American politics (non-partisan) from the beginning to date

by Thomas V. Cooper; Hector T. Fenton

The case of Mr. Brooks stands upon a different state of facts from any of those already given. The committee find from the evidence as follows: Mr. Brooks had been a warm advocate of a Pacific Railroad, both in Congress and in the public press. After persons interested in the Union Pacific road had obtained control of the Credit Mobilier charter and organized under it for the purpose of making it a construction company to build the road, Dr. Durant, who was then the leading man in the enterprise, made great efforts to get the stock of the Credit Mobilier taken. Mr. Brooks was a friend of Dr. Durant, and he made some efforts to aid Dr. Durant in getting subscriptions for the stock, introduced the matter to some capitalists of New York, but his efforts were not crowned with success.

During this period Mr. Brooks had talked with Dr. Durant about taking some of the stock for himself, and had spoken of taking fifteen or twenty thousand dollars of it, but no definite contract was made between them, and Mr. Brooks was under no legal obligation to take the stock, or Durant to give it to him. In October, 1867, Mr. Brooks was appointed by the President one of the Government directors of the Union Pacific road. In December, 1867, after the stock of the Credit Mobilier was understood, by those familiar with the affairs between the Union Pacific and the Credit Mobilier, to be worth very much more than par, Mr. Brooks applied to Dr. Durant, and claimed that he should have two hundred shares of Credit Mobilier stock. It does not appear that Mr. Brooks claimed he had any legal contract for stock that he could enforce, or that Durant considered himself in any way legally bound to let him have any, but still, on account of what had been said, and the efforts of Mr. Brooks to aid him, he considered himself under obligations to satisfy Mr. Brooks in the matter.

The stock had been so far taken up, and was then in such demand, that Durant could not well comply with Brooks’s demand for two hundred shares. After considerable negotiation, it was finally adjusted between them by Durant’s agreeing to let Brooks have one hundred shares of Credit Mobilier stock, and giving him with it $5,000 of Union Pacific bonds, and $20,000 of Union Pacific stock. Dr. Durant testifies that he then considered Credit Mobilier stock worth double the par value, and that the bonds and stock he was to give Mr. Brooks worth about $9,000, so that he saved about $1,000 by not giving Brooks the additional hundred shares he claimed. After the negotiation had been concluded between Mr. Brooks and Dr. Durant, Mr. Brooks said that as he was a Government director of the Union Pacific road, and as the law provided such directors should not be stockholders in that company, he would not hold this stock, and directed Dr. Durant to transfer it to Charles H. Neilson, his son-in-law. The whole negotiation with Durant was conducted by Mr. Brooks himself, and Neilson had nothing to do with the transaction, except to receive the transfer. The $10,000 to pay for the one hundred shares was paid by Mr. Brooks, and he received the $5,000 of Pacific bonds which came with the stock.

The certificate of transfer of the hundred shares from Durant to Neilson is dated December 26, 1867. On the 3d of January, 1868, there was a dividend of 80 per cent. in Union Pacific bonds paid on the Credit Mobilier stock. The bonds were received by Neilson, but passed over at once to Mr. Brooks. It is claimed, both by Mr. Brooks and Neilson, that the $10,000 paid by Mr. Brooks for the stock was a loan of that sum by him to Neilson, and, that the bonds he received from Durant, and those received for the dividend, were delivered and held by him as collateral security for the loan.

No note or obligation was given for the money by Neilson, nor, so far as we can learn from either Brooks or Neilson, was any account or memorandum of the transaction kept by either of them. At the time of the arrangement or settlement above spoken of between Brooks and Durant, there was nothing said about Mr. Brooks being entitled to have 50 per cent. more stock by virtue of his ownership of the hundred shares. Neither Brooks nor Durant thought of any such thing.

Some time after the transfer of the shares to Neilson, Mr. Brooks called on Sidney Dillon, then the president of the Credit Mobilier, and claimed he or Neilson was entitled to fifty additional shares of the stock, by virtue of the purchase of the one hundred shares of Durant.

This was claimed by Mr. Brooks as his right by virtue of the 50 per cent. increase of the stock hereinbefore described. Mr. Dillon said he did not know how that was, but he would consult the leading stockholders, and be governed by them. Mr. Dillon, in order to justify himself in the transaction, got up a paper authorizing the issue of fifty shares of the stock to Mr. Brooks, and procured it to be signed by most of the principal shareholders. After this had been done, an entry of fifty shares was made on the stock-ledger to some person other than Neilson. The name in two places on the book has been erased, and the name of Neilson inserted. The committee are satisfied that the stock was first entered on the books in Mr. Brooks’s name.

Mr. Neilson soon after called for the certificate for the fifty shares, and on the 29th of February, 1868, the certificate was issued to him, and the entry on the stock-book was changed to Neilson.

Neilson procured Mr. Dillon to advance the money to pay for the stock, and at the same time delivered to Dillon $4,000 Union Pacific bonds, and fifty shares of Union Pacific stock as collateral security. These bonds and stock were a portion of dividends received at the time, as he was allowed to receive the same per centage of dividends on these fifty shares that had previously been paid on the hundred. This matter has never been adjusted between Neilson and Dillon. Brooks and Neilson both testify they never paid Dillon. Dillon thinks he has received his pay, as he has not now the collaterals in his possession. If he has been paid it is probable that it was from the collaterals in some form. The subject has never been named between Dillon and Neilson since Dillon advanced the money, and no one connected with the transaction seems able to give any further light upon it. The whole business by which these fifty shares were procured was done by Mr. Brooks. Neilson knew nothing of any right to have them, and only went for the certificate when told to do so by Mr. Brooks.

The committee find that no such right to fifty shares additional stock passed by the transfer of the hundred. And from Mr. Brooks’s familiarity with the affairs of the company, the committee believe he must have known his claim to them was unfounded. The question naturally arises, How was he able to procure them? The stock at this time by the stockholders was considered worth three or four times its par value. Neilson sustained no relations to any of these people that commanded any favor, and if he could have used any influence he did not attempt it; if he had this right he was unaware of it till told by Mr. Brooks, and left the whole matter in his hands. It is clear that the shares were procured by the sole efforts of Mr. Brooks, and, as the stockholders who consented to it supposed, for the benefit of Mr. Brooks. What power had Mr. Brooks to enforce an unfounded claim, to have for $5,000, stock worth $15,000 or $20,000? Mr. McComb swears that he heard conversation between Mr. Brooks and Mr. John B. Alley, a large stockholder, and one of the executive committee, in which Mr. Brooks urged that he should have the additional fifty shares, because he was or would procure himself to be made a Government director, and also that, being a member of Congress, he “would take care of the democratic side of the House.”