Part 4 (2/2)
2. That in case any one of said trustees shall wilfully neglect or evade the performance of his duties as such trustee, or shall wilfully attempt to hinder, delay, obstruct, or interfere with the execution or performance of said contract, or the due execution or performance of said trust and conditions, according to the true intent thereof, or shall appropriate to his own use or benefit any money or other valuable thing belonging or appertaining to said trust, fund, or property, he shall not be ent.i.tled further to act as such trustee, or to receive any of the benefits of said trusts, either as shareholder in said Credit Mobilier of America, or otherwise.
The parties of the second part do hereby accept the said trust, and agree faithfully to execute and perform the same according to the terms, conditions, and limitations herein set forth.
The party of the third part, in consideration of the premises, hereby agree to advance, as upon a loan, to the said parties of the second part, their survivors and successors, all such sums of money, and at such times as maybe necessary, to enable said trustees, economically and promptly, to execute and perform the conditions of said contract, upon the call of said parties of the second part, their survivors and successors, such sums never to exceed in the whole the amount provided for in said contract, to be paid by the Union Pacific railroad company, for the execution and performance thereof, and to receive therefor interest at the rate of seven per cent per annum, payable semi-annually, on each sum so advanced, until the same are repaid.
And said party of the third part do further agree, for the consideration aforesaid, and for an amount equal to two and one-half per cent on the amount to be by them advanced, to be paid to them as commission, to, and do hereby guarantee unto, the parties of the first part and second part, the due performance and execution of the said contract, according to its terms and conditions, and do indemnify and hold harmless the said parties of the first and second part of and from all cost, liability, loss or damage to them, or either of them, arising from or on account of said contract, and to the faithful performance of the agreement, contracts, and conditions herein above specified to be done and performed by each.
And this conveyance and transfer is made upon the further trust and condition.
That the trustees shall adjust and pay over to the Credit Mobilier of America such portion of the net profits of the work done and material furnished on the first one hundred miles west of the one-hundredth meridian, as was done and performed prior to January 1, 1867.
In witness whereof, the party of the first part, the several parties of the second part, in their own proper persons, have hereunto set their hands and seals, and the party of the third part has caused these presents to be executed by its president, attested by its secretary with the seal of the said company, on the day and year above written.
OAKES AMES, THOMAS C. DURANT, OLIVER AMES, JOHN B. ALLEY, SIDNEY DILLON, CORNELIUS S. BUSHNELL, H. S. MCCOMB, BENJAMIN E. BATES.
Signed, sealed, and delivered in presence of CLARK BELL.
The Credit Mobilier of America, by its president, SIDNEY DILLON.
Attest: BENJAMIN F. HAM, _a.s.sistant Secretary_.
The first noticeable feature of this instrument is that the directors of the company contract with one of their own body to build six hundred and sixty-seven miles of its road.
