
that the dividends had nearly paid the par value of
the stock. In June, 1868, he received a dividend of
$600, being by check on sergeant-at-arms. Mr.
Allison at first stated that he had returned the stock
and the dividends immediately upon their receipt by
him, but he afterwards testfied that it was some time
later. It appeared only on the cross examination of
Mr. Ames that the stock had been returned after the
investigation began, and was with the understanding
that as soon as the matter had blown over, Mr. Ames
was again to give him the stock, the consideration
for the surrender to Mr. Ames being only nominal.
The check had been cashed by Mr. Allison. Owing
to his popularity and the influence of his friends the
committee were prevailed upon to pass Mr. Allison
by without mention.
JAMES A. GARFIELD, OF OHIO.
The Committee say:
The facts in regard to Mr. Garfield, as found by the
committee, are identical with the case of Mr. Kelley, to the
point of reception of the check for $329. He agreed with
Mr. Ames to take ten shares of Credit Mobilier stock, but
did not pay for the same. Mr. Ames received the 80 per
cent. dividend in bonds, and sold them for 97 per cent.,
and also received the 60 per cent. cash dividend, which
together paid the price of the stock and interest, and left
a balance of $329. This sum was paid over to Mr. Gar-
field by a check on the sergeant-at-arms, and Mr. Garfield
then understood this sum was the balance of dividends
after paying for the stock. Mr. Ames received all the
subsequent dividends, and the committee do not find that,
134
THE CREDIT MOBILIER
since the payment of the $329, there has been any com-
munication between Mr. Ames and Mr. Garfield on the
subject, until this investigation began. Some correspond-
ence between Mr. Garfield and Mr. Ames, and some
conversations between them during this investigation, will
be found in the reported testimony.
The following is the statement of Gen. Garfield
(Jan. 14, 1873):
The first time I ever heard of the Credit Mobilier was
some time in 1866 or 1867—I cannot fix the date—when
George Francis Train called on me and said he was organ-
izing a company to be known as the Credit Mobilier of
America, to be founded on the model of the Credit Mobil-
ier of France; that the object of the company was to pur-
chase lands and build houses along the line of the Pacific
Railroad at points where cities and villages were likely to
spring up; that he had no doubt money thus invested would
double or treble itself each year; that subscriptions were
limited to $1,000 each, and he wished me to subscribe.
He showed me a long list of subscribers, among them Mr.
Oakes Ames, to whom he referred me for further informa-
tion concerning the enterprise. I answered that I had not
the money to spare, and if I had I would not subscribe
without knowing more about the proposed organization.
Mr. Train left me, saying he would hold a place open for
me, and hoped I would yet conclude to subscribe. The
same day I asked Mr. Ames what he thought of the enter-
prise. He expressed the opinion that the investment
would be safe and profitable.
I heard nothing further on the subject for a year or
more, and it was almost forgotten, when some time, I
should say, during the long session of 1868, Mr. Ames
spoke of it again; said the company had organized, was
OF AMERICA.
135
doing well, and he thought would soon pay large dividends.
He said some of the stock had been left, or was to be left,
in his hands to sell, and I could take the amount which
Mr. Train had offered me, by paying the $1000 and the
accrued interest. He said if I was not able to pay for it
then he would hold it for me till I could pay, or until
some of the dividends were payable. I told him I would
consider the matter; but would not agree to take any
stock, until I knew, from an examination of the charter
and the condition of the subscription, the extent to which
I should become pecuniarily liable. He said he was not
sure, but thought a stockholder would be liable only for
the par value of his stock; that he had not the stock and
papers with him, but would have them after a while.
From the case, as presented, I probably should have
taken the stock if I had been satisfied in regard to the
extent of pecuniary liability. Thus the matter rested for
some time, I think until the following year. During the
interval I understood there were dividends due amounting
to nearly three times the par value of the stock. But in
the meantime I had heard that the company was involved
in some controversy with the Pacific Railroad, and that
Mr. Ames' right to sell the stock was denied. When I
next saw Mr. Ames I told him I had concluded not to
take the stock. There the matter ended, so far as I was
concerned, and I had no further knowledge of the com-
pany's operations until the matter began to be discussed
in the newspapers last fall. Nothing was ever said to me
by Mr. Train, or Mr. Ames, to indicate or imply that the
Credit Mobilier was, or could be, in any way connected
with the legislation of Congress for the Pacific Railroad,
or for any other purpose. Mr. Ames never gave, nor
offered to give, any stock, or other valuable thing, as a gift.
I once asked and obtained from him, and afterwards repaid
136
THE CREDIT MOBILIER
to him, a loan of $300; that amount is the only valuable
thing I ever received from, or delivered to him.
I never owned, received, or agreed to receive, any
stock of the Credit Mobilier, or of the Union Pacific Rail-
road, nor any dividends or profits arising from either of
them.
As the conversations and correspondence men-
tioned by the committee in their report are important
to show the relation of the parties to the transac-
tion, the testimony of Mr. Ames is here given in full.
By the CHAIRMAN: —
2. In regard to Mr. Garfield, state to the committee
the details of the transactions between you and him in
reference to the Credit Mobilier stock.
A. I got for Mr. Garfield ten shares of the Credit
Mobilier stock, for which he paid par and interest.
2. When did you agree with him for that?
A. That agreement was in December, 1867, or Jan-
uary, 1868, about the time I had these conversations with
all of them. It was all about the same time.
2. State what grew out of it.
A. Mr. Garfield did not pay me any money. I sold
the bonds belonging to his $1,000 of stock at 97, making
$776. In June I received a dividend in cash on his stock
of $600, which left a balance due him of $329, which I
paid him. That is all the transaction between us. I did
not deliver him any stock before or since. That is the
only transaction, and the only thing.
By MR. MERRICK :—
2. The $329 which you paid him was the surplus
earnings on the stock above the amount to be paid for it,
par value?
OF AMERICA.
137
A. Yes, sir; he never had either his Credit Mobilier
stock or Union Pacific Railroad stock. The only thing he
realized on the transaction was the $329.
2. I see by this statement of the account with General
Garfield there is a charge of $47; that is interest from
July previous, is it?
A. Yes, sir.
2. And the $776 on the credit side of the account is
the 80 per cent. bond dividend sold at 97?
A. Yes, sir.
2. And the $500 on the credit side is the money divi-
dend?
A. Yes, sir.
2. And after you had received these two sums, they
in the aggregate overpaid the price of the stock and inter-
est $329, which you paid him?
A.
Yes, sir.
2. Did you make a statement of this to Mr. Garfield?
A. I presume so; I think I did with all of them; that
is my impression.
2. When you paid him this $329, did you understand
it was the balance of his dividend after paying for the
stock?
A. I suppose so. I do not know what else he could
suppose.
2. You did not deliver the certificate of stock to him?
A. No, sir; he said nothing about that.
2. Why did he not receive his certificate?
A. I do not know.
2. Do you remember any conversation between you
and him in the adjustment of these accounts?
A. I do not.
2. You understood that you were the holder of his ten
shares?
138
THE CREDIT MOBILIER
A. Yes, sir.
2
2. Did he so understand it?
A. I presume so. It seems to have gone from his
mind, however.
2. Was this the only dealing you had with him in
reference to any stock?
A. I think so.
2. Was it the only transaction of any kind?
A.
2.
A.
D & D & D & D &
2.
A.
2.
A.
loan.
2.
The only transaction.
Has that $329 ever been paid to you?
I have no recollection of it.
Have you any belief that it ever has?
No, sir.
Did you ever loan General Garfield $300?
Not to my knowledge; except that he calls this a
You do not call it a loan?´
A. I did not at the time. I am willing it should go to
suit him.
2. What we want to get at is the exact truth.
A. I have told the truth in my statement.
2. When you paid him $329, did he understand that
he borrowed that money from you?
A. I do not suppose so.
2. Have you any belief now that he supposed so?
A. No; only from what he said the other day. I do
not dispute anybody.
2. We want your judgment of the transaction.
A. My judgment of the transaction is just as I told
There was but one thing about it.
you.
2.
That amount has never been repaid you? You
did not suppose that you had any right to it, or any
claim to it.
A.
No, sir.
OF AMERICA.
139
2. You regarded that as money belonging to him after
the stock was paid for?
A.
Yes, sir.
2. There were dividends of Union Pacific Railroad
stock on these ten shares?
A. Yes, sir.
2. Did General Garfield ever receive these?
A. No, sir; never has received but $329.
2. And that he received as his own money?
A. I suppose so; it did not belong to me. I should
not have given it to him if it had not belonged to him.
2. You did not understand it to belong to you as a
loan; you never called for it, and have never received it
back?
A. No, sir.
2.
Has there ever been any conversation between
you and him in reference to the Pacific stock he was enti-
tled to?
A. No, sir.
2. Has he ever called for it?
A. No, sir.
2. Have you ever offered it to him?
A.
No, sir.
2. Has there ever been any conversation in relation
to it?
A. No, sir.
2. Has there ever been anything said between you
and him about rescinding the purchase of the ten shares
of the Credit Mobilier stock? Has there anything been
said to you of its being thrown up, or abandoned, or sur-
rendered?
A. No, sir, not until recently.
2. How recently?
A. Since this matter came up.
140
THE CREDIT MOBILIER
2. Since this investigation commenced?
A. Yes, sir.
2. Did you consider, at the commencement of this
investigation, that you held these other dividends, which
you say you did not pay to him, in his behalf? Did you
regard yourself as custodian of these dividends for him?
A. Yes, sir; he paid for his stock, and is entitled to
his dividends.
2. Will the dividends come to him at any time on his
demand?
A. Yes, sir, as soon as this suit is settled.
2. You say that $329 was paid to him; how was it
paid to him?
A. I presume by a check on the sergeant-at-arms. I
find there are some checks filed without any letters or
initials indicating who they were for.
2. Have you had any correspondence, since this divi-
dend was paid, with him, in regard to this matter?
A. I don't know what matter you refer to.
2. If you had any correspondence I would like to see It.
A. I have no copy of it.
2. Have you the original?
A. No, sir. Mr. Garfield showed me a letter which
he said he intended to inclose with some money sent me.
I did not know who the money came from. He showed
me a letter which he said he intended to have put in. I
indorsed on the back of that letter my reply. I just turned
over the letter and wrote what I wrote on the back of it,
and let him have it.
2. Your answer, indorsed on the back of it, was pub-
lished in the newspapers?
A. Yes, sir; he published the letter, I believe.
2. As published did they correspond with your recol-
lection of the papers as written?
OF AMERICA.
141
A. Yes, sir. I wrote it off hastily. He came to my
room,
and said he had been accused of all kinds of crimes
and misdemeanors. I told him I had made no such state-
ments as he represented. He wanted me to say in writing
that I had not. I took his letter which he said he intended
to have inclosed with the money, and wrote on the back
of it that I had made no such statement.
2. The published correspondence in the morning
papers of the next day is your recollection of what
occurred?
A. It agrees with my recollection, except he says he
left a letter for me at the Arlington. I never received that
letter. I only saw the letter on which I indorsed my
answer.
2. Did he inclose the money?
A.
Some money came to me inclosed in an envelope,
which he said he had sent. I gave it back to him.
2. How much money was in that envelope?
A. About four hundred dollars.
The following is a copy of the memorandum
referred to by witness as a statement of his account
with Mr. Garfield:
J. A. G.
DR.
1868. To 10 shares stock Credit Mobilier of A. $1000 00
Interest
June 19. To cash
47 00
329 00
+
$1376 00
CR.
1868. By dividend bonds Union Pacific Railroad,
$1000 at 80 per cent. less 3 per cent.
Jun. 17. By dividend collected for your acc't
$776 00
600 00
$1376 00
142
THE CREDIT MOBILIER
2. You may state whether, in conversation with you,
Mr. Garfield claimed, as he claimed before us, that the
only transaction between you was borrowing $300?
A. No, sir; he did not claim that with me.
2.
said.
State how he does claim it with you; what was
State all that occurred in conversation between you.
A. I can not remember half of it. I have had two or
three interviews with Mr. Garfield. He wants to put it on
the basis of a loan. He states that, when he came back
from Europe, being in want of funds, he called on me to
loan him a sum of money. He thought he had repaid it.
I do not know. I cannot remember.
2. What did you say to him in reference to that state
of the case?
A. I stated to him that he never asked me to lend him
any money; that I never knew he wanted to borrow any.
I did not know he was short. I made a statement to him,
showing the transaction, and what there was due on it;
that, deducting the bond dividend and cash dividend, there
was $329 due him, for which I had given him a check;
that he had never asked me to loan him any money, and I
never loaned him any.
2. After you had made that statement, what did he
state in reply?
A.
He wanted to have it go as a loan.
2. Did he claim that it was, in fact, a loan?
A. No, sir; I do not think he did. No; he did not.
2. Go on, then, and state what was said—all the dis-
cussion that took place.
A. I cannot tell you all; we had three or four talks. I
cannot remember what was said.
2. How long after that transaction did he go to
Europe?
A.. I believe it was a year or two.
OF AMERICA.
143
2. Did you have any conversation in reference to the
influence this transaction would have upon the election
last fall?
A. Yes; he said it would be very injurious to him.
2. What else in reference to that?
A. I am very bad to repeat conversation; I cannot
remember.
2. State all you know in reference to it.
A. I told him he knew very well that that was a divi-
dend. I made out a statement, and showed it to him at
the time. In one conversation he admitted it, and said,
as near as I can remember, that there was $2,400 due him
in stock and bonds. He made a little memorandum of
$1,000 and $1,400, and, as I recollect, said there was
$1,000 of Union Pacific Railroad stock, $1,000 of Credit
Mobilier stock, and $400 of stock or bonds, I do not recol-
lect what.
2.
A.
date.
When was that memorandum made?
It was made in my room; I cannot remember the
It was since this investigation commenced.
2. Was it in that conversation that he referred to the
influence this matter would have upon the election in his
district?
A. I do not recollect whether it was in that one or
some other. I have had two or three conversations with
him.
2. Tell as nearly as you can, precisely the remarks he
made in that connection.
A. It was that it would injure his reputation; that it
was a cruel thing. He felt very bad, was in great distress,
and hardly knew what he did say.
2. Did he make any request of you to make no state-
ment in reference to it?
A. I am not positive about that.
144
THE CREDIT MOBILIER
2. What is your best recollection in reference to it?
A. My impression is that he wanted to say as little
about it as he could, and to get off as easily as he could.
That was about the conversation I had with him, about
the long and short of it.
2. Have you the memorandum that Mr. Garfield
made?
A. I have the figures he made.
[Paper shown to committee, containing
figures as follows:-]
$1,000
1,400
2,400
2. You say those figures were made by Mr. Garfield?
A. Yes, sir.
2. What do these sums represent? How did he put
them down?
