III. THE UNION PACIFIC RAILROAD CO. LE ET 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 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 commerce 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 undertaking. 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 subscriptions 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 company, which was placed at $100,000,000, should not be sold at less than par, or $100 per share. order to have enabled any company to obtain the control of the road would have required an investment of some $51,000,000. In 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 precedence 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 organization 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, commencing at the city of Omaha, at the rate of $50,000 for each and every mile so completed; the contractor 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 stockholders of the Union Pacific Railroad for the very purpose 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 correspondence 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 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, The above proposition is hereby accepted for and on behalf of the Union Pacific Railroad Company. October 3, 1864. JOHN A. DIX, 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 Mobilier, 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 |