Transcriber's Note: Obvious errors in spelling and punctuation have been silently corrected.

MONOPOLIES

AND

THE PEOPLE.

BY

D. C. CLOUD,

MUSCATINE.

"THE ENUMERATION IN THE CONSTITUTION OF CERTAIN RIGHTS SHALL NOT BE CONSTRUED TO DENY OR DISPARAGE OTHERS RETAINED BY THE PEOPLE."

"THE POWERS NOT DELEGATED TO THE UNITED STATES BY THE CONSTITUTION, NOR PROHIBITED BY IT TO THE STATES, ARE RESERVED TO THE STATES RESPECTIVELY, OR TO THE PEOPLE."

—Articles IX. and X. of the Constitution of the United States.

DAVENPORT, IOWA:
DAY, EGBERT, & FIDLAR.
1873.

Entered according to Act of Congress, in the year 1873.
By D. C. CLOUD,
in the Office of the Librarian of Congress, at Washington.

TO THE

Patrons of Husbandry,

WHO HAVE BECOME THE PIONEER CORPS IN THE EFFORTS BEING
MADE TO REFORM THE ABUSES NOW OPPRESSING THE COUNTRY,
AND WHO ARE EARNESTLY AND EFFICIENTLY LABORING
FOR THE RESTORATION OF THE RIGHTS OF THE
PEOPLE, WITH THE HOPE THAT IT MAY AID
THEM IN THEIR PATRIOTIC WORK, THIS
BOOK IS RESPECTFULLY DEDICATED

BY

THE AUTHOR.

PREFACE.

TO THE READER.

For two years past the author has awaited the auspicious moment for presenting to the public his views upon the oppressions and abuses practiced by corporations and combinations of men who were apparently getting a controlling influence over the commerce, finances, and government of the country. Recent action on the part of the people has convinced him that his opportunity has come, and he embraces it. He has aimed to present a true history of the operations of the different monopolies.

Since he began the preparation of his work, some events have taken place not noticed by him. Oakes Ames and James Brooks, two prominent characters among railroad men, and whom he has had occasion to name, have died. Some changes in the laws of congress have been made affecting the interests of corporations. The law requiring the secretary of the treasury to retain but one-half of the earnings from the government of the Pacific roads to apply on the interest due to government on subsidy bonds, has been repealed, and he may now retain and apply the whole amount. Suit has also been brought against the Union Pacific company because of its dishonest practices.

On the whole, however, combinations of corporations, and other rings and organizations, at war with the best interests of the people, have acquired new strength and more power within the last few months.

The reader will notice the fact, that while the author has quoted liberally from the statutes and resolves of congress to show the great privileges and powers conferred upon railroad companies, and familiarized the reader with their financial and other transactions for a clear understanding of their manner of doing business, he has not pretended to give a full history; satisfying himself with such chapters as would place before the public the true character of these monopolies.

The author has sought to present truthful statements of matters in connection with the various interests now so hostile to the rights of the people, and he believes he has embodied the facts as they exist.

D. C. C.

Muscatine, Iowa, July 28, 1873.

TABLE OF CONTENTS.

APPENDIX.

ERRATA.

Monopolies and the People.

INTRODUCTORY CHAPTER.

In treating of the topics discussed in this work, the author addresses himself to the task with no partisan bias. His purpose is to draw aside the veil, and let the facts speak for themselves. He writes, as he believes, in the performance of duty. Serious dangers are threatening the people. There is a power in the land, possessing elements destructive not only of the industrial and producing public, but of the very form and spirit of republican government. It will be the aim of the author to show forth the progress and present attitude of this power in its relations with the people, and to suggest, if not to advocate, such measures of relief and protection as the exigency demands.

It is a fact to be admitted by every candid thinker, that of late years, corporations, rings, and single speculators have, by united and persistent efforts, obtained control of the government; that their interests are guarded and protected by the legislative, executive, and judicial departments of the government, both state and national.

The men who are thus combined in opposition to the people, do not belong to any one political division; they are found in all parties; they are firmly united for the purpose of grasping power; of controlling the government in their own interest; of fastening upon the people oppressive monopolies, and of enriching themselves at the expense of the public. To accomplish these ends they procure donations of land, money subsidies, protective tariffs, continue a depreciated currency, and by arbitrary rules and by-laws of their own, hold the whole people at their mercy. To such an extent have these monopolies been fostered and protected, that at the present time the farmer pays in freights, taxes, and duties, at least one-half of his farm products for their support.

A silent or passive acquiescence in, and submission to, these abuses and oppressions, have given a controlling strength and power to monopolies that cannot now be overcome without a united, long, and hard struggle.

These evils cannot be corrected, nor the rights of the people restored, save by concerted action on their part, not only in securing proper legislation, but in asserting and maintaining in their business, at elections, and in the courts, their rights as free and independent citizens of the United States. The taxing of the people for the purpose of aiding private enterprises, the donation of the public land, or of the public money, to individuals, or companies, or the enactment of laws by which the people are compelled to pay a part of their hard-earned substance to aid private parties in accumulating wealth, are oppressions not to be tolerated in a republic. Yet it is true that we are now taxed for the purpose of paying the interest on many millions of money given or loaned to railroad corporations; that we pay large duties on goods for the benefit of wealthy manufacturers; that extortionate rates are exacted for transportation of products to market; that we are taxed to build railroads for private owners, and these things are all pronounced legal and constitutional, not because they are so, but because these private interests have become so powerful that they control the country. The antiquated idea that the government was instituted by the people, and for the people, has become entirely obsolete, and the new doctrine has obtained that the whole duty of the government is to foster, protect, and support monopolies, and that these monopolies own the people.

In no country of the civilized world are the people more directly connected with all the questions affecting their well being, than they are in the United States. It follows that all should be familiar with such measures as tend to fix and establish the general policy of the government, not only in respect to its general administration, but especially in those matters that directly or indirectly give to corporations, associations, companies, or individuals, exclusive grants, donations, or privileges, detrimental to the interests of those who are not of the "favored few."

A republican government can only exist when it is controlled by the people, and administered in their interest. When special, or class legislation, for the benefit of certain limited interests, or in favor of certain parties, becomes the rule of action in the administration of either the state or national government, accompanied by grants of land, money, or taxes, to be returned to the government by levies made upon the people without their consent, that government ceases to be republican.

In our country, with its vast extent of territory, its diverse interests, and variety of products, and manufactures, it is but natural for different localities and interests to ask governmental aid; nor is it always an abuse of power for the government to give this aid. In some instances it is the duty of the government to use its power and the public money in matters that in some degree, at least, are in their nature local; such, for instance, as the improvement of rivers, harbors, &c. In these cases it is not an abuse of power, but a legitimate exercise of the delegated authority for the benefit of the people.

But there is another species of legislation, approved by the executive and judicial departments of the general government, and endorsed and supported by the legislatures and courts of many of our states, that is in its operation anti-republican and oppressive to the people. We refer to the current special legislation in favor of railroad corporations, our protective tariff, and the banking system, and financial policy of the government.

No one will accuse the author of indulging in a partisan view of these matters. The history of our country shows that men of all parties have sought for and obtained special grants and privileges. Our aim is to direct the attention of the reader to some of the facts connected with, and resulting from, special legislation on the above named subjects, and show their effect upon the people generally.