A. $1,000 Union Pacific Railroad stock; $1,000
Credit Mobilier stock, and $400, which he could not
remember whether it was to be in cash, stock, or bonds.
2. Is that what he received, or was entitled to?
A.
What he was entitled to.
2. That was his idea of what was coming to him?
A. Yes, sir.
2. Was that about what he would have been entitled to?
A. He would have been entitled to the $1,000 in
stock, and he would have been entitled to more than that.
The $400 I think he is in error about. I gave him $329;
I do not know whether the $400 referred to that.
2. Did he put this down as his recollection of the
statement you made to him?
A. I so understood it.
2. It was in this conversation that these figures were
made, that he deprecated the effect of the matter upon his
election?
OF AMERICA.
145
A. I do not know about his election; it was about his
prospects, his reputation, &c.
2. I understand that in substance he desired you to
say as little as possible about it?
A. Yes, sir; and that is my desire.
2. Will you repeat just what he did say.
A. I cannot remember the conversation well enough
to repeat it.
2. You can repeat the substance of it?
A.
I have given you the substance of it.
2. How did you happen to retain this little stray
memorandum?
A. I do not know. I found it on my table two or three
days afterward. I did not pay any attention to it, at the
time, until I found there was to be a conflict of testimony,
and I thought it might be something worth preserving.
2. The conversation was in your room, and the figures
were made there?
A. Yes, sir.
2. Do I understand you that this loan which Mr. Gar-
field claims to have been made was in reference to a trip
to Europe taken by him a year or two afterward?
A. I do not know when he took his trip. I know he
did not go during that session of Congress. This payment
was made to him during that session of 1867-'68.
2. Do you know whether he went during that recess
following?
A. I cannot say. I do not know.
2. Do you know that he did not go to Europe for
nearly two years afterward?
A. No; I do not. It is my impression it was two
years afterward, but I cannot remember dates. People
ask me about things that occurred a year ago, and I can-
not tell whether it was ten years ago or one.
K
146
THE CREDIT MOBILIER
By the CHAIRMAN :——
2. Did you understand in this conversation you had
with General Garfield, that you detailed to him the history
of this matter as to how the statement you had let him
have was made up? and did you understand him to con-
cede your statement about it to be the truth?
A. Well, I cannot say. He would not have been very
apt to recollect the amount there was due him if he had
not acceded to my statement.
2. From the whole conversation — from what he said,
and the figures that he made, did you understand him to
concede the statement you had made to him as about the
truth?
A. Yes; I so understood him.
2. That statement you made to him was in substance
the statement you made to us in reference to him?
A. Yes, sir.
JAMES W. PATTERSON OF NEW HAMPSHIRE.
Mr. Patterson purchased of Mr. Ames, August
31, 1867, thirty shares of the Credit Mobilier, paying
therefor $3000, which stock he subsequently trans-
ferred to Morton, Bliss & Co., of New York, and later
purchased $4,000 of stocks and bonds of the Union
Pacific Railroad, which were sold for Mr. Patterson
by Morton, Bliss & Co. From the Credit Mobilier
stock Mr. Patterson received as dividends, February
14, 1868, $2,328; June 23, 1868, $1,800; May 6,
1871, $757.24 and 100 shares of Union Pacific
stock, and $2,000 income bonds of that road. Mr.
Patterson's testimony was to the effect that he gave
to Mr. Ames $3,000 to invest for him, and that he
OF AMERICA.
147
was not aware, and in fact never knew, that he had
purchased any Credit Mobilier stock with it; on
the contrary, his impression had always been that
the money had been invested by Mr. Ames in
Union Pacific stock and bonds. But the committee
(from the Senate) say:
As a matter of fact, the committee find that the $3000
paid by Patterson to Ames was the purchase money of
thirty shares of Credit Mobilier stock on the 31st of
August, 1867, positive testimony of Mr. Ames to this
effect, the payment of dividends in February following
upon that amount of stock, and again in June, when he
receipts to Ames "for $1800 on account of dividends
received by him as trustee on stock for my account."
In May, 1871, an adjustment of matters is had
between the parties, and Mr. Patterson gives Mr.
Ames a receipt for "$757.24 in cash, on account of
the transaction thirty shares of stock in the Credit
Credit Mobilier stock, and there are still due in
Mobilier of America, and $2,000 in income bonds
of the Union Pacific Railroad."
Mr. Patterson says, in regard to these receipts,
that Mr. Ames came to him some months after his
giving the money to invest, and said, "I have sold
your bonds," and paid to him some money, for
which he gives a receipt, without giving any heed
to the character of the receipt, and that the impres-
sion on his mind was, that Mr. Ames had disposed
of securities in the road, and nothing connecting
with the Credit Mobilier. The same committee,
however, say in their report:
148
THE CREDIT MOBILIER
The committee find in the statement of Mr. Patterson
before the committee of the House of Representatives, and
his statement before this committee, a contradictory rela-
tion of the transaction between him and Mr. Ames; a
suppression of material facts, and a denial of other facts
which must have been known to him.
The committee then further review this transaction,
and conclude their report as follows:
And further, that being inquired of in relation thereto
before committees of both branches of Congress, he gave
a false account of the transactions between himself and
Mr. Ames, suppressed material facts, and denied the
existence of other material facts which must have been
well known to him.
The committee have reached a conclusion, after the
most attentive consideration and anxious deliberation,
which they would fain wish were otherwise, but a sense
of duty compels them to declare.
They submit the following resolution:
Resolved, That James W. Patterson be, and he is
hereby expelled from his seat as a member of the Senate.
No definite action was taken on this report, and
five days after, the term of Mr. Patterson expired.
Mr. Patterson subsequently addressed the Senate
in a long reply, vindicating his actions, but which
we cannot insert here.
SCHUYLER COLFAX.
The committees from the House and from the Sen-
ate, in their reports, make no mention whatever of
the name of Mr. Colfax, at that time Vice-President
of the United States. But from the testimony that was
OF AMERICA.
149
taken before the House committee much of interest
may be gleaned. January 7, 1868, he made the
following statement before the committee:
I may add that Mr. Ames will recollect, when I call to
mind the circumstances of the transaction, that he never
paid me a dollar, or the value of a dollar, on any account
whatever. * * I repeat that I never did receive a dol-
lar, or the value of a dollar, on any account whatever,
from him; and I think Mr. Ames will recollect that I did
not, when I recall to his mind these circumstances, which
would of course impress themselves more on my mind
than his, as it was a larger matter to me than to him.
*
*
*
*
*
*
*
*
*
I state explicitly that no one ever gave, or offered to
give me, any shares of stock in the Credit Mobilier, or the
Union Pacific Railroad. I have never received, or had
tendered to me, any dividends in cash, stock, or bonds,
accruing upon any stock in either of said organizations.
And neither Mr. Ames, nor any other person connected
with either of said organizations, ever asked me to vote
for or against any measures affecting the interests of either,
directly or remotely, or to use any personal or official
influence in their favor. I desire, however, to state all
the circumstances through which, probably, my name
came to be associated with this organization.
Five years ago, about the time of the holiday recess, I
was conversing on the floor of the House with Mr. Ames
in regard to the Union Pacific Railroad, in favor of the
building of which I had previously made hundreds of
public addresses. In the course of this conversation he
asked if I would not like to purchase some stock in the
Credit Mobilier. Up to that time I knew nothing of its.
capital or profits; and I enquired of him as to its objects
and the value of its stock.
150
THE CREDIT MOBILIER
•
As near as I can recall this conversation, after the
lapse of so many years, I was informed by him that it was
a legally incorporated company, composed of the principal
stockholders of the Union Pacific Railroad, who were
themselves building the road, instead of letting it out
to contractors who always expected large profits for
their risks and for their advances of moneys for sup-
plies. I told him, after his explanation, that it looked
like a good and safe investment for one of limited means,
and that I would be willing to purchase twenty or thirty
shares at a fair price if I had the money. But I added
frankly that I could not pay for them till two or three
months afterward, as my housekeeping expenses in the
opening months of the session were much larger than the
average. He said he would contract to sell me twenty
shares at par, if I would, in addition, agree to pay interest
until final payment. I enquired what per cent. it would
pay, and he replied that there had been large dividends,
but as the road was pushed further into the interior the
profits might not be large, though they would be very
surely remunerative.
The Union Pacific Railroad had no legislation, that I
knew of, pending before Congress at the time, nor did I
suppose there could be any in the future, as the last
amendment to their charter, authorizing the issue of
first-mortgage bonds, which should have priority of the
government lien, had been enacted in 1864, over three
years before this conversation. Inferring that any ques-
tions arising under this charter would be judicially settled,
and supposing, at any rate, that I had the same right to
purchase this stock as to buy stock in a national bank
chartered by Congress, or in a manufactory, I told him
I would agree to purchase twenty shares at par, and inter-
est, to be paid for as soon as I had the money. Some
/
OF AMERICA.
151
weeks, or months, afterward, at the same session, I paid
Mr. Ames about $500 in cash on this contract of purchase,
being all the money I had; but received no dividend or
certificate, in whole or in part. My impression is that
he told me that one or two dividends had been earned,
but they were not in cash, and were as yet unadjusted.
Certainly I did not receive any, and was not offered any
in cash, bonds, or stock, then or since. A few weeks, or
months, after this, I heard a rumor that unpleasant contro-
versies existed among the largest stockholders, which
were certain to involve the organization in prolonged
litigation.
The very day I heard this rumor I told Mr. Ames
that no profits, present or prospective, could induce me to
buy into a lawsuit; that I had never been, during all my
life, a plaintiff or a defendant in a court of justice; and
that I must, therefore, recede entirely from the transaction
between us, as I did not want stock of any kind, on any
terms, that would make me a party to litigation. He
assented to this, and nothing was said as to the money
paid, my anxiety being not to get into a lawsuit. All
these things occurred at the same session of Congress, five
years ago, which closed in the summer of 1868. The
next year, or the year after, Mr. Ames suspended pay-
ment, in consequence, as was said, of financial involve-
ments connected with the Pacific Railroad, and his
creditors gave him an extension on his liabilities. But,
regretting his failure and its cause, I voluntarily told him
to dismiss from his mind the small amount of money
between us. I suppose, but for this, he would have
repaid me the money I paid him. I may repeat, there-
fore, that neither stock nor bonds were given to me, nor
offered to be given to me; that I have never received a
dollar in bonds, stock, or money, as dividends; that I did
•
152
THE CREDIT MOBILIER
contract to purchase twenty shares of stock n the com-
pany at par and interest, but that, after a partial payment.
I withdrew entirely from what I regarded as an uncom-
pleted contract to purchase, from repugnance to being
involved in litigation; and that, instead of being enriched
by it one thousand or twenty thousand dollars, as has
been charged, I am voluntarily out of pocket five hundred
dollars, and have been for nearly five years.
CC
The testimony of Mr. Ames is that he secured for
Mr. Colfax twenty shares of Credit Mobilier stock,
which he was to hold until paid for; that he
received a dividend on them of eighty per cent. in
bonds, which bonds he sold and accounted for to Mr.
Colfax; which left a balance due on the stock of
$534.72, which Mr. Colfax paid him with a check;
the date of the check was March 5, 1868."
The following are the questions by Judge Polland,
the chairman, with Mr. Ames' answers:
2. Were there any dividends on that stock afterward?
A. There was one dividend. There were other divi-
dends in stock which I never delivered to him. There
was a dividend in cash, in June, which I did pay to
him.
2. How large was that?
A. Twelve hundred dollars.
2. Have you any receipt or voucher for that?
A. No, sir; I gave him a check on the sergeant-at-
arms, and it is charged to me there.
2. And you got this date from the sergeant-at-arms'
book?
A. Yes; I never delivered to Mr. Colfax anything
else, and never received anything from him except that
i
OF AMERICA.
153
time. He paid me for the balance of the stock, and I
paid him a cash dividend.
*
*
2. At the time you paid him $1,200, or gave him a
check upon the sergeant-at-arms for that amount, did Mr.
Colfax understand that this was a dividend on this Credit
Mobilier stock?
A. I suppose so; 1 do not know; I so understood it.
That is what it was; whether he understood the matter is
more than I know; I do not know that I gave him any
explanation. I gave him the check.
2. Have you any doubt that you told him what it
was?
A. I cannot remember. When I suppose a man
knows a thing I don't tell him over again.
2. Do you remember whether he made any inquiry
as to what it was?
all.
A.
I don't remember anything about what was said at
2. You supposed that it was understood that it was a
dividend you had received upon that stock?
A. I supposed so.
2. Has he ever repaid you that $1,200?
A. Not to my knowledge.
me.
It did not belong to
2. You never made any claim upon him for it, and
did not suppose you had any right to it.
A. No, sir.
2. These $534 that were paid you, you did not sup-
pose he had any right to call upon you to pay back?
A. I did not suppose so; I understood that I sold him
$2,000 worth of stock. The first dividend, 80 per cent.
in bonds, and that check for $534, paid for the stock.
That was my supposition.
154
THE CREDIT MOBILIER
By MR. MERRICK :—
2. In what order of time were the two dividends paid,
of $1,200 and $500?
A. He paid me $500 in March, and I paid him $1,200
in the June following.
2. Were there any other different transactions between
you and Mr. Colfax to which these payments could refer
at all, except this Credit Mobilier?
A. No, sir.
2. What memoranda or entries have you in reference
to this transaction?
A. I made a little memorandum at the time, I suppose,
which I handed him; when, I don't remember.
2. Have you any memorandum with you?
A. No, sir.
2. Have you made a memorandum of it at all?
A. Yes; I took a copy of the memorandum I made,
and brought it with me. When I went home, you asked
me to look over my books. I did, and found I had
received $534 from Mr. Colfax, and I found I had charged
him with $1,200 in June.
2. Have
Have you the memorandum made at the time?
A. No, sir; not here; I have a memorandum which
I took from that.
2. What was the character of the book in which the
memorandum was made?
A. It was a small pocket memorandum, and some of
it on slips of paper.
2. It was entered in journal form?
A. No; it was simply a small memorandum book.
These things were closed up at the time here, and they
were not entered on my books at home.
2. Is what you have here a copy of your memorandum
made at the time?
OF AMERICA.
155
A. Yes, sir; that contains the names I took from my
books.
2. The only entry in this in reference to Mr. Colfax is
the $534. The $1,200 was not put on this memorandum?
A. No, sir.
By the CHAIRMAN :—
2. Both these entries were made in this book, the
$500 to pay the balance of the stock, and the $1.200
which were paid in June by a check on the sergeant-at-
arms?
A. Yes; they were both on that book. I have looked
it over to see, and I have looked over the sergeant-at-
arms' book to see if my entries were correct, and I find
they are.
By MR. MCCRARY:-
2. Did Mr. Colfax tell you at any time that he had
concluded not to take the stock?
