The Company thus organized, should follow established precedents, stockholders should hold annual meetings, elect a board of directors, and adopt bylaws and rules for the conduct of its affairs. The directors thus elected to be not less than thirteen in number, two to be added to their number by appointment of the President of the United States. The Board of Directors to elect the officers of the company and exercise supervision.
The Board of Commissioners met in Chicago in September, 1862, and organized, electing W. B. Ogden, President and H. V. Poor, Secretary, as called for in the charter, and subscription books were duly opened. There was no disposition on the part of moneyed men to subscribe for the stock and it was only owing to a few public-spirited men coming in and taking the two thousand shares that the Charter did not lapse. When the necessary stock had been subscribed, a meeting of the stockholders was held in New York City, in October, 1863, at which a Board of Directors were to be elected,—a strange situation confronted them, there being no man or set of men who were able to assume control, although there were no lack of cliques who were desirous of doing so, but these were largely irresponsible parties either lacking in the necessary capital or not command the confidence of those who did have it.
Something had to be done, and accordingly thirty men of more or less prominence were elected to the position of directors, some of them without their knowledge and some declined to serve. The Company was accordingly organized October 30th, 1863. General John A. Dix, who was elected President, had been a member of the Cabinet and later a general in the United States Army, was a man who was universally respected. The position was not of his seeking, and he gave notice he had neither the time nor inclination to give active attention to its affairs and the burden was practically assumed by the Vice-President Elect, Thomas C. Durant. But two hundred and eighteen thousand dollars the ten dollars per share called for by the Charter on two thousand one hundred and eighty shares had been paid in and further funds were not obtainable. Agitation was kept up and due representation made to Congress, resulting in an amendment to the Charter being passed. After the passage of the Supplementary Act in 1864 made necessary by the failure to secure funds, it was still regarded as an unpromising investment for the reason that investors could not feel any assurance that they or their friends would have any voice in the management of affairs or control of the Company. The capital of the Company was fixed by the supplementary act at one hundred million dollars, (one million shares at one hundred dollars each), consequently any interest holding over fifty millions of the stock would be paramount and vice versa. Until it was determined who would be in control, investors fought shy. Under the Charter the subscription books must remain open until the completion of the road, making it possible for outsiders to wait until the road was near completion and then step in and by large subscriptions acquire control.
As there were some funds available, a contract was entered into in May, 1864, with H. M. Hoxie, to build the first hundred miles. This contract was extended to cover from Omaha to the hundredth Meridian, two hundred and forty-seven miles, on October 3rd, 1864, and on the 7th of the same month assigned to a company (simple partnership) composed of Vice-President Durant and six others, all stockholders of the Railroad Company. The capital of this partnership consisted of four hundred thousand dollars (but a small percentage of the amount necessary to carry out the Hoxie contract). The members of the firm were unable or else unwilling, owing to the immense personal liability involved, to put up further funds and some other action was necessary.
Durant and his friends accordingly purchased the Charter of a Pennsylvania Corporation of limited liability and elastic powers, known as the "Pennsylvania Fiscal Agency" changed its name by legislative enactment to the Credit Mobilier of America. Subscribers of the two million one hundred and eighty thousand dollars of Union Pacific Stock were given the option of either exchanging Union Pacific stock for that of the Credit Mobilier, sell their Union Pacific stock to the Credit Mobilier, or turn it back to the Union Pacific Railroad Company and have it redeemed. By this the stockholders of the Credit Mobilier became the sole holders of the Union Pacific stock.
The Hoxie contract was reassigned to the Credit Mobilier who duly completed the work, finishing the line to the point specified October 5th, 1866. Owing to their inability to raise funds, it seemed as though the two companies, Union Pacific and Credit Mobilier, would fall down. There was no sale for the First Mortgage bonds of the railroad, the Government bonds were but little better, being worth but sixty-five cents on the dollar. Durant and his friends were not men of wealth nor did they command the confidence of wealthy men. The Company had become greatly involved and was compelled to sell some of its rolling stock to pay pressing debts. It was at this junction that Oakes Ames entered the field, being persuaded, it is said, to do so by President Lincoln who desired to enlist his well-known executive ability and capital in the enterprise. Through the efforts of himself and associates the paid up subscriptions were increased to two and a half million dollars.
The original or first contract made with Hoxie for a hundred miles had been extended to cover up to the hundredth Meridian, and the line to that point, two hundred and forty-seven miles from Omaha, was completed October 5th, 1866.
The second contract made was with a Mr. Boomer for one hundred and fifty-three and thirty-five hundredths miles from the hundredth Meridian west, at the rate of nineteen thousand five hundred dollars per mile for that part of the distance East of the North Platte River and twenty thousand dollars per mile west thereof. Bridges, station buildings, and equipment to be additional. This contract was also assigned to the Credit Mobilier. On this, fifty-eight miles were completed when dissensions arose, occasioned by financial stringency among the stockholders of the Credit Mobilier. Vice-President Durant going into court, compelled suspension of action on the third contract, made March 1st, 1867, with one J. M. Williams who had assigned it to the Credit Mobilier. This covered two hundred and sixty-six and fifty-two hundredths miles, commencing at the hundredth Meridian at the rate of fifty thousand dollars per mile. For a time matters were at a standstill, injunctions preventing the completion of present or the making of new contracts.
Finally a compromise was affected between the two factions, Durant and his friends on the one side, and the Ames interests on the other.
Under this, a fourth contract was made with Oakes Ames for which he was to receive from forty-two thousand to ninety-six thousand dollars per mile or forty-seven million nine hundred and fifteen thousand dollars for six hundred and sixty-seven miles, commencing at the hundredth Meridian. This it is supposed is the largest contract ever made by one individual. It was later transferred by Oakes Ames to seven trustees acting for the Credit Mobilier, he and his brother Oliver Ames being among the number. This last contract carried the line to nine hundred and fourteen miles from Omaha.