The assertion that the government is now committed to the policy of donating the public lands to railroad corporations may be thought untrue, yet if we look through the acts of congress for the last few years we will find that more than two hundred million acres have been donated to such corporations, and from the number of bills asking for further grants introduced during the last congress these donations have but just begun. It will not be claimed that the people asked for these grants, or that the necessities of the government demanded them. Nor will it be contended that the people derive any direct benefit from them. On the contrary, the lands and the roads are owned and controlled by private corporations, and not even the government can use these roads for purposes of transportation without compensation. Now, these lands do not belong to the government, but to the people. Those persons filling the different departments of government are but the agents or servants of the people, and have no more right to give the public lands to railroad corporations than to tax the people and donate the money received as taxes to these companies. The policy is bad and oppressive in its effects. If one owns lands and employs an agent to sell it at a given price per acre, this agent has no right to convey one-half of it to himself and friends, and mark up the remaining half to a double price, and leave it on the owner's hands. This is what congress has done with the public lands, and in every instance the grants or donations have been made to aid monopolies, corporations, and powerful companies, who disregard the interests of the public, and use their power and these immense gifts for the purpose of securing further grants by corrupting legislators, judges, and executive officers. If we scale their efforts at corruption by their apparent success, they have not always failed. The interests of these monopolies are adverse to those of the people. The privileges granted them are taken from the people. The wealth of the nation, held by the government in trust for the people, has been and is now being misapplied by the people's trustees, and given to these anti-republican monopolies, and unless something is done to arrest this species of dishonest and unconstitutional legislation, it is only a question of time, and that time not distant, when this government, called republican, will deny to the common people those unalienable rights guaranteed to them by the constitution. How is it now? Discriminations are made against the public in favor of these monopolies in payment of taxes, in special legislation for their benefit, and the aid and protection afforded them by the courts.

Corporations and joint stock companies should have such legislation and judicial aid afforded them as is necessary to give them a legal being, and place them on an equal plane with individuals, and no more. All privileges, immunities, and favors granted to them, beyond such as are necessary for the above enumerated purposes, are in conflict with the spirit and genius of our government. The granting of exclusive privileges to individuals or companies tends to build up an aristocracy of wealth, to array capital against labor, and to divide the people into classes. While we have no titled aristocracy in this country, under the fostering care of the government an aristocracy of wealth has sprung up among us, more despotic in its nature than exists in the old world. It holds in its grasp the labor of the country; it compels the whole people to pay tribute to it; it is constantly asking, claiming, and receiving additional strength at the expense of the people. So great has its power become throughout the country as to alarm all who have considered the subject. For the purpose of self-protection, the laboring community throughout the country are banding together to resist this monopoly. The Patrons of Husbandry are moving in the same direction, all feeling assured that no time must be lost, and that the welfare of the country, the perpetuity of our free institutions, and the privilege of owning and enjoying the fruits of thrift and labor, without giving at least one-half of them to support these monopolies, demand prompt, united, and efficient action.

We propose discussing the different matter referred to in the following order:—

I. Donations of land and government subsidies, and their effect upon the people and the country.

II. The oppressions practiced, and unjust discriminations made by railroad companies in the transportation, shipping, and storage of freights.

III. The unjust system of taxation and discrimination made by legislatures and congress in favor of railroad companies.

IV. The financial policy of the government, and the aid afforded by it to corporations and monopolies.

V. The tendency of the courts of the country to uphold special or class legislation in favor of monopolies and corporations, at the sacrifice of the interests and rights of the people.

VI. The banking system of the country with its useless burdens imposed upon the public.

VII. The policy of protective tariff, and its effect upon the people and the interests of the country.

VIII. The evils incident to the patent laws of the country.

IX. The author will present his views respecting the means to be used for redressing the grievances considered by him.

In treating of these different subjects, it will be our design to cite and quote such acts of congress, of the state legislatures, and decisions of the courts as will sustain the views presented, in order that the reader may fully understand how these giant monopolies are in fact aided and supported by the government; and we shall try to demonstrate that the only way to arrest and correct these evils is by united and persistent action on the part of the industrial and farming communities, and that the remedy for all improper legislation for, and governmental aid to, these monopolies is in the hands and under the control of the people.

CHAPTER I.

A PRELIMINARY SURVEY.

Nothing in this country has contributed so much to the subversion of our republican institutions as Land Grants made by congress to railroad corporations, and congressional legislation in their favor. The policy has opened a wide field for reckless speculation and corrupt legislation. It has reversed the old rule, that "the people are sovereign," and has given to "the favored few" the absolute control of the nation. The reckless giving of lands to railroad corporations, by congress, is without excuse, or even apology. When grants were first made to states, it was pretended that railroads could not be built without this aid. Subsequent developments exploded this idea. Take Iowa as an example: In 1856 four leading railroads crossing the state from east to west, received grants of lands sufficient to pay at least one-half of the entire cost of their construction across the state, yet they were not built until long years after the grants were made, nor were they constructed as rapidly as roads built exclusively by private enterprise and private capital. The effect of the grants was to retard the settlement and development of the wealth and resources of the state, by demanding from those who wished to settle upon the lands so granted, an extortionate, or at least a greatly appreciated price therefor. It does not require a great stretch of the imagination to arrive at the conclusion that but for these grants the population and wealth of Iowa (the taxable wealth) would be quite one-fourth greater now. The grant of lands to certain railroad companies in Iowa reach eight thousand acres per mile; this, at $1.25 per acre, amounts to $10,000. per mile; much more than one-half of the actual entire cost of their construction. Yet, as a matter-of-fact, some, if not all, of them became insolvent, and either before, or soon after their completion, their roads were sold to other parties—the original companies becoming bankrupt. But while the companies became bankrupt, the officers and few stockholders who controlled the corporation retired with immense wealth. These are the men who, at the inception of the land grant system of building railroads, inaugurated the theory which has since been practiced, that all lands thus granted were to be treated as donations to the men who controlled the roads receiving the grants. The result has been demoralizing. It has opened a field to adventurers, stock jobbers, and unscrupulous men, who have gone to the national capital and organized themselves into squads, rings, and companies, for the purpose of robbing the people. Not unfrequently the men elected by the people to look after their interests in congress, have themselves become leaders and partners in these raids upon the public treasurer; and so powerful are these organizations that all the departments of government have yielded to them, and the rule, with but few exceptions, is, to plunder the treasury upon all occasions, and for every conceivable object. But as these matters will be treated in detail in the following pages, we dismiss them for the present.

The rule has been, with few exceptions, in granting lands, to provide that the railroad company shall select alternate sections; that the residue shall be for sale at $2.50 per acre; that it shall not be subject to settlement under the pre-emption or homestead law. By these provisions, those persons who enter the remaining alternate sections, pay back to government the value of the lands donated to the railroad company. This plan of aiding monopolies is at variance with every principal of right and justice. The people themselves are the governing power. They are the government. Those who fill the various offices are not rulers, but agents and servants of the people. The public lands are the property of the people, and these agents or servants representing them in congress have no more right to give these lands to corporations than to vote a part of each citizen's private fortune to the same corporations. When, in addition to these grants, embracing territory eight or ten times larger than the state of Iowa, large subsidies of money are also voted to accompany the lands, the people should become alarmed, and, if possible, arrest such abuses.

Every acre of land given to railroad companies is a direct robbery of the people, and the fact that whenever a grant is made the people are required to make good the amount taken from them by paying a double price for the moiety that is left to them, but adds insult to injury. The citizen who wishes to live upon and improve his quarter section, instead of claiming it as a homestead, or even purchasing it at the government price of $1.25 per acre, must pay $2.50 per acre before he will be permitted to occupy it. Nor is this all; he must be taxed to pay the interest on the subsidy bonds issued to the same companies that have received the grants of land, and all the benefit he derives from these unjust burdens imposed upon him, is the privilege of traveling upon railroads, or of shipping his produce over them, after he has paid to their officers whatever sum they choose to demand for the privilege.

To show more fully the extent to which the people are being plundered under the plea of assisting railroads in their efforts to develope the country, we desire to direct the reader's attention to some of the acts of congress covering "railroad legislation." Let us, for an example, take the Union and Central Pacific railroad, beginning at Council Bluffs and terminating at San Francisco. The charter for this road was granted in 1862, at a time when the country was at war; when it would be natural to presume that the government had no surplus capital, and when reason and common prudence demanded strict integrity and rigid economy in every department. In chartering the company, all idea of economy, integrity, or even common honesty seems to have been abandoned. The demand for the road as a national necessity in time of war, for direct communication between the Atlantic and Pacific states, and the immense cost of the road, with its great length, were the arguments used in favor of liberal aid. All these reasons were plausible—perhaps valid. They were seized upon, and the action of congress besought in the premises by a ring that was formed for the purpose of making immense fortunes out of the enterprise. A noticeable feature in the matter is, that members of congress, in the senate and house, as soon as the act was passed granting the charter, became large stockholders and managers in the corporations. The aid granted by congress to this company was sufficient, if honestly applied, to construct a double track road the entire distance, and leave a large margin for distribution among the stockholders. The act of congress granting the charter, with subsequent amendments, opened a wide field for plunder, and the way the corporators availed themselves of their opportunity shows that they had determined to plunder the people of the last available dollar. A reference to this act and amendments, as published by congress, will fully sustain all we have asserted. Selecting the charter of this road as an apt illustration of all others receiving aid from government, we ask the reader's attention to some of its more remarkable features.