A. I have no recollection of it, unless it was in that
conversation to which he has referred. I have no recol-
lection of it.
2. Have you any recollection of informing him of the
litigation that had sprung up in regard to it?
A.
I think I did; I think I told them all.
2. You do not remember what he said when you
informed him of that?
A. No, sir.
2. Did you not understand that this sale of stock to
Mr. Colfax was rescinded; that the trade was given up,
and that he relinquished the stock to you?
A.
Not unless he meant to be understood so in the
conversation when I came back. I did not consider it
given up. I did not consider that I had any right to with-
hold it.
156
THE CREDIT MOBILIER
2. Was there any thing of the kind said between
you?
A. I cannot recollect; it might have been said; but I
cannot recollect it.
2. Have you ever been reimbursed for that $1,200?
A. No, sir.
At this point in Mr. Ames' testimony, Mr. Colfax,
with the permission of the committee, began to in-
terrogate the witness. Many of the questions of
little bearing are here omitted; but what are pre-
sented include all that are of importance.
2. Now, when I testified on the 7th of January, and
asked you to cross-examine me, if the statement I made
was not correct, why did you not contradict me then?
A. I had not examined the records then; I had not
refreshed my recollection.
2. The subject had been discussed all over the
country, and your attention must have been called to it.
A. My minutes were at home, and I had not examined
them until I went back home.
2. You say you paid me $1,200 by a check on the
sergeant-at-arms?
A. I did.
2. Where was I when you paid me?
A. I do not know; I cannot say. The check is in the
sergeant-at-arms' room.
2. Now, when I asserted, in my testimony, that I had
never received a dollar from you, why did you not contra-
dict me then, and say to the committee that you had paid
me a check of $1,200?
A. I was not in a position to contradict you, because
I had not examined my minutes, and refreshed my recol-
lection.
OF AMERICA.
157
છે. Did I not tell you the first of the present session that
I wanted you to tell the whole truth about the matter?
A. Well, I think I have done so.
2. Why not have done so at first? Why didn't you
tell it when I was here and gave my testimony? Why
didn't you state that you had paid me $1,200?
A. I did not want to dispute you.
2. You say that was the only cash dividend in 1868
upon this stock?
´
A. I think the only cash dividend.
2. In Mr. Durant's testimony there is a statement
that there was a cash dividend of 30 per cent. in July,
1868 ?
A.
I think not.
2. Mr. Durant also states that there was a bond divi-
dend during that session. What did you do with the
bonds belonging to me?
A. There are bonds belonging to you now.
2. You did not sell all the bonds then?
A. No; there are bonds that belong to you now,
bonds that belong to your stock, and that you are
entitled to.
2. Where is what I am entitled to now?
A. I hold it.
2. Have you ever offered it to me?
A. No, sir; I am waiting for the result of this suit.
2. Have you ever told me any thing about it?
A. I suppose I told you about it in 1868, when I told
several others.
2. You do not think you told me, do you?
4. I do not know whether I did; I suppose I gave
you a statement.
2. Now, in regard to this thing being off, you say you
got that from my testimony?
158
THE CREDIT MOBILIER
A. It must have been from a conversation with you
since we have been here this present session. I called
upon you at your room.
2. Did you have any other checks on the sergeant-at-
arms at the same time that you gave me this one for
$1,200?
A. Yes, sir.
2. You do not remember when you paid me this
$1,200 check?
A. I suppose it was in the House. The sergeant-at-
arms paid it.
2. Was it paid to my order?
A. It was payable to "S. C. or bearer.
2. Paid to me by the sergeant-at-arms?
""
A. I think so. It is in his possession as a voucher for
the money, and my books show that I gave you the check
at the time for $1,200.
2. Is it not more probable that you got the money on
that check yourself, as we had this talk about being off?
A. That check was given a long while before I had any
talk about being off. This check was given in June, 1868.
2. My recollection is that the talk we had about being
off was in the summer of 1868, at the same session at
which you say the check was given.
A. There had been no litigation then.
2. Was it not in regard to prospective litigation that
we were talking?
A. No; I did not know anything about any litigation
or suit until after June.
2. You are positive that you paid me this check for
$1,200?
A. I am positive I gave you the check.
2. And then I ask you again, why did you not say so
when you testified in December?
OF AMERICA.
159
A. I testified that I had paid you the dividends.
2. You stated in your first examination that you
could not remember having paid me any dividends.
Then, in your cross-examination, you said that possibly
you might have paid me, but you were not certain.
A.
Yes; now I am certain.
2. Then this transaction had passed out of your mind,
so that you were not certain then?
A. I could not remember the amount at all until I had
examined my books.
books. I examined my books when I went
home, and when I returned to Washington I compared my
memorandums with the checks the sergeant-at-arms has
on file, and I found my check filled out "S. C.", which
corresponded with the memorandum I had on my book.
Mr. Colfax again said:
I want again to state to the committee, as I before
stated, that I do not remember ever having received one
dollar from Mr. Ames, and I hope to be able to prove
that fact. I think there is a mistake in the statement Mr.
Ames makes.
The following is the memorandum from which
Mr. Ames testified in relation to Mr. Colfax:
S. C. DR.
1868.
1868.
CR.
To 20 shares stock
March 5. By cash $534 72
C. M. of A. . $2,000 00 Feb.
$2,000 00 Feb. 14. Dividends
To interest.
86
72
of bonds U. P.
June 19. To cash
1,200 00
R. R., $2,000
So; $1,600, less
1,552 00
$3.286 72
3 per cent.
June 17. By divi-
dend collected
for his account 1,200 00
$3.286 72
160
THE CREDIT MOBILIER
The following day considerable testimony was
given, both by Mr. Ames and Mr. Colfax, each
maintaining strongly the positions taken above, Mr.
Ames asserting positively that he paid Mr. Colfax
the $1,200, and accounted to him for the other
dividends, and producing the check of $1,200. Mr.
Colfax as positively denied its receipt, but said that
he understood that the $534.72 which he paid Mr.
Ames was to pay in full for the stock in connection
with the unadjusted dividends of which Mr. Ames
made mention.
Mr. Colfax also made the following statement:
I wish to repeat exactly what I stated day before yester-
day; that I never received from Mr. Ames a dollar on
any account whatsoever. I never saw this check. I never
knew, until I saw this check this morning, whether Mr.
Ames signed his name O. Ames or Oakes Ames. Why,
if the check was for me, he should have filled it out with
"S. C. or bearer," I cannot imagine. If I had seen a check
so filled out, it would have struck me very forcibly. Now
I could not have had $1,200 added to my income without
remembering it very positively. I could not have talked
with Mr. Ames afterwards about sympathizing with him
in his misfortunes, and proposed to remit to him the $500
I had paid him, if I had received $1,200 from him.
The sergeant-at-arms and assistants testified that
the various checks were paid, some with only ini-
tials, and some with whole names; that a check
payable to initials or bearer would be paid without
endorsement; but they could not tell to whom it was
paid.
OF AMERICA.
161
January 28, 1868, the cashier of the First National
Bank of Washington, where Mr. Colfax had his
account, was called, and testified as follows:
By the CHAIRMAN—
2. Will you state, from the ledger which is open
before you, whether it appears that Mr. Colfax made a
deposit on the 22d of June, 1868?
A. It does.
2.
A.
What is the amount?
By reference to the books I find it was $1,968.63.
2. From that entry you understand that amount of
money was deposited to his credit either by him or by
somebody for him?
A. Yes, sir.
2.
State the various deposits made to his credit from
that time during the month of July?
A. July 7, $400; July 8, $150; July 13, $1,543.87.
By MR. AMES:
2. Can you state whether the deposit of the 22d
June was in money or in checks?
A. It is entered as "cash items."
money; it may have been checks.
By the CHAIRMAN :
It may have been
2. Have you the deposit check with you? If so, you
will please read it.
A. It reads: 66 Deposited in the First National Bank
by Schuyler Colfax, June 22, 1868.
United States and bank notes.
Checks as follows. .
. $1,200 00
250 00
18 63
500 00
$1,968 63"
L
162
THE CREDIT MOBILIER
2. You will look at your ledger and see when the last
deposit of Mr. Colfax was made prior to the 22d June.
A. That was June 1st.
On the 6th of February Mr. Ames, at the request
of the committee, produced his memorandum book,
which is now so famous. The book was a small
one, which Mr. Ames carried in his pocket, and
used for the purpose of making private memoranda.
When called upon by the committee to produce it,
he did so, but desired that it should be exhibited
only as to those matters before the committee. We
shall not attempt to put in the different questions
and answers relating to it, but shall give copies of
the memoranda and explanation sufficient to make
them clearly understood.
The first entry exhibited was that of Mr. Wilson,
as follows:
1868.
Tuesday, January 14.
Henry Wilson, cr. for cash on act. of C. M.
of A..
70 00
1868. Monday, February 10.
For $1,600 bonds.
Paid H. Wilson.
•
548 00
In Scofield check
195 33
U. P. R. R. check.
•
Sergt.-at-Arms
308 72
44 00
548 05
Mr. Ames stated that there were several other
business matters relating to Mr. Wilson upon the
OF AMERICA.
163
book which in no way related to the Credit Mobilier.
This memorandum relates to the dividend of $1,600
in bonds on the 20 shares of Credit Mobilier which
Mr. Wilson held.
The next entry relating to Mr. Wilson is as fol-
lows:
1868.
Hon. Henry Wilson.
By div. from U. P. R. R.
Cash
1 C. R. & M. R. bd. .
Int'st from Feb. 1
Bond to be ded.
Monday, June 22, 1868.
. $1,200
223 00
950 00
27 00
I,200
Check on Bk. of Commerce
1868.
Rec'd' of Hon. H. L. Dawes
Cash on acct. of stock in C.
M. of A.
$800, Jan'y 11.
66
235,
14:
223
Saturday, January 11.
$1,035.
This entry shows the payments for the stock as made, it
being the par value of ten shares and interest.
Then next comes a statement of the different
individuals entitled to receive dividends, and the
amount. This book, which has the dates printed in
it, runs over into the next year a day or two, and
the following entries were made without any refer-
ence to the date, being simply a memorandum
showing the amount of dividend due to each of the
several holders of the bonds.
164
THE CREDIT MOBILIER
1
H. L. Dawes
Scofield
Patterson
Painter.
Wilson .
Colfax
•
Bingham
Allison.
Kelley
1868.
Saturday, January 1869.
Х 600 00
X 600 00
X1,800 00
X1,800 00
X1,200 00
X1,200 00
XI,200 00
X 600 00
X 329 00
X
329 00
X 329 00
Wilson.
Garfield
When the amount had been paid, Mr. Ames made
the cross to show that fact. They relate to the cash
dividend in June, 1868, and show simply the amount
to be paid each.
The next entry is :
1868.
Thursday, March 5.
Rec'd of Schuyler Colfax check balance. 534 72
The next entry regarding Mr. Colfax is a general
statement such as was made in each case.
Colfax.
20 shares Credit Mobilier cost
7 mos. 10 days' int'st
Less 80 pr. ct. bds. at 97
Paid March 5
2,000 U. P. stock.
2,000 C. M. stock.
$2,000 00
86 72
2,086 72
• 1,552 00
534 72
OF AMERICA.
165
This entry was made previous to June, and does
not include the dividend of $1,200 cash at that time,
but shows the amount which Mr. Colfax paid to
balance the cost of stock.
There were no other entries on the book regarding
Mr. Colfax, except the payment of the $1,200,
which entry occurs as follows :
1868.
Sunday, June 31.
Checks on Commerce, deposited with
sergeant-at-arms
$10,000 00
Pd. S. Colfax.
1,200 00
66
James F. Wilson .
329 00
66 H. L. Dawes
600
William B. Allison .
600
"G. W. Scofield.
600
J. W. Patterson
1,800
66
John A. Logan
329
James A. Garfield
329
66
William D. Kelley
66
Henry Wilson .
66
John A. Bingham
329
I,200
I,200
Although the date would show it was made
on Sunday, the remark made above that these
simple memoranda were made on such blank
pages as were convenient, applies here also. The
$10,000 Mr. Ames deposited for the express pur-
pose of paying these dividends from, and as they
were adjusted he drew a check on the sergeant-at-
arms for the amount, and the same was paid when
presented.
166
THE CREDIT MOBILIER
Mr. Ames here produced his memorandum book
for the year 1869, upon which there appeared one
entry regarding Mr. Colfax, as follows:
Friday, January 29, 1869.
Paid S. Colfax $60.75 for interest on $1500 certificate of
U. P. R. R.
This entry was made and the amount paid, as Mr.
Ames testified, on the day above. Mr. Colfax being
entitled to interest on $1,500, the same as if the
bonds themselves had been actually divided. He
collected the interest, and paid the same to Mr.
Colfax.
The next memorandum was as follows:
1868
Wednesday, January 28.
Rec'd of Glenni W. Scofield check
on sergeant-of-arms
IO coupons, 350 East .
Less 5 p❜r c't
708 50
350 00
•
17 50
332 50
1,041 00
to be invested in 10 shares of Credit Mobilier of America,
as trustee, by me, No. 346.
Immediately below this was the following entry : —
Feb'y 1st, 1868. — Del'd to Hon. Glenni W. Scofield
certificate No. 346, for 10 shares of stock on Credit
Mobilier, bot. for his account.
The next entry is
1868.
Sunday, February 9.
Reached Washington from N. Y.
OF AMERICA.
167
Del'd Glenni W. Scofield one bond.
10 shares Stock
1,000
1,000
Rec'd of G. W. Scofield for balance due on his bond
over his div., 195.33, & endorsed the same on my receipt.
The bond was worth eighty, which Mr. Scofield
took, paying the balance in cash.
Then came the entry of the payment of the $600
cash dividend, as above, and in the back of the
book, as follows:-
1
G. W. SCOFIELD.
By cash.
1,041
On bond.
D'l'd him one bond.
195 33
1,236 33
1,000
236 33
1,000 Credit.
1,000 U. P. R. R'd.
This entry, as it appeared upon Mr. Ames' mem-
orandum book, is crossed out, showing it was closed,
and that the whole transaction was ended.
The next entry is,
1868.
Rec'd of Wm. B. Allison
FRIDAY, April 24.
271 00
for balance due on stock sold him, 1,000 in Credit
Mobilier, and 1,000 in Union Pacific R. road.
This amount is what would be due after the eighty
per cent. dividend had been credited on this stock.
This amount being paid by Mr. Allison, and there-
fore not deducted from the cash dividend of $600 in
June.
168
THE CREDIT MOBILIER
The general statement is as follows:-
WM. B. ALLISON.
Ten shares Credit M.
Interest to May.
Dividend in Bonds 80 pr. ct., sold at 97
Cash to balance
1,000 C. M.
1,000
46
1,046
776
270
1,000 U. P.
This being crossed off, shows that the account
was finally closed.
