Democratic Sentinel, Volume 11, Number 52, Rensselaer, Jasper County, 20 January 1888 — THE PACIFIC RAILROADS. [ARTICLE]

THE PACIFIC RAILROADS.

Story of Jobbery and Robbery Not Fully Revealed by the Official Investigations. How the Schemers Lined Their Pockets at the Expense of the Government. A Plot to Defraud the Government of Its Dues—Policy of Charles Francis Adams. [From the Chicago Tribune.] The majority and minority reports of the Pacific Railroad Commissioners, startling as they are in their arraigment of the men that have mismanaged and wrecked these corporations, fall far short of revealing the actual condition of affairs. The history of both the Central and Union Pacific Companies is full of rottenness from the start. It may almost be said that they “were conceived in sin and born in iniquity.” The original idea of building a railroad across the western half of the continent, from the Missouri River to the Pacific Ocean, was a grand one, but if it had been left to the honest men that projected it, to accomplish the result, it would have been deferred many years. As originally chartered and surveyed, the Pacific Road was divided into two sections—the first, the Union Pacific, to run direct from Omaha to Ogden; the second, the Central Pacific, from Ogden to San Francisco. The enterprise was too heavy and costly and the results too uncertain to attract private capital to any extent, and Congress, to insure construction, voted aid at an average of $32,000 a mile. The sharpers soon ascertained that this would amount to more than the actual cost of building, and began to flock in, vulture like, to feast on the financial vitals of the corporations. The history of the Union Pacific from this point is peculiarly interesting, and a fair reflex of the operations of both sections during the construction period. The men who, attracted by the big Government bonus, had embarked in the work and virtually seized control of the company began to figure on a plan for securing all the plunder possible. They had little, if any, hope in the future of the road, and were in for what could be made out of the construction of it on the “addition, division, and silence” scheme. Prominent among these men were Dr. Durant, Vice President and General Manager of the company; the brainy but erratic George Francis James'Davis, and others more pr s less known to fame. Congress had wisely provided that the subsidy should be paid in installments only on the completion aid acceptance of the road in fifty-mile sections. Durant and his associates able and unwilling to stand the cost* of building the first section themselves, and' the whole affair threatened to “die a-born-in’.’’ At this juncture, George Francis Train, then the boss schemer and brains of the gang, came to the front with his Credit Mobilier, and showed his pals how to not only build the road without going down into their own pockets, but to shave off an extra share of the profits as well. It was under Train’s inspiration that the road, instead of being built direct from Omaha to Ogden, a distance as the crow flies of about nine hundred miles, was twisted in and out like an ox-bow, until an extra one hundred were covered and on which the government subsidy was demanded and paid. Every conceivable plan for the diversion of money from the treasury of, the government and pockets of innocent stockholders into the coffers of the construction ring was put on foot. Honest men, disheartened at the outlO'ok, either retired voluntarily from active participation in the councils of the company, or were rudely shoved aside by the managers. When the condition of affairs had become so notorious as to call for Congressional action the ring seem'ed to haye a death grasp on the morals as well as the finances of the country. Men in high places—Senators, Representatives, Judges on the bench—obeyed its behests with a readiness that caused surprise, even to their masters who issued the command.

And this ring was not always particular as to its methods of doing business. During the Durant dynasty, and when the road was getting well to the west of Cheyenne, one of the inside construction concerns, known as “Davis and Associates,” had a contract for furnishing all the ties, bridge timbers, and lumber needed, from Cheyenne west to Promontory Point, the real terminus of the road. This firm consisted of James Davis, M. B. Sprague, George Francis Train, and, as might be supposed, Dr. Durant. The latter’s share was in the name of his brother Frank, and Train’s was in the name of his beautiful wife, whose affections Durant is accused of having by that time alienated and transferred to himself.as well as the largest part of her husband’s property. This firm had sublet their contract to other parties at figures which insured an enormous profit to “Davis and Associates,” but, not contented with that, began to scheme for an additional dollar. When the work was about finished the Union Pacific was owing “Davis and Associates” $750,000, and the latter were indebted to the sub-contractors to the amount of $210,000. The laborers had been clamoring for their pay for some time, and the sub-contractors had made repeated demands on “Davis and Associates” for their money, but without result. Durant, as manager of the Union Pacific, claimed the company was bankrupt and unable to pay Durant, as head of the contracting firm, over 10 per cent of the $750,000, and the latter iu turn asked the sub-con-tractors to settle on that basis, hoping in this way to turn about $190,000 into the ring treasury. The cashier for “Davis and Associates” at that time was a nervy chap named Christopher, a character well known to Western and Southern railway men. Christopher, on becoming acquainted with the nature of the proposed steal, went to the sub-contractors and advised them not to settle, as he had a plan for getting their money in fuH. It was about time for the directors of the road to make an inspection, and Christopher arranged with a telegraph operator named Hilliken, then stationed at Echo City, to advise him as to the arrival of their train. This was done, and Christopher, gathering the subcontractors and their men, went to a siding six miies west of Piedmont, which was then the headquarters of “Davis and Associates.” When the train came along about sunrise it was stopped and switched off on the side-track. Christopher went into the car and explained the situation to Durant and his party, telling them plainly th at the men thought they were trying