CHAPTER II.

THE PACIFIC RAILROAD INIQUITY.

On the first day of July, A. D. 1862, the charter of the Union Pacific railroad was passed. It contains, among others, the following provisions, to-wit:—

"Section 2. That the right of way through the public lands be, and the same is hereby, granted to said company for the construction of said railroad and telegraph line, and the right, power, and authority, are hereby given to said company to take from the public lands adjacent to the line of said road, earth, stone, timber, and other materials, for the construction thereof. Said right of way is granted to said railroad to the extent of two hundred feet in width on each side of said railroad, where it may pass over the public lands, including, all necessary grounds for stations, buildings, workshops, and depots, machine shops, switches, side tracks, turn-tables, and water stations."

The right of way was reduced to one hundred feet for each side of the railroad, by act of congress of July 2, 1864, and the right to take material for the construction of the road was limited to ten miles on each side thereof, by the same act. By this section the company is allowed to take from the public lands all the material needed in the construction of the road; to strip the lands, and leave them naked for the people. The real value of the lands is given to the company; the refuse left for the American people.

A part of the third section reads as follows:—

"That there be, and is hereby, granted to the said company, for the purpose of aiding in the construction of said railroad and telegraph line, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores thereon, every alternate section of land, designated by odd numbers, to the amount of five alternate sections per mile, on each side of said road, on the line thereof, and within the limits of ten miles on each side of said road, not sold, reserved, or otherwise disposed of, by the United States, and to which a pre-emption or homestead claim may not have attached at the time the line of said road is definitely fixed. Provided, that all mineral lands shall be exempted from the operation of this act; but when it shall contain timber, the timber is hereby granted to said company."

By the act of congress of July 2, 1864, this act was so amended as to grant ten alternate sections on each side of the road, and to grant to the company the iron and coal found within ten miles of the road. The reader will notice the reasons given for this grant. 1st. To aid in the construction of the road; a legitimate reason. 2d. To secure the safe and speedy transportation of the mail, troops, munitions of war, &c. Twenty sections of land per mile are given to the company for the purpose of securing the safe and speedy transportation of troops, and above enumerated articles. It has been said that a poor reason is better than no reason. Of all poor reasons given for an act, this appears to be one of the weakest. The reader will not be able to discover its force. As we progress, we will find that from its inception this Pacific railroad charter, and amendments, were "conceived in sin, and brought forth in iniquity;" that, in its provisions and grants, it presents a state of facts which stamps the whole scheme as a base fraud upon the public, planned by men who were seeking to enrich themselves at the expense of their country; and that congress, either from inattention to the interests of the people, or because the spoils were to be divided, granted the company the precise charter that was to enable it to plunder the public without hindrance.

That we may not be regarded as treating the subject captiously, let us concede that the reason given was a good one, and that the grant of lands would give security to the transportation of the mails; still the thought presents itself that a grant of lands to the value of $15,500 per mile would be ample aid for the people to give to this company, in the construction of its road. It is not a government work, owned by the public, operated and controlled by the government. It is a private enterprise, and while all persons see the necessity of a railroad connection between the Atlantic and Pacific states, but few will indorse the policy of the government giving to this private company more aid in lands and money than the entire cost of the road, or more than it would have cost if built by private capital. And when it is found that this large grant is made without any equivalent, that not even the mails, troops, or munitions of war, can be transported over the road without the payment of just such rates as this private corporation chooses to charge, the conclusion is inevitable that the good, not of the public, but of the corporation, was the controlling motive in affording it aid; that the untold millions of subsidy bonds, and vast tracts of land wrongfully taken from the public, and given to this company, was but placing the interests of the whole people, in their social and business intercourse across the continent, at the mercy of a soulless corporation.

The donations we have already noticed are the "right of way;" the right to take all building material within ten miles of the road, and the grant of twenty sections of land per mile. But this is not all. Section five of the act provides: "That for the purposes herein mentioned, the secretary of the treasury shall, upon the certificate, in writing, of said commissioners, of the completion and equipment of forty consecutive miles of said railroad and telegraph line, in accordance with the provisions of this act, issue to said company bonds of the United States of one thousand dollars each, payable in thirty years after date, bearing six per centum per annum interest (said interest payable semi-annually) which interest may be paid in United States treasury notes, or in any other money or currency which the United States have, or shall, declare lawful money, and legal tender, to the amount of sixteen of said bonds per mile; and to secure the repayment to the United States, as hereinafter provided, of the amount of said bonds so issued and delivered to said company, together with all interest thereon which shall have been paid by the United States, the issue of said bonds and delivery to the company shall ipse facto constitute a first mortgage on the whole line of the railroad and telegraph, together with the rolling stock, fixtures, and property of every kind and description, and in consideration of which said bonds may have been issued." As we shall hereafter see, this section was amended by act of July 2d, 1864, so as to allow the company to issue its own bonds to the same amount per mile issued by the government, and to subrogate the government bonds to those issued by the company, thus making the bonds issued by the company the first mortgage bonds.

Section six provides for the transmission of messages by telegraph, and the transportation of the mails, troops, munitions of war, supplies, and public stores for the government, giving it the preference at all times, "at fair and reasonable rates of compensation, and not to exceed the amount paid by private parties for the same kind of service."

Section eleven reads as follows:—

"That for three hundred miles of said road, most mountainous and difficult of construction, to-wit: One hundred and fifty miles westwardly from the eastern base of the Rocky mountains, and one hundred and fifty miles eastwardly from the western base of the Sierra Nevada mountains, said points to be fixed by the president of the United States, the bonds to be issued in aid of the construction thereof shall treble the number per mile hereinbefore provided, and the same shall be issued, and the lands herein granted be set apart, upon the construction of every twenty miles thereof, upon certificate of the commissioners as aforesaid, that twenty consecutive miles of the same are completed; and between the sections last named, of one hundred and fifty miles each, the bonds to be issued to aid in the construction thereof shall be double the number per mile first mentioned, and the same shall be issued, and the lands herein granted be set apart, upon the construction of every twenty miles thereof, upon the certificate of the commissioners as aforesaid, that twenty consecutive miles of the same are completed; provided that no more than fifty thousand of said bonds shall be issued under this act to aid in constructing the main line of said railroad and telegraph."

This vast amount of bonds was issued to the main line of the road, which, as will be seen by an examination of the first section of the act, terminates at the western boundary of Nevada territory. This company, under its charter, gets $50,000,000 in bonds; its charter does not authorize it to construct the whole road to the Pacific, but to the western boundary of Nevada, where it meets the Central Pacific railroad, built by a company chartered by the legislature of California. Fifty millions in bonds, with the privilege of subrogating the security for their payment to a like amount issued by the company as first mortgage bonds on the road, with the grant of lands above named, the right of way, and the right to all building material within ten miles of the line of the road; this is deemed a fair provision for one company. In order that no charge of selfishness, or want of charity, should be brought against congress, it next turned its attention to other companies. Perhaps it was thought promotive of the interest of this corporate power, now controlling the government, that there should be unity of action and purpose; that its strength should be so great, and its ramifications so extensive, that neither private persons nor the public would dare to resist its demands. The necessity for a railroad from the Atlantic to the Pacific states was not the only consideration influencing the law-making power of the country. This fact is clearly apparent from the provisions of the charter, for numerous branch or spike roads are included in the charter, and provided for in the land grants and subsidy bonds.