The next is :-
JAMES F. WILSON.
IO shares C. M.
1,000
7 mo. 10 days
43 36
1,043 36
80 pr. cent. Div. at 97
776
267 36
Int's't to June 20
3 64
1,000 U. P.
271 00
1,000 C. M.
This also was crossed off, showing it was finally
closed.
Then follows:
1868.
Paid J. W. Patterson for 2,400$ bonds of Union
Pacific R. R. Co. as dividend, less 3 pr. ct.
Less interest paid..
P'd Cash
FRIDAY, February 14.
$2,328
105
$2,223
Per receipt
OF AMERICA.
169
And at the end of the book the general state-
ment:
Rec'd of J. W. Patterson
Cash and Interest .
3,105 00
2,328
Rec'd for 3
Bonds
5,433 00
Feb'y 14 to Cash .
2,328
3000 U. P. Stock
3,105 00
3000 C. M. A. “
The next is the general statement of
by Cash.
. Note .
JOHN A. BINGHAM.
2,000
to bonds.
C. M. 2,000
•
Stock . . 2,000
2,086 72
399 32
Mr. Bingham, it will be remembered, admitted
that he took two bonds, paid par, and had the benefit
of them.
Then comes the general statement of
WM. D. KELLEY
10 shares C. M. A.
•
1,000
7 mos. 10 days' inť'st
43 36
1,043 36
80 pr. ct. bond div. at 97
776
Int'st to June 20
267 36
3 64
271
1,000 U. P. stock
1,000 C. M.
170
THE CREDIT MOBILIER
This statement was made just previous to the
$600 cash dividend, which, credited to his account,
leaves the balance due him $329, which Mr. Ames
paid by check on the sergeant-at-arms.
This
account is not crossed off, as Mr. Ames had not yet
delivered him the stock to which he was entitled.
There is one other item on this account:
1868.
TUESDAY, September 29.
William D. Kelley on com
. $750
This is the amount received later by Mr. Kelley,
regarding which there was a dispute between them.
In regard to the next memorandum, that of Mr.
Garfield, we wish to give the evidence.
By the CHAIRMAN:
2. Now turn to any entries you may have in reference
to Mr. Garfield.
A. Mr. Garfield's payments were just the same as Mr.
Kelley's.
2. I find Mr. Kelley's name on the list of June divi-
dend payments for $329. That, I understand you, to be
the amount of the June dividend, after paying the balance
due on his stock?
A. Yes, sir; the general statement made up for Mr.
Garfield is as follows:
GARFIELD
10 shares Credit M
1,000
7 mos. 10 days.
43 36
1,043 36
So per ct. bd. div. at 97 .
776
267 36
OF AMERICA.
171
Int'st to June 20
267 36
3 64
271 00
1,000 C. M.
1,000 U. P.
2. You received $600 cash dividend on his ten shares i
A Yes, sir.
2 And, as you say, paid him $329, as the balance of
the dividend due him?
A. Yes, sir.
2. The general statement is not crossed off?
A. No, sir.
2. In the list of names for the June dividend, Mr.
Garfield's name is down for $329?
A. That would be the balance due.
2. The cross opposite his name indicates that the
money was paid to him?
A. Yes, sir.
MR. CLARK remarked that Mr. Ames was not certain
whether this amount was paid Mr. Garfield by check or
in currency.
The WITNESS. If I drew the check I may have paid
him off in currency, as I find no check with initials cor-
responding to his.
2. We find three checks for the amount of $329 each;
one is in blank; there are no initials written in. There
are, however, the same number of checks for that amount
as are called for by the names on this list for that amount.
A. I am not sure how I paid Mr. Garfield; I paid
him in some form.
2. This statement of Mr. Garfield's account is not
crossed off, which indicates, does it, that the matter has
never been settled or adjusted?
A. No, sir; it never has.
172
THE CREDIT MOBILIER
Next follows the general statement of
LOGAN.
IO shares C. M. A.
1,000
7 mo. 10 days
43 36
1,043 36
So pr. ct. Div. at 97.
776
267 36
Int'st to June 20.
3 64
271 00
1,000 U. P.
1,000 C. M.
This general statement, like all the others, was
made prior to the June dividend of $600 cash, and
when that dividend was made there was a balance
due Mr. Logan of $329, which he admits having
received. The account was crossed off, showing all
matters had been adjusted.
Here is the general statement of
HENRY WILSON.
Rec'd of him
1,000
two bonds 1,600
Less 3 p'r cent.
Cash.
1,552
70
2,622
p'd cash & Interest
1,548
1,074
2,000 Credit
2,000 U. P. Stock
OF AMERICA.
173
This account, having been finally settled, was
crossed off, as were others.
This includes all the memoranda relating to mem-
bers of Congress, as appearing upon his book.
Upon the conclusion of Mr. Ames' testimony
regarding the memorandum book, he was cross-
examined at great length by Mr. Robert S. Hale,
who appeared in behalf of Mr. Colfax, but no new
feature was brought out, nor were the former state-
ments of Mr. Ames in the least shaken; on the
contrary, his testimony was more positive. On the
11th February, 1873, Mr. Colfax again took the
witness stand, at his own instance, and made a long
statement, denying again, positively, the receipt of
any money, or dividends, from Mr. Ames. In
regard to the deposit of $1,200 in bills in his bank
immediately after the time which the check of Mr.
Ames was given and paid by the sergeant-at-arms,
Mr. Colfax attempts to explain, by saying that $200
on the 11th of July, another letter came from Mr.
of that amount he received in the month of June
from his step-father, Mr. Matthews, on account of a
debt which he owed him, and then says:
About the time of this payment, and, as near as I can
fix the date, about the middle of the month of June, and
very soon after the payment by Mr. Matthews, I was
opening my letter-mail at the breakfast table, in accord-
ance with my usual custom, and found an envelope within
another envelope postmarked New York. On opening
the inner envelope, I found it contained a letter written by
George F. Nesbitt, congratulating me most cordially and
174
THE CREDIT MOBILIER
warmly on my nomination for the Vice-Presidency, and
saying that the writer desired to send me, confidentially,
the remittance enclosed to aid me in the heavy expenses
of the canvass, but wished it kept a secret, as neither his
family nor any one else would ever know of it unless I
told them. Inclosed in this letter was a greenback, or
national bank bill, for $1,000.
He goes on, then, to say how he showed it to all
his family, and speaks of the surprise that all
exhibited as it passed around to each, and says he is
sure he deposited it with the $200 received from Mr.
Matthews. According to this, the deposit could
not have been made within a week from the time of
its receipt. This letter, containing such warm con-
gratulations, had been lost, and he was unable to
produce it before the committee. Further cross-
examination brought out the fact that on the 18th of
April, 1868, Mr. Colfax had received from this
same Mr. Nesbitt a letter containing a check for
$1,000, as a political contribution, and that again,
on the 11th of July, another letter from Mr.
Nesbitt, enclosing another check for $1,000, as a
political contribution. Both of the letters containing
these remittances, which were both in checks, Mr.
Colfax produced before the committee.
There was
also another contribution of $1,000 from Mr. Nesbitt
in November, at the end of the campaign. It may
only be necessary to add that at this time Mr.
Nesbitt held a contract from the Post Office Depart-
ment for supplying envelopes, and Mr. Colfax
was chairman of the Post Office Committee during
OF AMERICA.
175
a considerable portion of the continuance of this
contract.
Such, in brief, is the testimony which the Polland
Committee obtained from the various witnesses who
appeared before them; but all that is of principal
importance is herein contained. It then fell to the
province of the committee to make up from this
mass of testimony the report which they submitted
to Congress. It would be impossible, in a work of
this nature, to set that report out in full, and we
must content ourselves with a brief summary.
the testimony which precedes, we have taken the
report of the committee as the true statement of that
evidence, except where we differ from that report,
and where it became necessary to account for the
difference of opinion we entertain regarding it.
In
The committee say that in December, 1867, after
Mr. Ames came to attend the regular session of
Congress, then opened, he made arrangements with
certain members of Congress to take stock in the
Credit Mobilier, and that he sold it to them at par
and accrued interest from the July previous, while,
in fact, the stock at that time was of far greater
value, and was finding a ready sale at prices varying
from $160 to $225 per share; that Mr. Ames, in
selling at this price, did so for the purpose of creat-
ing such an interest in the recipients that their actions
on any matter to be brought before Congress, affect-
ing the Union Pacific Railroad, would be influenced
in favor of the road, and to this extent must be con-
sidered a bribe; and they found that this was the
UorM
176
THE CREDIT MOBILIER
object of Mr. Ames. To follow the language of the
report: -
The committee do not find that Mr. Ames, in his nego-
tiations with the persons above named, entered into any
detail of the relations between the Credit Mobilier Com-
pany and the Union Pacific Company, or gave them any
specific information as to the amount of dividends they
would be likely to receive.
And again :
The Credit Mobilier Company was a state corporation
not subject to Congressional legislation, and the fact that
its profits were to be derived from the building of the
Union Pacific Railroad did not apparently create such an
interest in that company as to disqualify the holder of
Credit Mobilier stock from participating in any legislation
affecting the railroad. In his negotiations with these
members of Congress Mr. Ames made no suggestion that
he desired to secure their favorable influence in Congress
in favor of the railroad company, and whenever the ques-
tion was raised as to whether the ownership of this stock
would in any way interfere with, or embarrass them in,
their action as members of Congress, he assured them it
would not.
And again :-
The committee have not been able to find that any of
these members of Congress have been affected in their
official action in consequence of their interest in Credit
Mobilier stock.
But the report goes on:
The committee are also satisfied that Mr. Ames enter-
tained a fear that, when the true relations between the
Credit Mobilier Company and the Union Pacific became
1
Myou
OF AMERICA.
177
generally known, and the means by which the great
profits expected to be made were fully understood, there
was danger that Congressional investigation and action
would be invoked.
The members of Congress with whom he dealt were
generally those who had been friendly and favorable to a
Pacific Railroad, and Mr. Ames did not fear, or expect to
find them favorable to movements hostile to it; but he
desired to stimulate their activity and watchfulness in
opposition to any unfavorable action by giving them a
personal interest in the success of the enterprise, espec-
ially so far as it affected the interest of the Credit Mobilier
Company. On the 9th day of December, 1867, Mr. C.
C. Washburn, of Wisconsin, introduced in the House
a bill to regulate by law the rates of transportation over
the Pacific Railroad.
Mr. Ames, as well as others interested in the Union
Pacific road, was opposed to this, and desired to defeat
it. Other measures, apparently hostile to that company,
were subsequently introduced into the House by Mr.
Washburn, of Wisconsin, and Mr. Washburne, of Illi-
nois. The Committee believe that Mr. Ames, in his dis-
tributions of stock, had specially in mind the hostile efforts
of the Messrs. Washburn, and desired to gain strength to
secure their defeat. The reference in one of his letters to
"Washburne's move" makes this quite apparent.
The committee also set out the transactions of
Mr. Ames with the several members of Congress.
substantially as above, and after reflecting severely
upon his conduct, concluded with the following
resolulution:
I. Whereas, Mr. OAKES AMES, a Representative in
this House, from the State of Massachusetts, has been
M
178
THE CREDIT MOBILIER
guilty of selling to members of Congress shares of stock in
the Credit Mobilier of America, for prices much below the
true value of such stock, with intent thereby to influence
the votes and decisions of such members in matters to be
brought before Congress for action: Therefore
Resolved, That Mr. OAKES AMES be, and he is hereby,
expelled from his seat as a member of this House.
2.
Whereas Mr. JAMES BROOKS, a Representative in
this House from the State of New York, did procure the
Credit Mobilier Company to issue and deliver to Charles
H. Neilson, for the use and benefit of said BROOKS, fifty
shares of the stock of said company, at a price much
below its real value, well knowing that the same was so
issued and delivered with intent to influence the votes and
decisions of said BROOKS as a member of the House in mat-
ters to be brought before Congress for action, and also to
influence the action of said BROOKS as a government direc-
tor in the Union Pacific Railroad Company: Therefore,
Resolved, That Mr. JAMES BROOKS be, and he is
hereby, expelled from his seat as a member in this House.
There are a few observations which it may be
necessary to speak of. It was by no means settled
by the testimony whether Mr. Ames solicited these
members of Congress to take the stock, or whether
they came to him first. It certainly was uncontra-
dicted that in some cases these members came to him
in regard to other investments, and when he recom-
mended the Credit Mobilier, and gave them refer-
ences concerning it, they took the pains to investigate,
and then said they would purchase the stock. The
whole evidence shows it to have been as any regular
business transaction. The stock which Mr. Ames
OF AMERICA.
179
sold to members of Congress was his own, which he
had paid for to the Credit Mobilier Company, at par.
The question as to the time of these contracts for the
sale of this stock has indeed a very important bear-
ing in ascertaining the value of the stock which was
sold by Mr. Ames. There was no conflict in the
testimony of any of the many witnesses, that it was
immediately after the opening of Congress in the
winter of 1867-68, that all these conversations were
had between Mr. Ames and those who purchased or
who were approached by him regarding this stock.
Five years had passed before this investigation
began, and facts and dates might easily pass from
memory. In the year 1867 there was an adjourned
session of Congress, which met in the month of
November, and continued in session day after day
until the regular session opened on the second day
of December. The two sessions ran into each other,
the one being closed and the other immediately
opened. When this adjourned session opened, and
for nearly six weeks thereafter, the stock of the
Credit Mobilier was offered for sale freely at par,
with no buyers, and a sale was only occasionally
made, and at less than par. Yet here is a fact,
important in its bearings as it is, that was entirely
overlooked by all the witnesses who testified, and
especially by Mr. Ames, to whom it was so impor-
tant. Search may be made through the entire testi-
mony of every witness, without finding any mention
of it whatever. Yet, as we said before, there was no
conflict in the testimony of all the witnesses, that all
180
THE CREDIT MOBILIER
these sales, or contracts, were agreed upon imme-
diately after the assembling of Congress. It must,
therefore, have been in the month of November, or the
early days of December, at a time prior to the decla-
ration of any dividends on Credit Mobilier stock,
prior to any increase in its value, and at a time when
it was a most difficult matter to dispose of the stock
to any one at so high a price as par. It needed,
therefore, the earnest solicitation of Mr. Ames to
· induce members to buy. He assured them that the
stock would be a good paying investment; but there
was not a particle of evidence showing what the
dividends might be ; nor was any statement made,
because, at the time the contracts for the sales were
made, it was not known that any dividend would
be declared for some time in the future. The value
of the stock was entirely speculative, and those who
bought, or agreed to buy, did so as an investment,
the same as any other man would do under similar
circumstances. There were violent objections made
to declaring these first dividends, and the first one
was declared on the 12th of December, 1867. It
was not until some time after this that the value of
the stock began to rise. It was after this that Mr.
