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 assignment. 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 assigned 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 assigned. 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 assigned 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 pronounced 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 CONSTITUTION, 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 constitution, 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 constitution, 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 assume the exercise of powers not conferred upon them by the express provisions of the constitution; and that while the state governments can exercise all powers not expressly prohibited in their constitutions, 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.