Let us look at the "Central Pacific railroad company," of California. This company received its charter from that state, was duly organized, and as we are informed, was at work on its road when the charter was granted by congress to the "Union Pacific." But congress, not to show partiality, in the ninth section of the charter of the Union Pacific, provides for the Central Pacific as follows:—

"The Central Pacific railroad company, of California, a corporation existing under the laws of California, is hereby authorized to construct a railroad and telegraph line from the Pacific coast, at or near San Francisco, or the navigable waters of the Sacramento river, to the eastern boundary of California, upon the same terms and conditions, in all respects, as are contained in this act for the construction of said railroad and telegraph line first mentioned, and to meet and connect with the first mentioned railroad and telegraph line on the eastern boundary of California."

Here is a company building its road exclusively in a single state, under a charter derived from a state having the exclusive control of its own affairs, and not subject to the legislation of congress, or the administration of the general government, like the territories; yet congress, that it may aid a great monopoly, assumes control of the matter, reaches out its hand laden with the people's land, and the people's money, and says to this California company: "If you will unite with and become a part of this giant monopoly we are creating to crush the people, and will accept the provisions of this act and render fealty to the general government as the 'higher power,' we will give you twenty sections of land, and subsidy bonds to the amount of sixteen thousand dollars per mile, with the privilege of issuing your own first mortgage bonds for an additional sixteen thousand dollars per mile for every mile of road you build in the state of California." Of course this California company accepts this tempting offer, and in addition to the fifty thousand of subsidy bonds for sixteen thousand dollars each to the Union Pacific, an additional sixteen thousand dollars per mile is issued to the Central Pacific, all of which, as we will show, principal and interest, will in the end come out of the pockets of the people. The uniting of these two companies, and the completion of their roads and telegraph lines, afforded to the country and the government (provided in all cases they paid to the companies the amounts they charged therefor) a road for the purpose of travel, and transportation of freights, and secured a "safe and speedy transportation of the mails, troops, munitions of war, and public stores thereon," and if the construction of the road was aided for that purpose, it would seem to have been accomplished, and as a matter of justice to the public, no further burdens should have been imposed upon the public. Two companies had been provided for at the people's expense, and all that was demanded for the prosecution of the public business had been effected. But there was danger that other through lines of railroad might be constructed across the territories that might become rivals of this giant monopoly. The Hannibal & St. Joseph railroad company were across the state of Missouri, looking to the west. The Leavenworth, Pawnee, & Western company were preparing for action. A road was crossing Minnesota and Iowa to strike the Missouri river at Sioux City. Any or all of these roads might become rivals. To prevent such a catastrophe, and to retain for all time to come an absolute and exclusive monopoly, these companies must be absorbed, or at least rendered harmless. To assist this scheme, congress is called upon for further aid from the public lands and treasury. The response is all that could be desired. It gave the final blow to competition, and left the people powerless in the grasp of this, the greatest monopoly in the country. A monopoly created by the servants of the people, and enriched with spoils taken from the people, in violation of every principle of right and justice, had been created by act of Congress, and to insure it the absolute control of the country, anything promising competition must be absorbed. To accomplish this object, the same act, section nine, provides: "That the Leavenworth, Pawnee, & Western railroad company, of Kansas, is hereby authorized to construct a railroad and telegraph from the Missouri river, at the mouth of the Kansas river, on the south side, so as to connect with the Pacific railroad of Missouri to the aforesaid point, on the one-hundredth meridian of longitude west from Greenwich, as herein provided, upon the same terms and conditions in all respects as are provided in this act for the construction of the railroad and telegraph line first mentioned, and to meet and connect with the same at the meridian of longitude aforesaid; and in case the general line or route of the road from the Missouri river to the Rocky mountains should be so located as to require a departure northwardly from the proposed line of said Kansas railroad before it reaches the meridian of longitude aforesaid, the location of said Kansas road shall be made so as to conform thereto; and said railroad through Kansas shall be so located between the mouth of Kansas river as aforesaid, and the aforesaid point, on the hundredth degree of longitude, that the several railroads from Missouri and Iowa herein authorized to connect with the same can make connection within the limits prescribed by this act, provided the same can be done without deviating from the general direction of the whole line to the Pacific coast."

It will be seen that one of the rival lines is given a premium of lands and bonds to intersect with the Union Pacific near the east end thereof; it becomes, for a consideration, a part of this great monopoly, and abandons all idea of competition.

Section ten provides for a union or consolidation of the Union Pacific, the Central Pacific, the Leavenworth, Pawnee, & Western, and the Hannibal & St. Joseph companies; and section thirteen provides: "That the Hannibal & St. Joseph railroad company, of Missouri, may extend its road from St. Joseph, via Atchison, to connect and unite with the road through Kansas, upon filing its assent to the provisions of this act, upon the same terms and conditions in all respects, for one hundred miles in length next to the Missouri river, as are provided in this act for the construction of the railroad and telegraph line first mentioned, and may for this purpose use any railroad charter which has been or may be granted by the legislature of Kansas." The section also provides for connecting this road with the main line. This company promised to be a rival, but when congress is appealed to, $1,600,000 in subsidy bonds, and two thousand sections of land are given it as its share of the spoils, provided it will accept this trifle as an inducement to combine its interest with this great corporation. This disposes of all rivals south of Omaha. True the people have paid dearly for it. They, through their servants in congress, have enriched a lot of unscrupulous men, banded together for the purpose of plundering the public, and given to these corporations the power to oppress the people for all time to come; but as it affords a safe means of transporting the mails, &c., for a consideration which the people must pay as the services are rendered, the public should not complain. Congress thought the matter so important as to require the gift of vast sums of the public moneys, and princely donations out of the public domain, and as our legislators acted for the people, and the companies have built their roads, the public must submit.

But there was danger that the roads crossing Iowa and Minnesota might compete with the Union Pacific. Sioux City was an objective point on the Missouri river. West of that city, across the then territory of Nebraska, a road could be constructed at comparatively small cost. This line might become a rival, and it also must be absorbed. To effect this object, the following provision was made a part of the fourteenth section of this act: "And whenever there shall be a line of railroad completed through Minnesota or Iowa to Sioux City, then the said Pacific railroad company is hereby authorized and required to construct a railroad and telegraph line from said Sioux City, upon the most direct and practicable route, to a point on, and so as to connect with, the branch railroad and telegraph line in this section hereinbefore mentioned, or with the said Union Pacific railroad, said point of junction to be fixed by the president of the United States, not farther west than the one-hundredth meridian of longitude aforesaid, and on the same terms and conditions as provided in this act for the construction of the Union Pacific railroad, as aforesaid, to complete the same at the rate of one hundred miles per year." The amendment made to this part of the act in 1864, to which we shall refer in another chapter, materially changes its provisions; and as we examine these provisions, we will discover that all the unjust donations made of the public lands and moneys are exceeded in this amendment.

Now, if the reader will take a map on which the railroads are marked, he will discover that from Leavenworth to Sioux City all the railroads running west are concentrated into one line, after leaving the one-hundredth degree of longitude—the Burlington & Missouri railroad company being made by the act of 1864 a part of the same great monopoly. By the exclusive franchises and imperial wealth conferred upon it by congress, this great corporation is given control, absolute control of the business interests of the great west. This grand system of railroads looks well on the map, and lends color to the plea that the wants of the public and of the government justified this large outlay of money and lands; but an inspection of the act chartering the companies, consolidating them, and by law giving them unlimited control of the interests of the public, will convince the impartial reader that the interests of the companies, rather than the needs of the government, or the welfare of the people, controlled the action of congress.

Grants of lands and exclusive privileges have been made to other corporations, as also to states, for the purpose of aiding in the construction of railroads; but our aim being to combat the policy itself, as involving gross injustice and oppression, and to show its effects upon the public, we have selected the Union Pacific and its branches as the best illustration of the action of congress in making these grants, and the companies owning this road and its branches as a fair sample of the class of professed benefactors of the people.

CHAPTER III.

THE MONOPOLISTS "HELP THEMSELVES."

The Pacific companies are such a deep mine of iniquity, we must sink our shaft somewhat deeper if we would see the true quality of the corruption. In order to fully comprehend the injustice done to the people, it will be necessary to examine the further legislation of congress in their favor.