Ames made his request to have shares of the stock
issued him by the Credit Mobilier Company, in order
that he might fulfil the obligations he had incurred.
His agreement was that this stock should be deliv-
ered at par and interest from the July previous, and
though the price in the meantime had greatly in-
creased, still his word was as binding to him as his
OF AMERICA.
181
bond. He delivered the stock as he had agreed,
though it was then far above the price he received.
But, to be accurate, he did not deliver it, but held it
in trust for those parties who had agreed to purchase.
And why did he do this? The answer is plain. Had
he given the stock to each buyer, and had that trans-
fer recorded on the books of the Credit Mobilier, the
holder would not have been entitled to any dividends,
unless, being also a holder of Union Pacific stock, he
had given his irrevocable proxy to the trustees. But
while the stock remained in the name of Mr. Ames on
the books of the Credit Mobilier, it would be entitled
to its dividends when any should be declared. And
for this reason no other transfer of the stock was
made, and Mr. Ames merely made a memorandum
on his private book regarding it, and without any
pretense of system. Mr. Ames was not a book-
keeper; and in all those extraordinary transactions
of business in which he was daily engaged, he car-
ried the details in his head, trusting and relying upon
his memory for all the accuracy he desired, and he
never made an error.
There can be no manner of question but that Mr.
Ames sold this stock, and that certain members of
Congress purchased it, for this was admitted by
all; whether a certain few who positively denied
it made investments, is another question. Henry
Wilson, John A. Logan, Henry L. Dawes, Glenni
W. Scofield, John A. Bingham, B. F. Boyer, Wil-
liam B. Allison, James F. Wilson-all admitted
that they bought it, and a portion of them returned
182
THE CREDIT MOBILIER
it, while another portion of them retained it. There
is no conflict in the testimony of these men, (unless
it was in that of Mr. Allison), and that of Mr. Ames.
In relation to James A. Garfield and Schuyler
Colfax, the very same testimony applied to them
that applied to the others—the same chain of cir-
cumstances connected them all. No question can
remain in the mind of any who will read the state-
ments of the parties, and the testimony and evidence,
but that these two were untruthful, that their
statements and explanations were wholly and abso-
lutely false from beginning to end, and that Mr.
Ames told only the truth, and that his record of
sales was true. Mr. Garfield having made his state-
ment, and being confronted by the statements and
evidence produced by Mr. Ames, which proved
beyond all doubt in the mind of any one that the
oath of Mr. Garfield was false, remained quiet and
never opened his mouth to offer an explanation, to
ask a question, or deny an assertion made by Mr.
Ames. He had expected, after making his state-
ment, that Mr. Ames would corroborate it, and thus
place him before the world as clean and pure; but,
when he found that Mr. Ames would tell the truth,
he was wise enough to see that any controversy
with Mr. Ames on this point would consign him
to a political grave. He therefore remained silent.
Not so with poor Colfax. He tried to break down
the testimony of Mr. Ames, and each step only
involved him deeper and deeper in falsehood.
Every move he made only cast still stronger upon
OF AMERICA.
183
him the conviction of the entire nation that he
was false, and that Mr. Ames was telling the
truth.
A word or two as to the findings of the committee.
They could not find that Mr. Ames had used any
persuasion to get congressmen to buy the stock, or
that he had made any particular representation as to
its value, or the dividends to be expected. They
could not find that the holding of this stock would
create such an interest as to disqualify the holder in
participating in any legislation affecting the Pacific
road; and they found, as a fact, that none of them
had been influenced, in their legislative actions, in
consequence of their holding the stock.
But in spite of this, in view even of the fact that
the possession of such would not and did not create
any unlawful interest, the committee were of the
opinion that Mr. Ames had sold it to them with that
purpose in view, and that he intended to do that
which the committee found could not be done, there-
fore, as it was necessary for them to find some one
guilty, they did find—at least they said they did
that Mr. Ames had been guilty of bribery, and
should therefore be expelled.
The only evidence of bribery before the com-
mittee was that of Mr. McComb, which was so
sifted as to prove every material statement made by
him to be without the shadow of a foundation; but
it must have been upon this that the committee
based their findings, or else on their own imagina-
tions, for there was nothing else.
184
THE CREDIT MOBILIER
As to the influence that was exerted upon these
members of Congress who had purchased the stock,
the records of Congress show that on the bill in-
structing the attorney-general to investigate whether
the Union Pacific and Central Pacific railroads had
not both forfeited their franchises, and directing the
withholding of bonds until the matter was decided,
each and every one of these members voted for it,
with the exception of Mr. Brooks, and he opposed
it on special grounds which he then assigned. Mr.
Wilson of Iowa was the author of the clause secur-
ing the government lien on interest due. Mr. Bout-
well forced the collection of the interest, and caused
Mr. Ames to fail in business. Mr. Bingham, of
Ohio, called up the most stringent bill to protect the
interest of the government passed since the legisla-
tion of 1864, and advocated it, and it was this that
all voted for when the bill overruling Mr. Boutwell's
order for collecting the interest came up before the
house. Mr. Dawes and Mr. Allison, at the time,
were absent at a meeting of conference committees,
and so could not vote. The story that Colfax ruled
out the resolution of Mr. Washburne, of Wisconsin,
fixing freight rates on these roads, is shown by the
Congressional Globe to be without foundation.
deed the committee were justified in finding that
these members had not been influenced by reason of
the stock they held.
In-
The debate upon these reports lasted two days and
evenings and part of the third day, and was partici-
pated in by a large number of the members; very
OF AMERICA.
185
few, however, had the courage to stand against the
report of the committee. In fact, as the evidence
was so bulky, they had not the time to investigate it
or study it, and therefore could not discover the fear-
ful errors into which the committee had fallen. In
the meantime the Judiciary committee of the House
had made a lengthy report, in which they held,
adversely to the committee on investigation, that
Congress had no right or power to expel a member
for acts committed prior to his election as a member
of that body.
We shall make no attempt to follow these argu-
ments in this place, many of which were couched in
language of purest eloquence and deep research.
The one most listened to was that of the most inter-
ested party in this unfortunate controversy, that of
Oakes Ames, which was read from the clerk's desk.
Inasmuch as it presents a most thorough summary
of the whole subject-matter, not merely of the evi-
dence elicited, but also the history of the Credit
Mobilier and its conection with the Pacific road, we
shall ask the privilege of setting it forth entire, and
asking for its earnest perusal.
IX.
DEFENCE OF OAKES AMES
AGAINST THE CHARGE OF SELLING TO MEMBERS OF
CONGRESS SHARES OF THE CAPITAL STOCK
OF THE CREDIT MOBILIER OF AMER-
ICA, WITH INTENT TO BRIBE SAID
MEMBERS OF CONGRESS.
Read in the House of Representatives, February 25, 1873.
BET
EFORE the House proceeds to the consideration
of the resolution reported on Tuesday last by
the special committee charged with the investigation
of alleged transactions with certain members of this
body, in the disposition of shares of the capital stock
of the Credit Mobilier of America, I desire to sub-
mit the following statement:
The charges on which said resolution is based
relate to events so intimately connected with a por-
tion of the history of the construction of the Union
Pacific railroad that I shall ask the indulgence of
the House while I proceed to trace such history in
greater detail than would otherwise be necessary.
On the 1st day of July, 1862, was passed and
approved an act of Congress, authorizing and pro-
viding for the construction of a railroad and tele-
graph line from the Missouri river to the Pacific
186
THE CREDIT MOBILIER.
187
ocean. The practicability and importance of such
a measure had long been urged by our most saga-
cious public men, but it failed to receive the sanction
of the government, until a great civil war threatened
to result in the withdrawal of the States and Terri-
tories of the Pacific coast from the authority of the
Federal Government. For a variety of reasons,
then long before the public, but chiefly to avert the
calamity indicated, this act was passed. It was
universally esteemed not only a measure of sound
policy, but a scheme appealing to the patriotism and
loyalty of the capitalists of the United States, as
the instrument whereby future separation of the
Pacific from the Atlantic States would be rendered
forever impossible.
The meeting of commissioners named in the act
to carry the same into effect, by the organization
of the corporation, was held pursuant to act of
Congress, on the first Tuesday of September, 1862.
Though composed of a great number of the leading
capitalists of the country, and, in addition to the
ordinary inducement of pecuniary advantage, acting
under the stimulus of patriotic ardor, the meeting
failed to accomplish anything beyond the opening of
books of subscription. Not a dollar of stock was sub-
scribed or promised, and it was not until about the
27th day of October, 1863—and then only with the
explicit understanding on the part of the subscribers
that in case of failure to secure future legislation the
project must be abandoned-that a sufficient sub-
scription was obtained to authorize the election of a
188
THE CREDIT MOBILIER
board of directors. On this subscription was the
name of no recognized capitalist. Parties known to
the country as wielding large capital in railroad
enterprises had studiously avoided all apparent
association with the enterprise, and in their place
appeared a class of comparatively unknown men
whose names, when rising to the surface, had been
chiefly connected with enterprises involving specu-
lative and extra-hazardous risks. Until the passage
of the law heretofore mentioned, nothing was done
under this organization beyond such acts as were
necessary to preserve the existence of the corpora-
tion.
Then came the act of July 2, 1864. Its principal
features were as follows: It authorized a reduction
of the par value of the shares from one thousand to
one hundred dollars, with a corresponding increase
in number; it enlarged the land grant from a ten to
a twenty-mile limit; it authorized the company to
issue first mortgage bonds on its railroad and tele-
graph, to an amount per mile equal to the amount
of United States bonds authorized to be issued
to the company in aid of the construction of the
road, and made the mortgage securing the same a
lien prior to that of the United States; it declared
that only one-half of the compensation for services
rendered for the government should be required to
be applied to the payment of the bonds issued by
the government in aid of construction. While thus
strengthening the company by these changes, Con-
gress, at the same time, and in the same act, dealt
OF AMERICA.
189
it two well-nigh fatal blows, from the effect of
which complete recovery is impossible. It author-
ized the Kansas Pacific, which was required to effect
a junction with the Union Pacific not farther west
than the 100th meridian of longitude-a distance
of about 247 miles west of the Missouri River—to
make such connection at any point westwardly of
such initial point deemed practicable or desirable.
The result is a rival parallel road connecting with
the Union Pacific at a point 516 miles west of the
Missouri River-being one-half the length of that
road—and claiming equal advantages and facilities
in all running connections and interchange of busi-
ness. It likewise provided that in case the Central
Pacific should reach the eastern boundary of Cali-
fornia before the Union Pacific should be built to
that point, the former company should have the
right to extend its road 150 miles eastward, and this
power was afterwards enlarged by Congress by act
of July 2d, 1866, so as to authorize such extension
indefinitely, until the two roads should meet. Thus,
by act of Congress, these two corporations were sent
forth upon a race across the continent, which finally
culminated in the construction of 500 miles of road
by each company in a single season, through a desert
country, upon a route beset by unparalleled obsta-
cles, and at a necessary cost largely in excess of
the most extravagant estimates.
It is in testimony before a committee of the House
that, after the impracticability of building the road
under the first act had been demonstrated, when it
190
THE CREDIT MOBILIER
had become apparent that additional aid was neces-
sary to induce capitalists to embark in the enterprise,
the late President Lincoln was urgent that Congress.
should not withhold the additional assistance asked,
and that he personally advised the officers of the
company to go to Congress for such legislation as
would assure the success of the enterprise, declaring
it a national necessity, and recommending them to
apply for additional concessions, ample to place the
construction of the road beyond a peradventure.
Notwithstanding this favorable legislation, no cap-
ital was attracted, no additional stock subscribe‹'.
On the 8th of August, 1864, a contract for building
one hundred miles west from the Missouri river was
let to H. M. Hoxie, the only contractor offering to
undertake so hazardous a venture. Six months
demonstrated his inability to perform his contract,
and with the experience of the company in dealing
with individual contractors, no course seemed open,
except to seek a consolidation of personal means into
a corporate body, whereby the pecuniary liability
of a large number of persons might be made avail-
able to the task of constructing the road, while at
the same time enjoying the shelter of corporate lia-
bility only. Accordingly, by a contract made March
15, 1865, the Credit Mobilier of America, a corpora-
tion created by and organized under the laws of
Pennsylvania, in substance assumed the obligations
of the Hoxie contract and entered upon its perform-
ance.
It was soon manifest that even this organi-
zation, as then constituted, would be unable to
OF AMERICA.
191
accomplish the work for which it was created. The
state of the country and the peculiar local conditions
surrounding the enterprise were exceedingly unfav-
orable to a successful prosecution of the work. Gold
was one hundred and fifty; there was no market for
the first mortgage bonds, and the government bonds,
payable in currency, were of uncertain value and
of difficult sale. No eastern railroad connection
existed whereby the vast amount of material essen-
tial to construction could find reasonable and rapid
transportation to the line of the road; it was com-
pelled, instead, to follow the long and tedious route
of the Missouri river, at an extraordinary cost for
transportation, and without insurance against the
perils of the hazardous navigation of that treacher-
ous stream. All materials were high, and all classes
of labor scarce, and only to be obtained in limited
quantities, at extravagant prices. Add to this the
universal distrust in financial circles of the ultimate
completion of the road, and the general conviction
that when completed it would fail to prove remuner-
ative or profitable, and it is easy to anticipate the
result which speedily followed, viz., the practical
failure of the new organization to carry forward the
work until reinforced by a new class of capitalists,
bringing with them larger means and a more power-
ful influence in the financial world.
Early in September, 1865, it became manifest that
the contract could not be performed, and that the
work must stop, unless additional strength could be
imparted to the corporation. Accordingly, after
192
THE CREDIT MOBILIER
urgent solicitation and long consideration, myself
and others associated with me, for the first time,
took an interest in the organization. Its capital
stock was increased, additional money was raised,
and the work went forward. Under this arrange-
ment two hundred and forty-seven miles of road
were built, when, on 16th day of August, 1867, it
was superseded by the Oakes Ames contract, so
called, and this contract was, on the 15th day of
October, 1867, assigned to seven persons, as trustees,
and under it six hundred and sixty-seven miles of
road were built.
The alleged corrupt transactions imputed to me are
all charged to have been initiated in December, 1867.
Glance for a moment at the situation of the Union
Pacific Company and my connection with it at that
time. After a long and nearly ineffectual struggle,
the final construction of the road had been assured
by my intervention in its affairs. No one doubted
that it would be rapidly pushed to completion. Con-
gress had long before, and not at my instance,
enacted the laws tendering inducements to the capital-
ists of the country to embark in the construction of
the road, and I and my associates accepted its offers
and undertook the work. The company had no
reason to apprehend unfriendly or hostile legislation,
for every department of the government manifested
a friendly attitude, and the whole country was loud
in demonstrations of approval of the energy and
activity which we had infused into the enterprise.
Heads of departments and government officials, of
OF AMERICA.