Second, that they agree to pay to one of their own body nearly double the actual cost of the work. Aside from these facts, nothing striking appears in the contract. It is dated August 16, 1867. It was approved by the directors, and on the 15th of October following, only two months after its execution, it was a.s.signed to the seven trustees for the consideration of one dollar and diverse other good and valuable considerations. These trustees agree to perform Oakes Ames' contract, but upon consideration that they shall hold all the avails and proceeds of the contract, reimburse themselves and the Credit Mobilier for all money expended on said contract, with interest and commission, and reserve to each of themselves $3,000 per year for services. The trustees are to hold all of the residue for the several persons possessing and owning stock in the Credit Mobilier, or to their a.s.signs, but upon condition that all stockholders in the Pacific railroad company, who own stock in the Credit Mobilier, shall give an irrevocable proxy for their railroad stock to the trustees named in the agreement. The Credit Mobilier is to advance at seven per cent the money necessary for the prosecution of the work, and for a commission of two and one-half per cent, agrees to save harmless the parties of the first and second part from all loss or damages to them, or either of them, arising from, or on account of, said contract. The contracting parties are all stockholders and directors in the railroad company, and in the Credit Mobilier (whatever that may be) they are trustees for themselves. They loan to themselves the money they receive as a grant from government (voted to the railroad corporation while a part of their own members were members of congress); they pay themselves seven per cent interest for loaning to themselves their own money; also, two and one-half per cent commission for furnis.h.i.+ng this money, donated by government, to themselves, besides $3,000 per year, each to themselves for their services in this most extraordinary transaction. In order to have funds with which to compensate themselves, they issue the first mortgage bonds on the road of the Union Pacific company to the amount of many millions, and then ask congress to relieve them from interest on the bonds received from government; and congress, composed in part of the persons signing the above quoted contract and a.s.signment, relieves the company from $3,125,000 per year, for thirty years, and taxes the people with this vast sum, because the government requires ”a _more safe and speedy_ transmission of the mails, troops, &c., across the territories to the Pacific coast.” We have nothing to do with the financial operations of this company, only as far as the people are affected by them. Bearing in mind that the eight persons concerned in and signing this contract and a.s.signment, were all directors of the Union Pacific railroad company; that four of them were the executive committee; that one of them was the contractor, and all of them stockholders in the Credit Mobilier, probably at that time const.i.tuting that entire corporation; and that seven of them were trustees for some persons, company, or corporation, or what appears still more probable, for themselves, and Oakes Ames, the contractor, and we can account for the wholesale robbery of the people, perpetrated by these eight men with the aid of congress, as above shown.
But how the five non-stockholding directors, appointed by the president, who are presumed to act for the government and its interest, could have been ignorant of the whole matter, is not so easily understood. The act of congress of July 2, 1864, section 13, provides:
”That at least one of said government directors shall be placed on each of the standing committees of said company, and at least one on every special committee that may be appointed. The government directors SHALL from time to time report to the secretary of the interior, in answer to inquiries he may make of them touching the condition, management, and progress of the work, and shall communicate to the secretary of the interior, at the same time, such information as should be in the possession of the department. They shall, as often as may be necessary for a full knowledge of the condition and management of the line, visit all portions of the line of road, whether built or surveyed, and while absent from home, attending to their duties as directors, shall be paid their actual traveling expenses, and be allowed and paid such reasonable compensation for their time actually employed as the board of directors may decide.”
If these government directors and the company observed the law, then one of them was on the executive committee of the Union Pacific company and must have known of this fraudulent contract and its a.s.signment. If no one of them was placed on the executive committee, then in the discharge of their duty they should have reported the facts to the secretary of the interior. One of two inferences is irresistible. 1st. That they were ignorant of what it was their duty to know, or 2nd. That they were unfaithful to the public trust confided in them.