A perusal of the act from which we have quoted will convince the reader that these companies received all that was necessary for the successful completion and operation of their road, and its numerous branches, and to enable them to extort from the government and the people all that the most grasping and avaricious could desire. But, like Oliver Twist, they still asked "for more," and they got it; not in more lands and money, but in being relieved, by act of congress, from the restrictions and duties imposed upon them by their charter.

The act of congress chartering the Union Pacific railroad, and its numerous branches, was amended by the act of July 2, 1864, in many particulars, to some of which we have already referred. The fourth section amends the third section of the original charter by increasing the number of sections of land granted per mile to said road, from ten to twenty, and allowing the selection of the lands to be made within twenty miles of the line of the road, instead of ten, as provided in the original charter; and also provides that the secretary of the interior shall withdraw from sale and pre-emption all the land within twenty-five miles of the line of the road, until the company has selected its twenty sections. The original charter limited the withdrawal to fifteen miles. The amendment also qualified the term "mineral lands," contained in the original act, so as to except from the lands reserved by the government all coal and iron lands; thus enabling the company to select coal and iron lands to the full amount of twenty sections per mile, giving to said railroad company, or companies, a monopoly of the coal trade in a country where coal is, and will continue to be, the greatest desideratum; and the same section gives the company the right to use, in fact grants to the company, all the timber found on each side of the road within ten miles thereof. The company can, under its charter, take all the timber from the land it does not select, and then take its twenty sections in coal lands, when they can be found. This it has done, and in addition, bought of the government other large tracts of coal land; not in the name of the company, perhaps, but in the name of the individual stockholders. By this means, all who settle along the line, in the vicinity of this Union Pacific road, are placed in the power of this great corporation, and must pay it for fuel and transportation whatever sum may be demanded, because the charter does not restrict the company in the matter of charges for transportation.

Section seventeen of the original charter provided that twenty-five per centum of the subsidy bonds should be retained by the government until the entire line of the road was completed. Section seven, of the act of July 2, 1864, repealed this provision.

Other amendments are made for the benefit of the corporation, as to time and manner of payment; but as it is not our intention to examine all of its provisions in detail, we pass to the tenth section.

By the original charter, the subsidy bonds issued to the company were to be and remain first mortgage bonds upon the road and property of the company, the company paying six per cent interest (payable semi-annually) on said bonds, and the principal in thirty years. The tenth section of the amendment reads as follows:—

"That section five of said act be so modified and amended that the Union Pacific railroad company, the Central Pacific railroad company, and any other companies authorized to participate in the construction of said road, may, on the completion of each section of said road, as provided in this act, and the act to which this act is an amendment, issue their first mortgage bonds on their respective railroad and telegraph lines, to an amount not exceeding the bonds of the United States, and of even tenor, time of maturity, rate and character of interest, with the bonds authorized to be issued to said railroad companies, respectively. And the lien of the United States bonds shall be subordinate to that of the bonds of any or either of said companies, hereby authorized to be issued on their respective roads, property, and equipments, except as to the sixth section of said act, to which this is an amendment, relating to the transmission of dispatches, and the transportation of mails, troops, munitions of war, supplies, and public stores, for the United States."

By this amendment, the public money appropriated to private corporations, to the amount of about $65,000,000, for which security had been taken, on all the property of the companies, was left in the hands of the companies without any security; or, in other words, the servants of the people made an absolute gift of this great sum of money. The history of the country, in connection with railroad corporations, demonstrates the fact that these corporations by "watering" their stock, and other characteristic management, show, if they so desire it, no margin from the business of their roads. They permit the interest on their bonds to accumulate, until a foreclosure and sale on first mortgage bonds are necessary, and then, under a new name, but with the same persons as stockholders, the road is bought in and becomes profitable. In this case the amount of $65,000,000, and the accrued interest must be first paid, or the property of the corporation must be sold, and the public money advanced by the government will be lost. Even at the present time (as we shall show hereafter) the people are paying the interest on these subsidy bonds, and the only security they have for its repayment is the honor of the company; for all precedents prove that as a rule second mortgage bonds, when a large sum of first mortgage bonds is to be paid, are of no real value.

Sections fifteen and sixteen provide for a division of earnings, and a consolidation of the various companies. Sections eighteen, nineteen, and twenty, provide for the admission of the Burlington & Missouri river railroad company as a branch of the Union Pacific, with a grant of land in Nebraska. But the greatest outrage upon the rights and interests of the people, in this Pacific railroad law, will be found in the seventeenth section of this amendment. By the original act, the Union Pacific company was required to construct a branch, road from Sioux City (on the most direct and practicable route) to some point on its road to be fixed by the president of the United States (but not beyond the one-hundredth parallel) when a railroad should be constructed through Minnesota or Iowa to Sioux City. This new road was to unite with and form a part of the great monopoly, and was to receive the same amount of lands, and subsidy bonds, per mile, as the main line received. The building of this road from Sioux City west, to a proper point of connection with the main line, would have cost but little, comparatively, because of the favorable character of the country through which it would pass.

For some reason, unknown to the public, it was decided to make a change in respect to this branch, not only as to its location, but also as to the company whose duty it should be to build it. To effect this object, this seventeenth section contains the following provisions:—

"That so much of section fourteen of said act as relates to a branch from Sioux City, be, and the same is hereby, amended so as to read as follows: That whenever a line of railroad shall be completed through the state of Iowa, or Minnesota, to Sioux City, such company now organized, or as may be hereafter organized, under the laws of Iowa, Minnesota, Dakota, or Nebraska, as the president of the United States, by its request, may designate, or approve for the purpose, shall construct and operate a line of railroad and telegraph from Sioux City, upon the most direct and practicable route to such point on, and so as to connect with, the Iowa branch of the Union Pacific railroad, as such company may select, and on the same terms and conditions as are provided in this act, and the act to which this is an amendment, for the construction of said Union Pacific railroad and telegraph line, and branches; and said company shall complete the same at the rate of fifty miles per year. Provided, that said Union Pacific railroad company shall be, and is hereby, released from the construction of said branch. And said company constructing said branch shall not be entitled to receive, in bonds, an amount larger than the said Union Pacific railroad company would be entitled to receive if it had constructed the branch under this act, and the act to which this is an amendment; but said company shall be entitled to receive alternate sections of land for ten miles in width on each side of the same, along the whole length of said branch; and provided further, that if a railroad shall not be completed to Sioux City, across Iowa or Minnesota, within eighteen months from the date of this act, then said company designated by the president as aforesaid, may commence and complete the construction of said branch, as contemplated by the provisions of this act. Provided, however, that if the company so designated by the president as aforesaid, shall not complete the said branch from Sioux City to the Pacific railroad within ten years from the passage of this act, then, and in that case, all of the railroad that shall have been constructed by said company, shall be forfeited to, and become the property of, the United States."

Now if the reader will take a late map, having the lines of railroads upon it, he will discover that a road from Sioux City to Columbus, in Nebraska, would be about one hundred miles in length, on a line running nearly west; and at this latter point it would intersect and unite with the Iowa branch of the Union Pacific; or a line running southwest for a less distance would unite with the Union Pacific at Fremont, in Nebraska. In the original charter it was contemplated to occupy one of these lines, and, in fact, a branch road was commenced from Sioux City to Fremont. The directors of this branch and the Union Pacific are in part the same, to-wit: Oakes Ames, of Boston, and G. M. Dodge, of Iowa. It would seem that this road, running southwest to Fremont, and there uniting with the Pacific, would afford all necessary facilities for securing the transportation of the mails, troops, &c., and that upon no pretext whatever could another grant of land and subsidy bonds be asked. Yet congress thought otherwise, and in the section last quoted authorized any company organized under the laws of Iowa, Minnesota, Dakota, or Nebraska, that might be designated by the president of the United States, on application to him for that purpose, to construct a railroad to unite with the Union Pacific, leaving it with the new company to fix the point at which it would so unite, but requiring it to commence at Sioux City. Taking advantage of this act, two companies, the Sioux City & Missouri Valley, and the Chicago & Northwestern, constructed a line of road from Sioux City to Council Bluffs, there to unite with the Pacific; the Sioux City & Missouri Valley constructing the road from Sioux City to Missouri Valley, and the Chicago & Northwestern from Missouri Valley to Council Bluffs. This line of road was constructed ostensibly as a part of the Pacific road. It is presumed to run west. Look at the map and you will see that from Sioux City to Council Bluffs, instead of going west, it runs on a line east of south, to the extent of thirty miles, Council Bluffs being thirty miles east of Sioux City. The company constructing this last named road received from the government a grant of one hundred sections of land per each mile, and $16,000 in subsidy bonds for each mile of road. This road runs along the east side of the Missouri river, and in truth, is of no use as a route for the transportation of mails, troops, &c., unless the government prefers to use the longest, least expeditious, and most expensive line of road. Indeed, it seems to be a road that is under the especial care and protection of congress. It is called in the Railroad Manual, "The Sioux City & Pacific Railroad." It was a "nice and fat" job. It has one feature not often found in these railroad jobs carried through congress. It appears to have been gotten up for the benefit of congressmen. After repeated efforts to learn who were the incorporators of this company, we addressed a letter to the secretary of state of Iowa, and received the following answer:—

Des Moines, December 7, 1872.