193
every grade, whose duties brought them in contact
with the affairs of the company, were clamorous for
increased speed of construction, and never lost an
opportunity of expressing approval of the work and
urging it forward. It had never entered my mind
that the company would ask for or need additional
legislation, and it would have been difficult to find a
man so reckless of popular opinion as to have lent
himself to a crusade against an organization whose
praises everywhere filled the press and were on the
lips of the people. As a matter of history, no legis-
lation, at all effecting the pecuniary interests of the
company, was asked for for three years and a half
after the date of the alleged sales by me of Credit
Mobilier stock, and then only in settlement of a
purely judicial question, suddenly and without warn-
ing sprung upon it, in a critical period of its fortunes,
and in relation to which no controversy had ever
before been made. Under no other state of affairs,
and in no other attitude of the government, could I
for a moment have been induced to assume the
enormous responsibility entailed by a contract in-
volving a liability of forty-seven millions of dollars.
To undertake the construction of a railroad, at any
price, for a distance of nearly seven hundred miles,
in a desert and unexplored country, its line crossing
three mountain ranges, at the highest elevations yet
attempted on this continent, extending through a
country swarming with hostile Indians, by whom
locating engineers and conductors of construction
trains were repeatedly killed and scalped at their
N
194
THE CREDIT MOBILIER
work, upon a route destitute of water, except as
supplied by water trains hauled from one to one
hundred and fifty miles, to thousands of men and
animals engaged in construction, the immense mass
of material, iron, ties, lumber, timber, provisions,
and supplies necessary, to be transported from five
hundred to fifteen hundred miles, I admit might
well, in the light of subsequent history and the
mutations of opinion, be regarded as the freak of a
madman, if it did not challenge the recognition of a
higher motive, namely, the desire to connect my
name conspicuously with the greatest public work
of the present century. It is by no means strange
that my credit with conservative financiers like Gov-
ernor Washburn should have been shaken, and that
he should have hastened to call in loans which, in his
judgment, this contract proved to be in unsafe hands.
Under these circumstances, with all legislation
sought granted, and no future action of Congress to
be asked for or feared, it is charged that I “have
been guilty of selling to members of Congress shares
of stock in the Credit Mobilier of America, for prices
below the true value of such stock, with intent to
influence the votes and decisions of such members
in matters to be brought before Congress for action.”
If this charge is true, it is predicated upon three
facts, all of which should be shown to the satisfac-
tion of this body, in order to justify the extreme
measures recommended by the committee.
First. The shares must have been sold at prices
so manifestly and palpably below the true value as
OF AMERICA.
195
to conclusively presume the expectation of some
other pecuniary advantage in addition to the price
paid.
Second. The shares must have been of such a
nature as that their ownership would create in the
holder a corrupt purpose to shape legislation in the
interest of the seller.
Third. Some distinct and specific matter or thing
to be brought before Congress, and on which the
votes and decisions of members are sought to be
influenced, should be alleged and proved.
It is by no means clear, from the testimony, that
the stock was sold at a price less than its true value.
It was not on the market; it had no market value.
Unlike an ordinary marketable commodity, it had
no current price, and the amount for which it could
be sold depended upon the temperament of the
buyer, and his inclination to assume extraordinary
risks on the one hand, or his tendency to conserva-
tive and strictly solid investments on the other. It
is in proof before a committee of this House, by
witnesses largely interested in railroad construction
and operation, and of great financial ability and
strength, that when this stock was offered to them
at par, it was instantly declined, by reason of the
enormous risks involved in the enterprises on which
its value depended. These capitalists believed that
all the capital invested in the stock was jeopardized,
and the venture was declined on the rule that no
promise of profit justifies a prudent man in embark-
ing in any enterprise in which all the capital invested
196
THE CREDIT MOBILIER
is liable to be sunk. Apart from some proof that a
small amount of this stock changed hands between
persons addicted to speculation, at about one hun-
dred and fifty, nothing is shown in reference to its
value, except that it was not on the market, and had
no ascertained price. To overturn the presumption
of innocence and substitute the conclusive imputa-
tion of guilt, from the simple fact of such a transac-
tion occurring between men who had long main-
tained the most friendly personal relations,
whom nothing was asked, and by whom nothing
was promised,—is to overturn all the safeguards
afforded persons and property by the common law,
and in lieu thereof establish an inquisitorial code,
under which no man's reputation is safe.
of
It has been assumed that the ownership of Credit
Mobilier stock necessarily created in the holder a
personal and pecuniary interest in procuring Con-
gressional legislation favorable to the Union Pacific
Railroad company, or preventing legislation ad-
verse to it. At the date of the alleged distribution
of Credit Mobilier stock, the Oakes Ames contract
had been made, and was in progress of execution.
It was completed, and the road covered by the con-
tract turned over to the company about the close of
the year 1868.
1868. Not until two years after was any
legislation asked for by the company, and then it
was such as arose out of exigencies presented by
the action of the government in reversing a long-
continued and uniform previous policy, which could
not, by any possibility, have been foreseen or
OF AMERICA.
197
anticipated. The stock depended for its value upon
the connection of the Credit Mobilier with the Oakes
Ames contract, which was simply in the capacity of
a guarantor of its execution, whereby a certain class
of its stockholders became entitled to participate in
the profits of that contract in money. There is no
provision of the Oakes Ames contract, the assign-
ment thereof, or of the triplicate agreement, where-
by a stockholder became entitled to any of the secu-
rities of the Union Pacific Railroad Company, or in
any way interested in their value. The profits
derived, if any, were to be, and were, in cash.
When the Oakes Ames contract was completed,
and the consideration thereof divided in cash to the
several parties entitled, in due proportion, the inter-
est of a holder of Credit Mobilier stock in the Union.
Pacific Railroad Company, and every thing pertain-
ing to it, was at an end. In other words, the stipu-
lations of that contract, and the cash profits derivable
therefrom, were the end and the beginning,—the
centre and circumference, — the absolute measure of
the pecuniary interest of a holder of Credit Mobilier
stock in 1868. To say that the Washburne bill,
which professed to deal exclusively with the
operation of the road, in the hands of the com-
pany, after it had been built and turned over by
the contractors, was a measure feared, and to pro-
tect the railroad company, against which the stock
in question was sold to members of Congress,
seems to me to invoke the last extreme of
credulity.
198
THE CREDIT MOBILIER
It is impossible to impute to me the purpose to
corruptly influence members of Congress, by con-
ferring upon them pecuniary benefit without ade-
quate consideration, unless the benefit conferred is
of such a character as to necessarily create an incli-
nation to aid the donor to the detriment of the public.
There is but one escape from this position, and that
leads to a lower deep. It may be said that the giv-
ing by any person, and the receiving by a member
of Congress of any gratuity whatever, or, what is
identical therewith, selling and buying at an inade-
quate price, imports corruption in both the giver and
receiver, the buyer and seller. Whoever proclaims
this doctrine should instantly set on foot the inquiry
how many railroad presidents and superintendents
have presented to members of Congress the value of
transportation over their respective railroad lines,
and by whom the same has been received, to the end
that justice may be done, and the one presented for
indictment, and the other for expulsion. The dimen-
sions and value of the gratuity have nothing to do with
the question. There is no middle ground on which
to stand.
For the first time in the history of any tribunal,
this body has before it an alleged offender without
an offense. Any person accused in the courts of the
country, under like circumstances, might well, when
called upon to plead to the indictment, insist that it
failed to charge a crime. I am charged by the com-
mittee with the purpose of corrupting certain members
of Congress, while it, at the same time, declares said
OF AMERICA.
199
members to have been unconscious of my purpose,
and fails to indicate the subject of the corruption.
In other words, the purpose to corrupt is inferred,
where the effect of corrupting could not by possi-
bility be produced, and where no subject for corrup-
tion existed. No lawyer who values his reputation
will assert that an indictment for bribery could stand
for an instant in a common-law court, without specifi-
cally alleging who was the briber, who was bribed,
and what precise measure, matter, or thing was the
subject of bribery. There can be no attempt to
bribe without the hope and purpose of corruptly
influencing some person or persons in respect to
some particular act. Until, therefore, it is alleged
and shown not only who tendered a bribe, but who
accepted or refused it, and what was the specific
subject-matter of the bribery, any conviction which
may follow the alleged offense must rest upon the
shifting and unstable foundation of individual caprice,
and not upon the solid rock of justice administered
under the restraints of law.
I shall not enter upon a discussion of the jurisdic-
tion of this body over offenses alleged to have been
committed during a previous Congress, leaving that
question for such additional comment as the lawyers
of the House choose to make. The position, how-
ever, that the fault- if such exists - is a continuing
offense, is so extraordinary, and fruitful of such fatal
consequences, that I cannot forbear a reference to it.
Since the Credit Mobilier stock sold by me passed
into the hands of the several members of Congress
200
THE CREDIT MOBILIER
referred to in the report, I have been, in the judg-
ment of the committee, a perpetual and chronic
offender against the dignity and honor of the House,
and, so far as my own volition is concerned, must so
continue to the end of the world. So long as a single
share of this stock shall not be restored, but shall
remain in the hands of the several receivers, or either
or any of them, my offense goes on, and I am bereft
of the power to stop it. And yet, notwithstanding the
world is now apprised of my alleged corrupt inten-
tions—and no member of Congress can be ignorant.
of them the parties who alone have the power, but
fail to release me from the necessity of continuing
my offenses by return of the stock, are themselves
without blame, and in no way obnoxious to the sins
laid upon me. The committee declare that want
of knowledge alone of the corrupt intention of the
seller excused the buyer, while holding and owning
the proceeds of the sale. Now that such knowledge
is everywhere and among all men, how can this, in
the absence of a restoration of the stock or its pro-
ceeds, be a living, continuing, perpetual crime in the
seller and not in the buyer?
I beg to be correctly understood. I allege nothing
against those members of the House who purchased
Credit Mobilier stock. I am simply following the
reasoning of the committee to its logical results. I
make no assault upon any man or class of men; but
I earnestly protest against being chosen the victim
of a line of reasoning and assertion, in my judg-
ment unjust, partial, unsound, inconsistent, and
OF AMERICA.
201
inconclusive, calculated, if endorsed, to bring this
body into disrepute, and repugnant to the sense of
justice and fair play embedded in the hearts of the
American people.
Reference is made by the committee to the act of
February 26, 1863, and, after setting out the same,
the following language is used:—"In the judgment
of the committee, the facts reported in regard to Mr.
Ames and Mr. Brooks would have justified their
conviction under the above-recited statute, and sub-
jected them to the penalties therein provided.' I
beg gentlemen to note the entire section carefully
and critically, and verify the assertion I now make
that every penalty denounced upon him who shall
promise, offer, or give, or cause, or procure to be
promised, offered, or given,
CC
ble thing'
""
*
* *
*
"" *
*
*
Ce
""
""
""
any valua-
"to any member of Congress
with intent to influence his vote on any
matter pending or to be brought before him, is
alike launched with impartial severity against any
member, officer, or person who shall in anywise
accept or receive the same, NOT knowingly, wilfully,
or feloniously receive the same, but IN ANYWISE
accept or receive the same. Mark the language:
" And the member, officer, or person who shall IN
ANYWISE accept or receive the same, or any part
thereof, shall be liable to an indictment as for a high
crime and misdemeanor, and shall, upon conviction
thereof, be fined not exceeding ten times the amount
so offered, promised, or given, and imprisoned in a
penetentiary not exceeding ten years.
**
202
THE CREDIT MOBILIER
Again I protest against the conclusion of the com-
mittee, which makes this unequal, partial, and dis-
criminating allotment of the penalties of a statute
designed by its framers impartially to strike or
shelter all to whom it applies. Whatever result may
be reached here, none can doubt that in the courts
of the country there will be one law for all.
Aside, then, from the letters addressed to Mr.
McComb, it is impossible to infer the motives attri-
buted to me by the committee. Mr. McComb claimed
that about $20,000 of the $25,000 of stock voted me
to fulfil my obligations to my friends, should be
given to him for distribution to his friends, and the
letters to him were written to show that I was selling
the stock in small quantities to my friends, and could
not give his friends the entire amount they desired.
A perfect understanding of the circumstances under
which these letters were written, and a candid
consideration of their object and purpose, must, I
think, carry to any unbiased mind the conviction that
my motives were very far from those ascribed to me.
Dr. Durant, Mr. McComb, and myself, were each
anxious to secure as large a portion as possible of
the shares of Credit Mobilier stock, and professedly
for the same purpose; namely, for disposition to
those persons with whom, from past favors or per-
sonal friendship, we were willing to share opportu-
nities of profitable investment. I had no desire or
expectation to further enrich myself, for my sole
object was to get and retain as much of this stock
as possible, to be used in redeeming obligations of
OF 203
AMER CA.
.
AMERICAthe character named. These obligations had been
incurred not only to members of Congress, but to
many private citizens in no way connected with
official life; they had been contracted early in the
year 1867, when the stock could not be sold above
par, and it was to meet these contracts that I made
special efforts to obtain the stock. In doing so, I
took it, not for my individual use, but as trustee, for
the sole purpose of conveying it to the parties entitled,
and it would have been a breach of faith in me to
have asked or taken a price in excess of the par
value, notwithstanding it may have in the meantime
advanced. No distinction was made between mem-
bers of Congress and unofficial friends, and in per-
forming the obligations I had incurred, I sold to both
alike stock at its par value, in accordance with my
agreement. When, therefore, Mr. McComb objected
to my receiving so large an amount, and entered
upon a struggle to prevent it, I naturally addressed
to him such arguments and considerations as, in my
judgment, would make the deepest impression upon
his mind. It so happened that, in the prosperity
and success of the Union Pacific Railroad Company,
Mr. McComb and myself had a common and identi-
cal interest; and I therefore urged upon him that
I had so disposed of the stock as to enhance the
general strength and influence of the company, for
whose welfare his solicitude was not less than my
own. It is no sufficient answer to this to say that
the statement contained in the letters on which I
most relied to influence his mind, I now concede
204
THE CREDIT MOBILIER
contained expressions liable to be construed against
the purity of my motives. Tried by the test of casual
and confidential letters, often written hastily, and
under circumstances and surroundings entirely dif-
ferent from those in the light of which they are
interpreted-framed for a specific purpose, and to
accomplish a particular end-their collateral and
incidental bearings not reflected upon and deliber-
ately weighed, but flung off hastily in the instant
press of business, and the freedom of that personal
confidence ordinarily existing between parties jointly
concerned in financial schemes or enterprises of
public improvement, he would indeed be a cautious,
a prudent, a wise, and almost perfect man, who could
emerge from such an ordeal completely free from the
suspicion of fault.