Follow us a little further into this Credit Mobilier organization. It was first organized in Pennsylvania as the Pennsylvania Fiscal Agency for the buying and selling of railroad bonds, advancing loans to railroads and contractors, and to do almost any kind of business except banking. The charter was granted in 1860, to Duff Green and some fifteen others, but included none of the Credit Mobilier company. In 1864 (the corporation having done nothing up to this time) the secretary of the company, supposing Duff Green (the president) to be dead, sold out the charter to George Francis Train, Thos. C. Durant, Oakes Ames, Oliver Ames, and others, and Train baptized it with the new name of, ”The Credit Mobilier of America;” and then George Francis seems to have disappeared. It does not appear that any considerable amount of the capital stock was ever paid in (the whole capital stock being $5,000,000;) perhaps just sufficient to legalize their operations, to-wit, $25,000. The first business done, of which there is any record, was a contract made by the directors of the Union Pacific company with one Hoxie, of Iowa, for building 247 miles of the road, at what price per mile we cannot learn. It was not intended that Hoxie should build this road, but, as the directors of the company could not contract with themselves, it was arranged to contract with Hoxie, and then to set the Credit Mobilier to ”running,” and divide the spoils. With the consent of the executive committee of the company, Hoxie a.s.signed his contract to the Credit Mobilier. The first mortgage bonds of the company were sold and sufficient realized to build forty miles of road in 1865, and in 1866 to complete the Hoxie contract. From the subsidy bonds received from government, or from some other and unknown source, the Credit Mobilier, in the year 1867, reported a paid-up capital stock of $3,750,000, and were ready for extensive operations. In pursuance of the plan formed by the executive committee of the railroad company and the owners and directors of the Credit Mobilier, the contract with Oakes Ames herein copied was made, and then a.s.signed. The Credit Mobilier was so used as to _do good_. It was ”placed where it would do the most good.” It does not appear that this corporation had any considerable financial transactions, or did any particular business save in connection with the Pacific road; yet it proved to the holders the most prolific stock of any on record. The Ames contract was a.s.signed to Sidney Dillon, and others, trustees, on the 15th of October, 1867. It declared dividends as follows:
Dec. 12, 1867, Union Pacific R. R. bonds, valued at $2,700,000 Jan. 3, 1868, ” ” ” ” ” 637,500 June 17, 1868, ” ” ” ” ” 525,000 June 17, 1868, cash 2,250,000 July 8, 1868, ” 1,125,000 ---------- Total of dividends in seven months $7,237,500
In addition to the above, another dividend was declared July 3d, 1868, of $2,390,625 in bonds, which were p.r.o.nounced bogus, or worthless. It is thus seen that the directors of the Pacific railroad company, who were also the Credit Mobilier--trustees for themselves, and some of them members of congress--by the aid of congressional legislation, and the fiction of the Credit Mobilier, contracted with themselves, agreeing to pay themselves extravagant prices for building their own road, and getting their pay as a donation from the public treasury, and were able in seven months to declare dividends to themselves of nearly two hundred per cent upon the reported paid up capital, which capital was also obtained from government. If the reader has followed us in the statements we have made relative to the land and bond subsidies granted to the Pacific railroad companies, he will not wonder that the indebtedness of these companies, after the completion of the roads, and after the receipt from government of more than their entire cost, nearly doubles the amount necessary to build them, had honesty and economy been used in their construction.
We might pursue this subject further, but we think enough has been shown to convince the impartial reader, that whatever the pretence for making these grants, the real object has been to enrich unscrupulous and dishonest men at the expense of the public; and that this corrupting power has become so great that those who occupy high and responsible places in the government have become partners in these wholesale robberies of the people. This conclusion becomes irresistible when we find members of congress voting government aid to railroad companies in which they are stockholders and directors at the time the aid is voted.
CHAPTER VIII.
HAS CONGRESS THE POWER, UNDER THE CONSt.i.tUTION, TO CREATE OR ENDOW PRIVATE CORPORATIONS?
To answer this question intelligently, we must examine the powers granted to the United States, as well as the rights, powers, and relative duties of the state governments. The state governments are supreme in all matters affecting the public and the people, save in those which, by the expressed provisions of the const.i.tution, are delegated to, or conferred upon, the general government. The powers thus delegated to the general government are all of a public character, such as states individually could not control or execute, and such as were deemed essential to our national existence. All privileges, rights, and powers, not deemed essential to the successful administration of the national government, were reserved to the states and to the people. It follows that the general government is one of limited powers; that while it is supreme in all matters delegated to it by the const.i.tution, and while in its several departments it can exercise all such implied powers as are necessary for the complete execution of those expressly delegated, neither the executive, legislative, nor judicial departments can a.s.sume the exercise of powers not conferred upon them by the express provisions of the const.i.tution; and that while the state governments can exercise all powers not expressly prohibited in their const.i.tutions, because of their general sovereign character, the general government is limited to such as are expressly granted. If these propositions are correct, then the general government has no authority for creating private corporations.
We are aware that congress has a.s.sumed the negative of these propositions, and has granted charters to some of the most gigantic corporations of the country, under which charters they have organized and are doing business in states which, according to our interpretation of the const.i.tution, as above stated, should have the absolute control of such companies. We shall attempt to demonstrate that the acts of congress granting charters to railroad and other private corporations are usurpations of power, in conflict with the provisions of the const.i.tution, destructive of the rights of the people and of republican government.
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