Dear Sir:—In answer to yours of the 6th inst., I will say that there is no line of railroad from Sioux City to Council Bluffs, run as one road, or by one company. The Sioux City and Pacific railroad runs from Sioux City to Missouri Valley, and the Chicago and Northwestern (Cedar Rapids and Missouri River) from Missouri Valley to Council Bluffs. The corporators of the Sioux City and Pacific company were L. B. Crocker, M. K. Jessup, James F. Wilson, A. W. Hubbard, Chas. A. Lombard, Frank Schuchardt, W. B. Allison, and John I. Blair.

Yours truly,
Ed. Wright,
Secretary of State.

Among the present directors are to be found the names of Oakes Ames, John I. Blair, D. C. Blair, and G. M. Dodge. Ames was a member of the late congress, and G. M. Dodge is an ex-member. Among the directors of the Cedar Rapids & Missouri river company appear the names of John B. Alley, and James F. Wilson, who were members of congress when the act of July, 1864, was passed, amending the charter of the Union Pacific, and making the large grants to the company designated by the president to build the Sioux City branch of the Union Pacific railroad. Wm. B. Allison has been a member of congress almost continuously from 1860 to the present time.

This Sioux City branch seems to have been a special favorite with certain congressmen. It received the lion's share of lands, getting five times as many sections per mile as the main lines, and this, too, for the purpose of building a railroad running east of south, instead of west—the direction of the main line—following the course of the Missouri river on the east side thereof for the entire length of this branch, and crossing on the bridge to the Nebraska shore at Omaha.

In addition to the road from Sioux City to Omaha, and for the purpose of getting all the land and money possible out of the government, the conspirators organized another company, under the laws of Nebraska, to-wit: The Fremont, Elkhorn, & Missouri Valley company, and built a road running from Missouri Valley to Fremont, in Nebraska—about fifty miles,—and these two roads, from Sioux City to Missouri Valley, and from Missouri Valley to Fremont, are now called the Sioux City & Pacific. We do not know who were the incorporators of the Fremont, Elkhorn, & Missouri Valley company, but we find among the present directors, John I. Blair, D. C. Blair, and ex-congressman John B. Alley. The two companies are consolidated. The grant of one hundred sections of land, and bonds to the amount of $16,000 per mile, with the privilege of issuing first mortgage bonds to the amount of $16,000 per mile, altogether comprise one of the most remunerative jobs ever conceived and consummated by incorporating, stockholding and "direct"-ing congressmen in the companies receiving the aid. When it is remembered that the actual cost of the construction of the road was less than $30,000 per mile (as shown by the Railroad Manual), and that it is of no value to the government because of its course, save for carrying local mails (its entire earnings for government transportation being less than $1,000 per annum), it will not be uncharitable to conclude that this fat little slice of the Pacific railroad job was put through congress, and nursed and petted by government for the exclusive benefit of congressmen, their friends and relatives.

We do not deny the right to congressmen to become and remain stockholders and directors in railroad corporations, but we do deny their right to vote lands and money to companies in which they are stockholders and directors. They are elected to represent the people, to attend to and protect the public interests. When they form themselves into companies and vote the lands and moneys of the people to themselves, they violate their trust, and instead of protecting the people, plunder them, and divide the spoils. To give these unjust practices some color of right, or in some manner to excuse themselves for thus appropriating the wealth of the country and dividing it with their friends, they assert in the laws thus enacted that it is done to aid in the construction of railroads, and "to secure the safe and speedy transmission of the mails, troops, munitions of war, and government supplies," &c. It is no part of the duties of congressmen to construct railroads, nor are the people under obligations to furnish them the means for that purpose. When members of congress form themselves into private companies, and to procure the means for prosecuting their private enterprises, agree to divide among themselves a part of the money and property belonging to the public, because the position they occupy enables them to do so, they manifest the same disregard for the rights of others, and the same disregard of law that is shown by the class of men who follow theft and robbery for a livelihood.

But let us follow still further the course of this Pacific railroad company. It would occupy too much space, and weary the reader were we to state in detail all the acts of congress passed in aid of this gigantic combination. In speaking of the Pacific railroad we are apt to look upon it as simply a line of road extending from the Missouri river to the Pacific ocean; to consider its great length; the character of the country through which it passes; the sparse settlements; the necessity for direct and speedy communication between the Atlantic and Pacific states, and we yield a ready assent to the action of congress in voting lands and subsidy bonds for its construction. But when we find that the charters of the Union Pacific and Central Pacific companies, and their various amendments, together with the several acts of congress making many other companies branches of the Pacific road, virtually consolidates all the railroads between the cities of St. Louis and St. Paul on the Mississippi river, and all the railroads running west from Chicago, into one vast corporation, uniting all in one track from Fort Kearney to the Pacific ocean, the people will begin to realize that while they thought congress was appropriating lands and moneys solely for the purpose of opening a highway across the territories, it was in fact aiding a combination of men and corporations in their attempt to control the commerce of the great west; and when we further learn that this great railroad interest is already virtually consolidated, and that the whole people are placed at the mercy of this great monopoly, we see at a glance the extent of the power vested in it by act of congress.

Among the railroad companies that are included in this combination are the following: Chicago & Northwestern; Iowa Falls & Sioux City; Cedar Rapids & Missouri River; Leavenworth, Atchinson, & Northwestern; Kansas Pacific; Union Pacific; Burlington & Missouri River; Sioux City & Pacific; Missouri River; Chicago, Iowa, & Nebraska; Hannibal & St. Joseph; and the St. Paul and Sioux City. Most of the above roads received grants of lands; some of them received subsidy bonds, ostensibly for the public benefit, but in reality for the purpose of combining in one the interests of all these combinations. Whatever may have been the intention of congress in granting exclusive privileges to these companies and permitting them to unite, the effect has been to fasten upon the great west a monopoly, that for all time to come will be an instrument of oppression. With its vast power and wealth it can but control the fortune of the laboring and producing classes inhabiting the richest portion of our common country. The further fact that this great corporate power is the particular pet of congressmen, and that among its directors and stockholders are members and ex-members of congress, render the hope of any change in favor of the people remote, if at all attainable. If the reader is desirous of learning who are the directors and managers of the Pacific railroad and branches, he has only to consult Poor's Railroad Manual for 1872-3. He will find among the present directors the men who, in congress, voted the lands and subsidies to the companies in which they are now directors, and also, that some of these directors are now holding the office of congressmen and of United State's senators.