I wish, therefore, to declare, in the broadest sense
of which language is capable, that in writing the
McComb letters, I had alone in view the objects
above enumerated; that I never for an instant
imagined that from them could be extracted proof
of the motive and purpose of corrupting members of
Congress-motives and purposes which I solemnly
declare I never entertained. The insignificant
amounts of stock sold to each member with whom I
had dealings; the proven fact that I never urged its
purchase, and the entire lack of secrecy―ordinarily
the badge of evil purposes-in these transactions,
ought, in my judgment, to stand as a conclusive refu-
tation of the offences charged. And above and
beyond this, I submit that a long and busy life spent
OF AMERICA.
205
in the prosecution of business pursuits, honorable to
myself and useful to mankind, and a reputation
hitherto without stain, should of its weight overcome
and outweigh charges solely upheld by the uncon-
sidered and unguarded utterances of confidential
business communications.
A vast amount of error has been disseminated and
prejudice aroused in the minds of many by incorrect
and extravagant statements of the profits accruing
from the different contracts for the construction of
the road, and especially that commonly known as
the Oakes Ames contract. The risk, the state of
the country, the natural obstacles, the inflation of
the currency and consequent exorbitant prices of
labor and material, the Indian perils, the unparal-
leled speed of construction, and the clamorous de-
mands of the country for speedy completion, seem
to be forgotten, and the parties connected with the
Credit Mobilier and the construction of the road are
now to be tried by a standard foreign to the time
and circumstances under which the work was done.
It is said that when the failure to secure the neces-
sary amount of cash subscriptions to the stock was
proved, and it became manifest that the only medium
through which the work could go on was by a con-
structing company, which would undertake to build
the road and take the securities and stock of the
company in payment-when the whole enterprise had
come to a complete halt, and was set in motion by my
individual credit and means, and that of my associ-
ates the enterprise should have been abandoned.
206
THE CREDIT MOBILIER
Were it possible to present that question to the
same public sentiment, the same state of national
opinion, which existed at the time the exigency
arose, I would willingly and gladly go to Congress
and the country on that issue. But I am denied that
justice, and the motives and transactions of one
period are to be judged by the prejudices of another,
at an hour when the fluctuations of opinion are ex-
treme and violent, beyond the experience of former
times. The actual cost, in money, of building the
road was about seventy millions of dollars, and all
statements of a less cost are based upon mere esti-
mates of engineers who never saw the work, and
utterly fail to grasp the conditions under which it
was prosecuted. The actual profit on this expendi-
ture, estimating the securities and stock at their
market value when received in payment, was less
than ten millions of dollars, as can be demonstrably
established in any court. It is in testimony before a
committee of the House, by witnesses who have
spent their lives as contractors, as well as those who
have been builders, owners, and operators of some
of the great trunk lines of the country, that for
twenty years past the ordinary method of building
railroads has been through the medium of construc-
ting companies; that few, if any, roads involving a
large outlay of capital are built in any other way;
that a profit of from twenty to thirty per cent. is not
unreasonable in any case, and that upon the con-
struction of the Union Pacific railroad, estimating
it with reference to the magnitude of the work and
•
OF AMERICA.
207
the risk incurred, no man could reasonably object to
a profit of fifty per cent. The like evidence is given
by a government director, long intimately acquainted
with the manifold difficulties and embarrassments
encountered, and who has not yet outlived the recol-
lection and realization of them.
So far as I am pecuniarily concerned, it would
have been better that I had never heard of the Union
Pacific railroad. At its completion the company
found itself in debt about six millions of dollars, the
burden of which fell upon individuals, myself among
others. The assumption of the large portion of this
liability allotted to me, followed by others necessary
to keep the road in operation until there should be
developed in the inhospitable region through which
it runs a business affording revenue sufficient to meet
running expenses and interest, finally culminated in
events familiar to the public, whereby losses were
incurred greatly in excess of all profit derived by
me from the construction of the road.
What then has the government received as the
fruits of the connection of the Credit Mobilier with
the Union Pacific Railroad Company, and the trans-
actions now under consideration? By the terms of
its charter it agreed, among other things, to loan the
company for thirty years its bonds to certain amounts
per mile, and until their maturity one-half the earn-
ings on account of government transportation should
be retained, to be applied in repayment to the gov-
ernment of whatever interest might in the mean-
time be paid on the bonds by the United States.
208
THE CREDIT MOBILIER
The company in turn, by acceptance of the charter,
agreed to pay the United States the amount due on
the bonds at their maturity, and to perform certain
services. Without asking additional legislation, or
being called upon to resist obnoxious legislation,
except wherein this contract had been disregarded
and ignored by the government, the road has been
completed and successfully operated throughout its
entire line now nearly four years.
us.
No complaint has ever come up from any quarter
of any failure to faithfully perform its obligations to
the government, both in respect to transportation
services and its pecuniary obligations. In the only
instance in which it has differed from any depart-
ment of the government, the variance has been upon
a purely judicial question, upon which the courts
have been open to the United States, but closed to
The government made itself the creditor of the
Union Pacific Company, tying its debtor hand and
foot with a multiplicity of stipulations, and then re-
fused to submit their interpretation to its own courts.
That it has so far reaped the principal benefit of the
bargain cannot be denied. Official statements of
the postmaster-general are before the House, which
show that for the six years ending June 30, 1872,
the saving to the government upon the transportation
of postal matter alone by reason of the construction.
of the Union Pacific railroad, assuming the amount
carried to be equal to that transported previous to its
construction, has been $643,579.55. But the amount
of postal matter has been over six times greater by
OF AMERICA.
209
No
rail than by stage, so that the real saving is not less
than $3,861,477.30. Even this result fails to repre-
sent the increased speed of carriage and convenience
of handling and distribution afforded by postal cars
to the employees of the department accompanying
the mails, thus insuring safety and regularity in de-
livery. A like statement from the war department
shows the saving upon military transportation for
the same time to have been $6,507,282.85.
official estimates are before the House for the saving
upon transportation of Indian goods, for the navy
department, or of coin or currency, but they may
be safely aggregated at not less than $2,500,000.
This gives a total saving for the six years ending
June 30, 1872, of the sum of $12,868,760.15. The
Secretary of the Treasury in a communication to
the House, bearing date May 20, 1872, in answer
to a resolution calling for such information, esti-
mates the amount of interest and principal which
will be due from the Union Pacific Railroad Com-
pany, at the maturity of the government bonds,
at the present rate of payment, at $58,156,746.98.
Assuming that the saving to the government of all
the different classes of transportation in the future.
will be the same as in the past (a supposition
entirely on the side of the United States, for it
will in fact increase in almost geometrical progres-
sion), and the result is a total saving, at the date of
the maturity of the bonds of $64,343,880.75, a sum
in excess of the principal and interest due at that
time to the amount of $6,187,053.77. In other
U
210
THE CREDIT MOBILIER
words, if at the maturity of the bonds not one cent of
interest or principal was paid, but on the other hand
was entirely lost, the government would be the
gainer in money to the amount of $6,187,053.77-
Utah
All this is solid gain, involving no consequential
element, and susceptible of exact computation. To
attempt to grasp the national benefits which lie out-
side the domain of figures, but are embodied in the
increased prosperity, wealth, population, and power
of the nation, overtasks the most vivid imagination.
When the rails were joined on Promontory Summit,
May 10, 1869, the Pacific and the Atlantic, Europe
and Asia, the East and the West, pledged them-
selves to that perpetual amity out of which should
spring an interchange of the most precious and
costly commodities known to traffic, thus assuring a
commerce whose tide should ebb to and fro across
the continent by this route for ages to come.
was then an isolated community, with no industry
but agriculture, and those manufactures necessary to
a poor and frugal people. In 1872 it shipped ten
millions of silver to the money centres of the world,
and is now demonstrated to be the richest mineral
storehouse on the continent. An institution repug-
nant to the moral sense of the Christian world is fast
yielding to the civilizing contact of the outer travel
made possible by the construction of the railway.
Many believe it has already substantially solved the
perplexing problem of polygamy. A vast foreign
immigration, bringing with it from Europe an immense
aggregate sum of money, has already been distributed
OF AMERICA.
211
far out on the line of the road, and its means and
muscle are fast subjecting the lately sparsely-peopled
territories of Colorado, Wyoming, Montana, and
Idaho to the uses of an enterprising and rapidly-
increasing population. A steady and copious flow of
British capital is pouring into the mines of Colorado
and Utah. The Indians have been pacified; fruit-
less and costly hostile military expeditions, frequent
elsewhere, have ceased in the vicinity of its line,
and the facility and speed of communication afforded
by the railroad enables the government to offer ade-
quate protection to the frontier with a handful of
troops, and at the same time dispense with large
garrisons and fortified posts, hitherto maintained at
fabulous cost. The countless herds of Texas are
moving up to occupy the grazing grounds of the
buffalo in the valleys and canons shadowed by the
Rocky Mountains. A region of boundless natural
resources, lately unknown, unexplored, and unin-
habited, dominated by savages, has been reclaimed,
hundreds of millions added to the wealth of the
nation, and the bonds of fraternal and commercial
union between the East and West strengthened
beyond the power of civil discord to sever.
Does any one-yearning with solicitude lest the
United States, which has made this fortunate bar-
gain, should fail to receive each cent due at the
precise moment it may be demanded by its officers—
doubt the ability of the company to perform its obli-
gations and pay the last dollar due, long before the
maturity of the bonds? Four years ago the road
212
THE CREDIT MOBILIER
was opened, without local business, with no consid-
erable through traffic, and in the dawn of the
friendly relations between the United States and
those Asiatic nations which now bid fair to prove
the source of its largest and most lucrative business.
The conservative capitalists of the country believed
it would bankrupt any organization which undertook
to operate it. Four years have reversed that opinion,
and now the same men are putting forth their best
efforts to secure the benefit of a close traffic-connec-
tion, and perhaps ultimate ownership. Twenty-four
years ago there was scarcely a mile of railroad west
of Lake Erie, and no connecting line west of Buf-
falo. Let him who would rightly estimate the future
of this company go back to the year 1848, and
thence forward to the present time, trace the growth
and development of that portion of the United States
lying west of the great lakes, and he will be able to
approximate the coming history of the region through
which this road stretches for a thousand miles, and
of the trade and products and commodities of which
it is to be the great commercial artery. There is
but one power that can destroy its ability to perform
all its obligations to the government; there is but
one agency that can render it incapable of paying
all its indebtedness, to the last dollar, namely, the
Congress of the United States. It alone can so
cripple, weaken, or destroy the company as to make
the loan of the government to it a total loss.
These, then, are my offences: that I have risked
reputation, fortune, everything, in an enterprise of
OF AMERICA.
213
incalculable benefit to the government, from which
the capital of the world shrank; that I have sought
to strengthen the work, thus rashly undertaken, by
invoking the charitable judgment of the public upon
its obstacles and embarrassments; that I have had
friends, some of them in official life, with whom I
have been willing to share advantageous opportuni-
ties of investment; that I have kept to the truth
through good and evil report, denying nothing, con-
cealing nothing, reserving nothing. Who will say
that I alone am to be offered up a sacrifice to ap-
pease a public clamor or expiate the sins of others?
Not until such an offering is made will I believe it
possible. But if this body shall so order that it can
best be purified by the choice of a single victim, I
shall accept its mandate, appealing with unfaltering
confidence to the impartial verdict of history for that
· vindication which it is proposed to deny me here.
X.
THE VOTE OF CENSURE.
IN consequence of the report of the Judiciary com-
mittee already alluded to, and a feeling on the
part of many members that the evidence would not
warrant the conviction, it was growing apparent that
the report of the committee would not be sustained,
and that the expulsion of these members would not
follow. Mr. Sargent, of California, moved to sub-
stitute for the resolutions offered by the committee,
the following:-
Whereas, by the report of the special committee herein,
it appears that the acts charged against members of this
House in connection with the Credit Mobilier of America,
occurred more than five years ago, and long before the
election of such persons to this Congress, two elections by
the people having intervened; and, whereas grave doubts
exist as to the rightful exercise by this House of its power
to expel a member for offenses committed by such mem-
ber long before his election thereto, and not connected
with such election: therefore,
Resolved, That the special committee be discharged
from the further consideration of this subject.
Resolved, That the House absolutely condemns the
conduct of OAKES AMES, a member of this House from
214
THE CREDIT MOBILIER.
215
Massachusetts, in seeking to procure Congressional atten-
tion to the affairs of a corporation in which he was inter-
ested, and whose interest directly depended upon the
legislation of Congress, by inducing members of Congress
to invest in the stocks of said corporation.
Resolved, That this House absolutely condemns the
conduct of JAMES BROOKS, a member of this House from
New York, for the use of his position as government
director of the Union Pacific Railroad, and a member of
this House, to procure the assignment to himself or family,
of stock in the Credit Mobilier of America, a corporation.
having a contract with the Union Pacific railroad, and
whose interests depended directly upon the legislation of
Congress.
On this motion to substitute, the yeas and nays
were called, and with the following result. Yeas,
115; nays, 110; not voting, 15. So it was agreed
to substitute these resolutions for those offered by
the committee.
The question then came upon the resolution con-
demning the action of Oakes Ames, and it was
agreed to by a vote of 182 yeas, 36 nays, 22 not
voting.
Upon the resolution condemning the action of
James Brooks, the vote stood: 174 yeas, 32 nays,
34 not voting.
And so the resolutions were each agreed to.
During these proceedings Mr. Ames occupied a
seat on the floor of the House, immediately in front
of the Speaker, in plain view of all. He realized
the situation in which he was placed, and felt deeply,
keenly, the disgrace that was being placed upon
216
THE CREDIT MOBILIER
him. He sat there silent, immovable, a deathly
pallor on his countenance, calmly waiting for the
awful decision. Mr. Brooks occupied his own seat,
looking more like a corpse than a human being.
'Those were awful moments to these men, as name
after name was called and recorded on the everlast-
ing pages of history, where generations yet unborn
might come, and, reading, point the finger of scorn
at those names thus shrouded in eternal infamy. A
whole life was centered in those few moments. All
hope was lost, all honor gone. When the decision
had been announced and the awful sentence record-
ed, there "ensued upon the floor of Congress a
scene without parallel. Men who had just joined in
the vote of condemnation against Mr. Ames, gath-
ered around him to ask his pardon for having done
so. They said to him, 'we know that you are inno-
cent; but we had to do it in order to satisfy our
constituents.'
935
This scene is a fact, and the names of those who
thus spoke can be given. What virtuous men to sit
in judgment upon their fellow-men! How noble the
hearts that could thus consign to infamy a fellow
being! Years after, others have confessed their vote
was given as it was solely on account of personal
hopes. It presents a picture of depravity by the side
of which all the acts charged against Oakes Ames
stand out as honorable in the extreme.
Congress soon adjourned, and the terms of service
of Oakes Ames and James Brooks were at an end.
They returned to their respective homes only to die.
OF AMERICA.
