Resolved, further, That the committee have the right to employ a stenographer, and that they be empowered to send for persons and papers;
beg leave to make the following report:
In order to a clear understanding of the facts hereinafter stated as to contracts and dealings in reference to stock of the Credit Mobilier of America, between Mr. Oakes Ames and others, and members of Congress, it is necessary to make a preliminary statement of the connection of that company with the Union Pacific Railroad Company, and their relations to each other.
The company called the “Credit Mobilier of America” was incorporated by the Legislature of Pennsylvania, and in 1864 control of its charter and franchises had been obtained by certain persons interested in the Union Pacific Railroad Company, for the purpose of using it as a construction company to build the Union Pacific road. In September, 1864, a contract was entered into between the Union Pacific Company and H. M. Hoxie, for the building by said Hoxie of one hundred miles of said road from Omaha west.
This contract was at once assigned by Hoxie to the Credit Mobilier Company, as it was expected to be when made. Under this contract and extensions of it some two or three hundred miles of road were built by the Credit Mobilier Company, but no considerable profits appear to have been realized therefrom. The enterprise of building a railroad to the Pacific was of such vast magnitude, and was beset by so many hazards and risks that the capitalists of the country were generally averse to investing in it, and, notwithstanding the liberal aid granted by the Government it seemed likely to fail of completion.
In 1865 or 1866, Mr. Oakes Ames, then and now a member of the House from the State of Massachusetts, and his brother Oliver Ames became interested in the Union Pacific Company and also in the Credit Mobilier Company as the agents for the construction of the road. The Messrs. Ames were men of very large capital, and of known character and integrity in business. By their example and credit, and the personal efforts of Mr. Oakes Ames, many men of capital were induced to embark in the enterprise, and to take stock in the Union Pacific Company and also in the Credit Mobilier Company. Among them were the firm of S. Hooper & Co., of Boston, the leading member of which, Mr. Samuel Hooper, was then and is now a member of the House; Mr. John B. Alley, then a member of the House from Massachusetts, and Mr. Grimes, then a Senator from the State of Iowa. Notwithstanding the vigorous efforts of Mr. Ames and others interested with him, great difficulty was experienced in securing the required capital.
In the spring of 1867 the Credit Mobilier Company voted to add 50 per cent. to their capital stock, which was then two and a half millions of dollars; and to cause it to be readily taken each subscriber to it was entitled to receive as a bonus an equal amount of first mortgage bonds of the Union Pacific Company. The old stockholders were entitled to take this increase, but even the favorable terms offered did not induce all the old stockholders to take it, and the stock of the Credit Mobilier Company was never considered worth its par value until after the execution of the Oakes Ames contract hereinafter mentioned.
On the 16th day of August, 1867, a contract was executed between the Union Pacific Railroad Company and Oakes Ames, by which Mr. Ames contracted to build six hundred and sixty-seven miles of the Union Pacific road at prices ranging from $42,000 to $96,000 per mile, amounting in the aggregate to $47,000,000. Before the contract was entered into it was understood that Mr. Ames was to transfer it to seven trustees, who were to execute it, and the profits of the contract were to be divided among the stockholders in the Credit Mobilier Company, who should comply with certain conditions set out in the instrument transferring the contract to the trustees. The Ames contract and the transfer to trustees are incorporated in the evidence submitted, and therefore further recital of their terms is not deemed necessary.
Substantially, all the stockholders of the Credit Mobilier complied with the conditions named in the transfer, and thus became entitled to share in any profits said trustees might make in executing the contract.
All the large stockholders in the Union Pacific were also stockholders in the Credit Mobilier, and the Ames contract and its transfer to trustees were ratified by the Union Pacific, and received the assent of the great body of stockholders, but not of all.
After the Ames contract had been executed, it was expected by those interested that by reason of the enormous prices agreed to be paid for the work very large profits would be derived from building the road, and very soon the stock of the Credit Mobilier was understood by those holding it to be worth much more than its par value. The stock was not in the market and had no fixed market value, but the holders of it, in December, 1867, considered it worth at least double the par value, and in January and February, 1868, three or four times the par value, but it does not appear that these facts were generally or publicly known, or that the holders of the stock desired they should be.