By the acts of congress granting and amending the charters of the Pacific railroad companies and branches, it is made the duty of the president of the United States to appoint five directors, "who shall be denominated directors on the part of the government," and these acts forbid such directors being stockholders in said Pacific railroad companies. It is made the duty of these government directors to exercise a general supervision of the Pacific road and branches, and to report its condition from time to time to the secretary of the interior. In contemplation of law they are to have no pecuniary interest in the companies or in the roads. The present government directors are B. F. Wade, of Ohio; Hiram Price, and J. F. Wilson, of Iowa; J. C. S. Harrison, of Indiana; and D. S. Ruddock, of Connecticut. By act of congress of June 2d, 1864, the Cedar Rapids & Missouri River railroad was authorized to connect with the Iowa branch of the Union Pacific road, and sections fifteen and sixteen of the acts of July 2d, 1864, place all roads connecting with the Union Pacific on an equality as to charges for freights and passengers, and permits them to consolidate if they elect so to do. The Cedar Rapids & Missouri River company has leased its road to the Chicago & Northwestern company, and it is operated in connection with the Union Pacific, uniting with it at Council Bluffs, and it virtually becomes a branch of the Union Pacific road. The reader can look over the list of directors, as shown in the Railroad Manual before referred to, and learn if any of the government directors of the Union Pacific are directors in the Cedar Rapids & Missouri River company. The reports made of the cost, condition, and other matters connected with Pacific railroad enterprises, disclose such utter disregard of the rights and interests of the people, and such a gross betrayal of the public good for the benefit of a ring (in part a congressional ring) as to leave it without precedent.

The fact that the men who formed this ring have become a powerful moneyed aristocracy, able by their votes and influence in congress to convert the public lands and money to their own use, and are now boldly taxing the people with the interest on the money appropriated to build up these oppressive monopolies, should arouse the country to a sense of its imminent peril.

CHAPTER IV.

HOW CONGRESS BETRAYED THE PEOPLE.

In order to fully realize the great power of what is known as the Pacific railroad companies, it will be necessary to look at the Central Pacific company, and its control of the transportation of freights and passengers from the Pacific country. This company, organized under the laws of California, was, by acts of congress of July 1st, 1862, admitted into the grand combination known as the Pacific roads, and granted equal privileges with the Union Pacific and branches. The Central Pacific extends from the Pacific ocean to Ogden, a distance of eight hundred and eighty-one miles. The acts of congress of April 4th, 1864, and July 2d, 1864, granted to this company additional privileges and powers, including the right of consolidating with all the companies on the Pacific coast. In 1870 the following companies, to-wit: The Western Pacific railroad company; the San Francisco, Oakland, & Alameda railroad company; the San Joaquin railroad company; the California & Oregon railroad companies were consolidated.

The state of California at that date had but one thousand and thirteen miles of road within its borders. Of this number of miles, about one-half became a part of the Central Pacific, by the consolidation as above stated. All the roads pointing towards the east were combined in this one great corporation, forming a solid body, with one common and general object and interest, viz: a monopoly of the travel and traffic with the eastern states. And congress, by appropriating lands and subsidy bonds, and granting exclusive rights and privileges to this monster monopoly, has given it the key not only to the overland commerce of the country, but also to the commerce of our country with other nations upon the Pacific ocean. This giant monopoly, by the aid of congress, has obtained the absolute control of the best interests of the whole people for all time to come—a control that is now being used, and will continue to be used, to enrich its own members and stockholders by oppressive levies for transportation over its roads.

To fully comprehend the cost to the country of these munificent gifts by congress to the Union and Central Pacific corporations, let us examine the expense somewhat in detail.

First. A grant is made of all the material needed in the construction of the roads, found within ten miles of the line of said roads.

Second. A grant of thirty-five million acres of the public lands, amounting, at $1.25 per acre, to $43,750,000. This vast amount of land is taken from the people and given to companies by congressmen who in some instances are members of the companies, and receive their pro rata share of the grants.

Third. Aid voted by congress in shape of subsidy bonds, $65,000,000, payable in thirty years, with six per cent per annum. The theory was that the companies would pay the interest as it matured (semi-annually) and eventually the principal. But that this was not the intent of the companies, nor of congress, is apparent from the different acts regulating the matter, and as the case stands, the government is actually paying the interest and collecting the amount from the people in tariffs and excise taxes. The payment of the amount of these bonds, with the interest according to their terms, will require about $200,000,000. This amount, or nearly all of it, will be paid by the people, and not by the companies. The report of the secretary of the treasury shows that the amount of interest annually due on these subsidy bonds is $3,875,000, of which the Pacific railroad companies have paid about $750,000, and the government the balance, say $3,125,000. The original charter of the companies provided that the charges for carrying done for the government should be credited to the companies in liquidation of these bonds, and also that five per cent of the net earnings of the road should be applied to the same object. The secretary of the treasury of the United States insisted that these companies should be bound by this provision of their charters, refused to pay them their earnings for government services, and also demanded the five per cent, under the law. The companies refused to pay the five per cent of their net earnings, and demanded pay for transportation. If we remember that congress had already so amended the charters of these companies as to permit them to issue $65,000,000 of their own bonds as "first mortgage bonds," and provided that the subsidy bonds obtained from government should be subordinate or junior to the bonds issued by the companies, and also bear in mind that these amendments also provided that whenever twenty miles of road was completed the patent for twenty sections of land per mile was to issue to the companies, so that when the roads were completed they would have title to all their lands, we will see good reasons for the stand taken by the United States secretary of the treasury.

The security which the United States had for the payment of the principal and interest of the bonds, under the charter, was destroyed by subsequent legislation, and unless the secretary could retain the amounts due from government for transportation, and collect the five per cent, the whole amount of the subsidy bonds, would be lost to the government and the people. The facts of the case being well known to congress, who are supposed to be the representatives of the people, and to legislate in their interest and for their benefit, it would hardly be supposed that an act would pass both branches, and receive the approval of the president, compelling the secretary of the treasury to yield to the demands of these corporations. Honest legislation, and a decent regard for the public welfare, would seem to forbid any attempt on the part of any one of the departments of the government to aid the companies in their dishonest endeavor to avoid the provisions of a charter which had been enacted for their special benefit. And when it is remembered that at the time the application was made to congress (March, 1871) certain members were stockholders and directors in these same companies, one would not think it possible that an act could be passed relieving the companies from these requirements of their charters, or only possible because of the practice being so long established for congressmen to appropriate public lands and moneys to their own use, that they had arrived at the point where they deemed the property and money of the government lawful plunder, and that their first duty was to provide for the rings and corporations in which they had a personal interest. It seems to have required some strategy for the friends of these corporations to grant them the aid they asked. Afraid to take issue with the secretary of the treasury, and unwilling to hazard the success of their scheme by an attempt to pass an act for the relief of these railroad companies independently of any other measure, to insure the safe passage of the legislation and its approval by the president, congress, by an amendment, tacked it to the army appropriation bill (which passed March 3d, 1871), secured the relief asked for.

Section nine of the army appropriation bill reads as follows: "That, in accordance with the fifth section of the act approved July 2, 1864, entitled 'An act to amend an act to aid in the construction of a railroad and telegraph line from the Missouri river to the Pacific ocean, and to secure the same for postal, military, and other purposes, approved July 1, 1862,' the secretary of the treasury is hereby directed to pay over in money to the Pacific railroad companies mentioned in said act, and performing services for the United States, one-half of the compensation, at the rate provided by law for such services heretofore or hereafter to be rendered: Provided, that this section shall not be construed to affect the legal rights of the government or the obligations of the companies, except as herein specifically provided."

This act was approved by the president, and the question at issue between the secretary of the treasury and the companies was settled by congress in favor of the latter—absolutely relieving them from the payment of any part of the $65,000,000 of subsidy bonds, except such sums as may be paid by allowing the government to retain one-half of the earnings of the roads for carrying mails, etc., which sums, as shown by the companies themselves, amount to less than one-fourth of the annual interest accruing on the bonds. The people must pay all the balance, principal and interest. These companies have received, in lands and bonds, from the general government, about $109,000,000, to aid in the construction of their roads, and all that government receives in return is one-half of the fare levied on government transportation over these roads, "at the price fixed by law." The only provision as to price is, that after having donated to the companies sufficient to pay the entire cost of the construction of the roads, government shall pay such reasonable prices as may be agreed upon, not exceeding the rate the companies charge to other parties. When we say "the entire cost," we do not mean the full cost claimed by the companies, for it is not policy for them to make a correct showing in this matter; we mean the real actual cost. We cannot find a statement of the cost of the Union Pacific, and do not know what the company claim to be its cost per mile, or the aggregate cost. The Central Pacific puts the cost of its roads at $120,000,000, or about $136,000 per mile. It shows a paid-up capital stock of $54,000,000, and a funded debt of about $82,000,000, making its indebtedness about $16,000,000 more than the entire cost of its road, including rolling stock and equipments. Making a liberal margin for the value of these last named items, and allowing the Central Pacific to cost nearly double the ordinary cost of other roads, and the reader must conclude that there has been, in this case, a watering of stock and an excessive issue of bonds for the benefit of the company and at the expense of the people. The statement of the capital stock and funded debt of the Union Pacific shows about the same condition for its road as to indebtedness; but the estimated cost of the road is not given.