to rob them, and that they could not proceed until the $210,000 was paid in full. Durant made all sorts of promises, but it was of no use. After fortyeight hours’ parleying Durant sent out $56,000 which he had in a safe in the car, and wired to Omaha for $50,000 more, which was forwarded. When the SIOO,OOO was paid over, Durant made fresh pledges and asked to be allowed to finish his trip. Under Christopher’s advice, however, the men refused. Then Durant began to rave and threaten them with imprisonment, saying he bad wired for help. The men in command were not fooled by this talk, as they had taken good care that no communicat on revealing the actual condition of affairs should go over the wires. Before morning of the third day a Mr. Wilson, of New York, who was with Durant, advanced the latter $50,000, and Henry Rogers, a Cheyenne banker, was sent ;or. When Rogers arrived Durant drew d-afts on New York for the remaining $60,000, which Rogers accepted and gave Christopher certificates of deposit for. Thus the men were paid in full, and the car pulled out in a hurry, Durant standing on the platform and swearing that he would have Christopher and his allies in the penitentiary for train robbery. The affair finally died out, however, and there was no prosecution. With the completion of the road the gang looked for new conquests, and turned their attention to the operating department. When President Lincoln, in conformity with the wishes of the original projectors of the road, located its eastern terminus on the west bank of the Missouri River he named Omaha as the initial point Thia did not satisfy the cormorants, who were hungry for fresh prey. Money was to be made in the construction and operation—particularly the latter—of a bridge across the Missouri, and in connection therewith of a union depot on the lowa side. In order to proceed legally with this work it was necessary to have a judicial decision naming the eastern bank of the Missouri as the intended and proper initial point of the road. This was obtained from Judge Dillon, then on the United States bench, and was followed, on the Judge’s retirement, by his appointment as counsel for the company at a fat salary. Under this decision the bridge and union depots were built, and are being operated to-day at an. immense profit, which goes only in small part to the stockholders of the railroad, the bulk being absorbed by the favored few who manipulate the “inside” construction concerns. These “inside” companies have always been a curious feature of Union Pacific history. The company stands sponsor for branch roads without number, for bridge corporations, for coal mines and stone quarries, all worked by “inside” organizations. Whenever one of these side issues is found to be earning a fair dividend a goodly share of the stock can bo trace’d to individuals, while the securities of the non-paying concerns invariably are classed among the assets- of the parent company. When Charles Francis Adams was elected President of lhe Union Pacific some three years ago, there was a terrible shaking up of the offenders in this line, and an honest and determined effort was made to put the affairs of the company on a fair and sound basis. That it has been only partially successful is not the fault of Mr. Adams. During the shaking-up process referred to, some startling disclosures were made, of which Mr. Adams is possibly not as ignorant as he would claim to be to an interviewer. One of these was a wellmatured plan, fathered by men high in Union Pacific management, to gobble the valuable portions of the road, and leave the Government “holding the bag,” after the fashion of the Southern snipe- hunters. The Government, as security for the aid advanced in construction, holds a secondmortgage on the. main line between Omaha and Ogden, and on the Kansas Branch west of the 350th mile-post. The eqmings of these mortgaged roads, instead of going into a sinking fund for the gradual extinction of the Government debt, have been used in the building of branch lines, feeders, etc., until now the company has a network of roads that, connecting links of a few miles put in here and there, would give it a satisfactory through route. It was the intention in case the Government pressed payment of its claim, to allow the old roads to be seized, and the company would then have a comprehensive system, free from Government debt and congressional interference. Thus the Union Pacific has for years been actively at work tacking, together its various branch lines until now a glance at its map will show that, by the dropping down of a few rails, it would have an independent and practical line from Missouri River points to Portland, aside from the regular road. Should the majority report of the Commission, recommending the extension of the time for paying the debt, be adopted this scheme wiM probably be sat upon still harder.

Mr. Adams and the men now associated with him in the management of the company are understood to have some ideas of their own in regard to financial matters which may be laid before Congress for consideration. Under its charter the Union Pacific is debarred from borrowing money or guaranteeing, thesecurities of other corporations. Much as it may need money for legitimate uses it cannot go into the market and borrow it like other corporations. For this reason many well-inten-tioned and necessary improvements have boen delayed, and territory which should have been gridironed by Union Pacific tracks has been seized by competing roads. The efforts of the company in the past have been directed to the securing of a link of outsiderpads rather than the invasion of paying territory. Many miles of branch lines in eastern Nebraska are needed, rather than costly and uncertain roads into thinly settled parts of Colorado and Idaho. But promising as these projected feeders may be, investors do not care to put money into them unless they are reasonably certain, under a guarantee, that the interest at .least will be paid. Mr. Adams is known to favor the granting of power to the Union Pacific to either borrow the money to build such roads or to guarantee their securities so they will find, sale on the market. The conroany’s surplus iu the hands of the authorities at Washington, drawing at the most per cent., could, he was heard to assert some time ago, be used just as safely and much more profitably in the building of branch; roads into the thickly settled agricultural regions of Kansas and Nebraska. Mr. Adams even goes so fay as to claim that the money ;thus invested wdtild earn 10 per cent, where itnow only brings 4|, and that in addition it would largely swell the profits of the Union Pacific, make the property a more valuable security for the Government mortgage, and insure the payment of the huge debt at a much, earlier period than by any other means.