217
In a few weeks they were no more. The people
of the whole nation soon began to realize that in the
death of Mr. Ames the country had lost a great ben-
efactor-a man through whose instrumentality the
greatest achievement of the present age had been
successfully completed. There is no doubt but the
disgrace thus placed upon him ended his life.
Whatever opinion the world at large may have
entertained of the man, however deep was the
feeling against him in general, those who knew him,
and who had been associated with him, could not
be made to believe that dishonor or guilt had ever
lurked within his heart. In all his private relations.
his name was pure and spotless. In his business
his honor and integrity were proverbial. Still he
may not have been a man who would impress those
who knew him not, with a sense of his greatness.
That was reserved for those who could become inti-
mate with him, and understand him. He was not
given to niceties, or to small matters. He might not
be able to discern fine-drawn distinctions, but his
mind was comprehensive enough to grasp the most
gigantic schemes, and understand them. To him
the success of the Pacific road was beyond doubting.
He believed it, and he was willing to risk his entire
fortune-as, in fact, he did-in its construction.
He beheld the vast benefit it would be to the
country, and he saw the stream of commerce that
was to roll on forever over its line. He saw the
unity it would establish between all sections of the
country, and comprehended the patriotic influence it
218
THE CREDIT MOBILIER
would ever exert. He became interested in the
Pacific road at a critical hour of its fortunes, and he
gave it his means, his energy, his life.
While we cannot say that he was insensible to
gain, still those who knew him best can never be
made to doubt that there was a large element of
patriotism in the views which induced him to take
the position he did in constructing this great high-
way from the river, through the wilderness, and
over the mountains to the ocean. His work was
finished in the same spirit in which he worked all
through his connection with it; and at the time when
he ought to have received his reward, when he
should have been entitled to a life of honor and
ease, he found himself assailed in the most most
wanton manner, and his name and fame forever
tarnished.
When he returned from Washington, at the close
of his Congressional labors, he was met by the
citizens of his home with a demonstration which
showed their absolute confidence in his honor, and
they gave expression of their love for him in a
manner that was most impressive. Two months
later they followed him to his grave and wept over
his remains.
The flight of time has not failed to bring back
to the memory of Oakes Ames the vindication that
was denied him on the floor of Congress. Every
position which he took regarding the Credit Mobilier
or the Union Pacific road has been sustained when-
ever brought before our tribunals of justice. The
OF AMERICA.
219
anticipations and predictions of the future of that
road have been fulfilled. It has proven a success
in every way, and the country through which it
was built has been developed beyond the wildest
prophecies.
The stockholders of the Union Pacific road have
lately erected a monument to the memory of Oakes
and Oliver Ames, on the highest ground between
the Atlantic and Pacific slopes crossed by the road.
While the road itself is the grandest monument that
could be erected to the memory of any man, it is but
appropriate that this outward sign should be made
as a further evidence of the appreciation of their
business enterprise and sagacity, and their great
merit. There may it ever stand, overlooking the
work they carried through; and those who journey
over the road cannot avoid the feeling that this is
but a just recognition for their services; and when
the whole of this great struggle shall have become
fully known, no doubt can longer exist as to the
loyalty of their motives and actions.
XI.
THE CREDIT MOBILIER OF TO-DAY.
FROM this time forward the Credit Mobilier has
lived only in history. The work which it was
commissioned to do had been completed—at the
date of this vote of censure, three years- and since
then has never been heard of, save as spoken of in
connection with this last disgraceful scene in its his-
tory. Why did it assume so great importance? What
were the causes which brought it forth so promi-
nently? These causes have already been alluded to,
viz., the political influence that could be created by
and through it. Undoubtedly had its purposes, its
objects, its work been understood and appreciated, it
would never have been heard of after its work was
finished. There is an element in the politics of all
countries which will grasp every incident that will
tend to inflame with prejudice the minds of the peo-
ple against any party or any individual. Party suc-
cess overcomes and controls the judgment of party
advocates, and those events which in themselves
may be pure and innocent, are distorted and made
to appear impure and corrupt. Our own country is
certainly no exception to this spirit. Our party
220
THE CREDIT MOBILIER.
221
leaders are not opponents to the rule that success
will justify any means used to attain it. Party feeling
runs high in our land, and the advantages offered to
party leaders to prejudice public opinion are singu-
larly attractive, for in the hands of the people lie all
power, and upon them rests the entire responsibility
of good government. The jealous care with which
our liberties have been governed, the deep love that
has been instilled within our hearts for our institu-
tions, and the patriotic desire of every American to
see those liberties sustained, those institutions per-
petuated, oftentimes make us forget to examine into
the merits of the arguments presented, and we con-
demn where we should praise, and praise where we
should condemn. We do not stop to consider con-
sequences, but too oft imbibe within us the very feel-
ings of prejudice which are thrown in our way. We
see an action which appears to be born of corrup-
tion, or to hold within its hands elements of evil,
and straightway we condemn, never stopping to look
at its real work or object, never considering whether
or not that very appearance is not artificial, and has
been pictured to us, by skilful partisans, for no other
purpose than their own benefit and advantage. No
cry in all our country has so powerful an effect or
exerts so great an influence upon public opinion as
that which tells us our liberties are in danger of
being destroyed by corruption in places of high trust
and honor in our national councils. So it was when,
in the excitement of a presidential campaign, the cry
of Credit Mobilier was raised,-when the declaration
222
THE CREDIT MOBILIER
was made that corruption the most flagrant had been
unearthed among the members of Congress,-when
the names of representatives and senators, and other
high officials, were given to the country as those who
had enriched themselves from the public treasury
and had used their positions and their honor for
their own gain; it was not strange that the whole
country should be aroused, and that society should
be stirred to its very foundation. The proof pre-
sented was so direct and strong that those whose
names were thus paraded before the country dared
not face the storm of indignation, and knew not
how to explain their positions. In their dilemma they
took that course which seemed to afford the easiest
and surest escape, and denied all connection.
Where was the wrong? where was the guilt?
The people could not understand; the politicians
themselves did not comprehend the relation of the
Credit Mobilier, or if comprehending they felt un-
able to state the case so that the people should be
able to understand. In the excitement that pre-
vailed matters became so complicated that when the
investigation ended, when all the evidence had been
collected, every one seemed more in doubt than
ever. The public had become more and more con-
vinced that the government had been defrauded, and
all parties and classes united in the cry for the
for the pun-
ishment of the guilty. The committees of investi-
gation, in view of all this cry of alarm, became so
biased that they were impressed in the same man-
ner, and their reports were written more to appease
OF AMERICA.
223
the public, and insure their own safety and continu-
ance in power, than to arrive at exact justice. The
recommendations of the Polland committee were.
shown and proven to be without any authority, and
that expulsion, under the circumstances, would be
against every law and precedent in parliamentary
history. It would have been the establishment of a
precedent so wrong and unjust that there would be
danger of its overturning the very foundations of
the liberty they pretended to be anxious to save.
So clear, so plain were the objections to those
recommendations set forth, that even their most hot-
headed advocate held back in fear, and as a last
and final resort the vote of censure was substituted
and passed. But it was not passed because it was
just and merited, not because those who voted upon
it believed it was right, but because the cry through-
out the country was for some sort of condemnation,
and those men dared not face their constituents
with any other record of their votes. No doubt
there were many honest, honorable men in that
body who voted according to their convictions, who
believed that censure to be just, and thought in vot-
ing it that they were doing themselves credit and
freeing their country from the great stain of dis-
grace that was upon it. Yet those men could not
have had an opportunity to investigate this subject,
did not understand it, and from the reports of the
committee became more and more uncertain regard-
ing it; and so, taking the reasoning of the committee
in all their false positions as correct, voted as they did.
224
THE CREDIT MOBILIER
The Wilson committee failed utterly and com-
pletely to understand the relations between the
Credit Mobilier and the Union Pacific road, and
between that road and the government. Their con-
clusions have been shown, in the highest court of
justice in our land, to be founded in error, and to
be absolutely wrong. The Supreme Court of the
United States has decided that the government was
not wronged; that every obligation imposed upon
the road has been faithfully performed; that neither
the Credit Mobilier nor the trustees, who held the
contracts for building the road, had wronged any
one, unless it might be some bona-fide stockholder
of the road, who took no part in its construction, and
there was no proof or evidence of such holders.
Common sense would teach us that the government
was not wronged, when we consider the nature
of its claim upon the road. Its credit alone was
loaned; it took a security of its own choosing; and
though those contractors had incurred an expense
of $500,000 per mile in the construction of the road
it would not have affected the security of the goy-
ernment. That security was a second mortgage,
subject only to a first mortgage of the same amount.
If the road had been built for only $50,000,000-
the lowest estimate that could be given under the
most favorable circumstances, and the amount which
the Wilson committee erroneously claim as its actual
cost- still the government's security would have
been precisely the same, a second mortgage of the
same amount that it now is, subject to a first
OF AMERICA.
225
mortgage of the same amount.
Whatever was more
than this, whatever further obligations were incurred,
became subordinate to the claim of the government,
and so no wrong could be done in that way. The
prejudice of the past has cleared away to such an
extent that the people can be brought to understand
this; and when they see that every position taken
by the managers of the Credit Mobilier has been
upheld in our highest courts of justice; when they
have seen that every prediction of the Ameses
regarding the prosperity of the road has been more
than fulfilled; when they see that the loan of the
government will be paid at its maturity by the very
means provided in the beginning; when they see
the extraordinary advantages that have come to the
whole country through the building of that road;
when they see the vast volume of commerce that
rolls along from the Atlantic to the Pacific, then
they become willing to listen to the voice of reason,
and cast aside their prejudices, in an attempt
to understand and appreciate all that has been
done.
When, also, they come to view, with impartial
eyes, the connection of members of Congress with
the Credit Mobilier; when they comprehend the
circumstances under which that stock was held;
when they ascertain that there was not then, nor for
years after, any legislation before Congress affecting
the Pacific roads, that no further legislation was
desired, asked for, or feared; when they consider
that the contract, under which profits were to come,
226
THE CREDIT MOBILIER
if come at all, had been made, and was being
executed, and that the government had not the
right to violate a contract legally made, as the
courts have decided this was; when they read the
conclusions of the very committee who charge
bribery that no one had been bribed, that no mem-
ber had been influenced in his actions by holding
the stock, and that the holding of the stock would
not even have a tendency to create an interest that
would influence the action of a member of Congress;
and when they reflect upon the extreme littleness of
the reputed bribe, and its insignificance in compar-
ison with the risk of exposure, how can any other
conclusion be reached than that no bribe was offered,
no bribe accepted, and no bribery thought of; that
members of Congress not only held the stock, but
held it rightfully, and with no corrupting influence
connected therewith.
Then, again, when looking at all this, when
understanding that the government was not, could
not, be wronged by the action of the Credit Mobil-
ier; when they understand that the connection
of members of Congress with the stock was honor-
able and right, and that no bribery was attempted,
or.thought of; when they remember that the sole
charge of bribery came from a witness whose
testimony was shown, by the most conclusive evi-
dence, to be perjury in every material point, how
can any other conclusion be held than that Oakes
Ames, in all his acts, was a conscientious and an
honest man, and that the vote of censure passed
OF AMERICA.
227
upon him was the most unjust and shameful event
in the whole history of Congress.
How all this might have been avoided had men
been truthful! No stain rests upon those who
came forward and acknowledged their owning the
stock. The names of Dawes, and Henry Wilson,
and Logan, and Bingham, and John F. Wilson, and
others like them, are pure and unspotted, and no
thought is ever given them in that respect. The
people still honor them; those living are entrusted
with high office; those dead have their memory
enshrined in the hearts of the people. To Brooks,
and Patterson, and Colfax, the finger of scorn is
ever held, because they denied the truth, and their
word was proven false. They have sunk into a
political grave, never again to be trusted with places
of honor, or to have their memories, when dead,
consecrated in the hearts of their countrymen. In
this same list would be classed the name of
Garfield, had he not, after he had been cowardly
enough to falsify his word, and attempt to blacken
the name of his associate and friend, and after he
found his word was proven false, by evidence too
strong to be overcome, had the wisdom to hold his
tongue, and let the whole matter rest in quietness,
feeling sure that if no further notice was taken of it,
time would lead to its being forgotten.
The Credit Mobilier is still an organization. Its
charter is still in force, but its power is gone. Its
stock is being gradually absorbed into one com-
mon vortex, so that now only about one-fourth is
228
THE CREDIT MOBILIER
outstanding. There are some questions yet remain-
ing as to its assets, and claims have been made against
the Union Pacific Railroad, and a suit is now pending
in the courts in Boston for the recovery of $2,000,000,
which the Credit Mobilier claims is due from the
road. No decision has been reached, and nothing
can be said as to the result. Should this claim be
sustained, the stock of the Credit Mobilier will be of
value; but, as is more than probable, if this suit
should be decided adverse to the Credit Mobilier, its
stock will be of no value whatever. Its existence
thus lies upon the uncertain decision of a suit, and it
is more than likely ere another year shall pass, the
Credit Mobilier will be among the organizations of
the past. Its history may be a pleasant and interest-
ing one in many respects, and in others the extreme
opposite. With its life were linked the fortunes of
many. Perhaps never in any organization of equal
capital has there ever been associated so much
wealth, energy, and ability as in this. Its managers
were at all times men of the most extraordinary
talents, and whose names have almost been house-
hold words throughout the land. Its achievements
have been the most wonderful ever seen in this
country, and the results that have been reached
through its work, have done more to build up the
commerce of the nation, and to add to its material
wealth, and power, and strength, than any other
enterprise since our history began. A tract of land
greater than that of most of the empires of the world,
has been reclaimed from a desert waste, and made a
OF AMERICA.
229
fertile valley, wherein may be grown all the products
of the world, in quantities sufficient to sustain the
entire human race. It has already added two States
to our Union, populated the Territories both to the
north and the south, has added hundreds of millions
to the valuation of our country, and more than all,
has created that feeling of common interest between
the extreme East and West that will rivet forever
the bands of union, and weld all into one common
country, wherein all interests are forever to be the
same. It has rendered that union secure, and has
given inestimable blessings to every citizen of
America.
Bright as may be the picture upon one side, it has
likewise its dark side. Reputations have been ruined,
and names once honored now lie in the seclusion of
disgrace and infamy. Its purposes have been mis-
understood, it has been tossed hither and thither, and
has been made a foot-ball to be kicked about by
politicians of all parties. Should its true object and
purpose ever become appreciated, it will be looked
upon as a corporation that has been of incalculable
benefit to our country. The disgrace that has been
placed upon one of its principal men will pass away,
and in the clear light of the sun of truth and justice,
the name of Oakes Ames will stand out bright and
fair, as pure as the driven snow that circles around
the base of the monument that has been erected to
his memory on the highest point where the road he
built crosses the Rocky mountains.

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