Contemporary American History, 1877-1913Beard, Charles A. (Charles Austin)
History
Contemporary American History, 1877-1913
Beard, Charles A. (Charles Austin)
United States -- History -- 1865-1921
It must not be thought that this rapid railway expansion was due solely
to private enterprise, for, as has been the standing custom in American
politics, the cost of doubtful or profitless undertakings was thrown as
far as possible upon the public treasury. Up to 1872, the Federal
Government had granted in aid of railways 155,000,000 acres of land, an
area estimated as "almost equal to the New England states, New York, and
Pennsylvania combined; nineteen different states had voted sums
aggregating two hundred million dollars for the same purpose; and
municipalities and individuals had subscribed several hundred million
dollars to help railway construction." To the Union Pacific concern
alone the Federal Government had granted a free right of way through
public lands, twenty sections of land with each mile of railway, and a
loan up to fifty million dollars secured by a second mortgage on the
company's property. The Northern Pacific obtained lands which a railway
official estimated to be worth enough "to build the entire railroad to
Puget Sound, to fit out a fleet of sailing vessels and steamers for the
China and India trade and leave a surplus that would roll up into the
millions." Cities, townships, counties, and states voted bonds to help
build railways within their limits or granted rights of way and lands,
in addition, with a lavish hand.
The chronicle of all the frauds connected with the manipulation of land
grants to railways and the shameless sale of legal privileges cannot be
written, because in most instances no tangible records have been left.
Perhaps the most notorious of all was the Credit Mobilier scandal
connected with the Union Pacific. The leading stockholders in that
company determined to secure for themselves a large portion of the
profits of construction, which were enormous on account of the prodigal
waste; and they organized a sham concern known as the Credit Mobilier in
which they had full control and to which the construction profits went.
Inasmuch as the Federal Government through its grants and loans was an
interested party that might interfere at any time, the concern, through
its agent in Congress, Oakes Ames, a representative from Massachusetts,
distributed generous blocks of stock to "approachable" Senators and
Representatives. News of the transaction leaked out, and a congressional
investigation in 1872 showed that a number of men of the highest
standing, including Mr. Colfax, the Vice President, were deeply
implicated. Nothing was done, however; the leading conspirator, Ames,
was merely censured by the House, and the booty, for the most part,
remained in the hands of those connected with the scandal. When the
road was complete, "it was saddled with interest payments on $27,000,000
first mortgage bonds, $27,000,000 government bonds, $10,000,000 income
bonds, $10,000,000 land grant bonds, and if anything were left, dividend
payments on $36,000,000 of stock."
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Public-domain text, read in full here on John Shaqi.
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