For proof that we are not mistaken in our estimated cost of these roads, and that the companies have received from the government a sum more than sufficient to defray the entire expense of their construction, we turn to reports of the cost of railroads generally, in the country, made by men who are in sympathy with our present railroad system. These men say that the cost of railroads in this country, from their first introduction, is about $50,000 per mile, and that those constructed recently will average about $30,000 per mile. We are apt to think that the cost of the Pacific roads would exceed that of most other roads. Such is not the fact. On the contrary, taking the entire road into consideration, the line was more favorable than any other in the country. It is thus described in the Railroad Manual, before referred to:—

"The route for the eastern portion of the line is up the valley of the Platte, which has a course nearly due east from the base of the mountains. Till these are reached, this valley presents, probably, the finest line ever adopted for such a work for an equal distance. It is not only straight, but its slope is very nearly uniform towards the Missouri, at the rate of about ten feet to the mile. The soil on the greater part of the line forms an admirable road bed. The road, after leaving the mountains, has very few affluents, the only constructed bridges for the distance being one over the Loup Fork and the North Platte. The base of the mountains is assumed to be at Cheyenne, five hundred and seventeen miles from the Missouri river. This part is elevated six thousand and sixty-two feet above the sea, and five thousand and ninety-five feet above Omaha. From Cheyenne to the summit of the mountains, which is elevated eight thousand two hundred and forty-two feet above the sea, the distance is thirty-two miles. The grades for reaching the summit do not exceed eighty feet to the mile. The elevation of the vast plain from which the Rocky mountains arise, is so great, that the mountains, when they are reached, present no obstacles so formidable as those offered by the Allegheny ranges to several lines of railroads which cross them. * * * The line of the railroad up the eastern slope of the Rocky mountains is not so difficult as those upon which several great works have been constructed in the eastern states. After crossing the eastern crest of the mountains, the line traverses an elevated table land for about four hundred miles, to the western crest of the mountains, which forms the eastern rim of the Salt Lake basin, and which has an elevation of seven thousand five hundred and fifty feet above the sea. Upon this elevated table land is a succession of extensive plains, which present great facility for the construction of the road. The whole line is a very favorable one, when its immense length is considered. More than one-half of it is practically level, while the mountain ranges are surmounted by grades not in any case exceeding those now worked upon some of our most successful roads."

The description of the line of the Central Pacific, or western six hundred and sixty-seven miles, from Ogden to Sacramento, will not vary much from that given of the Union Pacific. It is not quite so favorable. Taking the character of the route as given, with the facilities for building the road, and it is not probable that the actual cost of construction averaged more than $30,000 per mile, or $57,000,000 for the whole line. Taking the highest rate, as given, viz: $50,000, and apply it to the whole road, the entire cost would be $94,000,000.

To aid in the construction of this road, the government issued subsidy bonds at the rate of $48,000 per mile for three hundred miles, $32,000 per mile for nine hundred and four miles, and $16,000 per mile for the balance of the main road and branches. The funded debt of the companies owning and operating the road (not including the debts of the branches), after deducting the amount of bonds they received from the government, to-wit: $65,000,000, is, as shown by their own report, $93,000,000. How much their floating debt amounts to we cannot tell. The stock on their road cannot cover one-tenth of the amount of their debts. The companies report a paid up capital stock of $91,028,190. The statement of account would be about as follows:—

Thus, after placing the land received from the government to the credit of the road, still a small balance of more than $108,000,000 has disappeared, and the companies are not able to pay the interest on the government bonds. The reports of these companies show, for the year 1871, that the net earnings of their roads (over and above all expenses, including taxes, repairs, damages to property and persons, cost of snow sheds, and all other items of expense) amounted to about $9,000,000, and yet, because these companies asked it, congress released them from the payment of the interest on the subsidy bonds.

The conclusion to be drawn from the facts of the case, as they develop themselves, is, that these Pacific railroad companies have used the federal offices, and the public moneys, and lands, for enriching themselves; that a company of men, in congress, and out of it, have combined and confederated together for the purpose of robbing the people, and controlling the government. We have selected the Union and Central Pacific companies for illustrations, and attempted to state the facts in their case, not because of any exception that they present to the general rule, but to show the manner in which the people are duped and defrauded by congressmen voting government aid to railroad companies, under the pretext of developing the country, and the equally false necessity of providing speedy and secure transportation for the mails, troops, supplies, and munitions of war.

One peculiar feature about the whole matter is, that congressmen have deemed it necessary for the accomplishment of their object, to become personally interested in their own legislation by subscribing stock, and becoming directors in the companies to which they voted these aids. We can name congressmen who, if they were not stockholders in these Pacific roads, at the time the bonds and lands were voted, certainly were stockholders and directors when these companies were relieved from the payment of the interest on the bonds issued to them by the government, to-wit: Oakes Ames and James Brooks. How many more held stock we cannot tell; but the fact that members were stockholders and directors must have been known to the different departments, for, under the charter of these companies, the directors, and especially the government directors, are required to report in detail the condition of the companies, and the names of the directors once each year to the secretary of the interior, at Washington. If the reader would know the extent of congressional legislation in favor of the rings, and combinations of men, plundering the people, he need only look over the different acts of congress passed directly for their benefit during the last twelve years. He will arise from their perusal feeling that the chief duty of the government is to foster, protect, and enrich these rings at the expense of the people.

These Pacific companies are required, by their charters, to construct telegraph lines along the route of their roads, and to transmit messages for the government at such rates as they charge other parties. The appropriations by congress show that $40,000 have been voted annually to pay for telegraphic dispatches, between the Atlantic and Pacific, but there is nothing to show that any such sum was due from the government for telegraphing. Among the appropriations is an item for the mileage of the government engineer for travel, from Cincinnati to Omaha, and from Omaha to Washington, and thence to New York; but the charters of the companies required them to pay the expenses incurred on account of the services of persons appointed by the president to inspect these roads. Indeed, the action of congress is such as to induce the belief, that these roads, if not owned by the general government, are owned by congress, or congressmen, and that it is perfectly legitimate and proper for government to pay the cost of their construction, and of the telegraph lines, and also their running expenses. The energy and zeal manifested by congress, in aid of these corporations, and the great number and variety of acts passed for their benefit, demonstrate the fact that while the representatives of the people assemble at Washington ostensibly to legislate for the public generally, they devote their time to legislation for their own benefit, and that of the numerous corporations and companies of which they are members.

CHAPTER V.

CONGRESS BECOME A STOCK EXCHANGE.

In scanning the names of the directors of the railroad corporations which have received large grants of lands, subsidies, and special and exclusive privileges, we find many ex-members of congress in whose terms of service these grants were voted. We also find members of congress who were directors at the time their relief and aid bills were passed. We find one member who is now a director in three of the companies receiving the largest sums from government, and which are considered the best of all, because of the opportunity they present to enterprising men of legislative and financial ability; and in order that proper provision should be made for his kindred, one of the brothers of this same congressman is a director in five of these land grant subsidy corporations. These jobs are "nice and fat," made so by the unjust legislation of congress, and being "nice and fat," the division and distribution of the spoils is made among these congressmen and their friends. The practice of voting the money and lands of the public to these corporations has become so common that it is considered legitimate to bribe or buy the votes and influence of certain congressmen in favor of certain grants. Large bribes have been offered, and perhaps accepted for these purposes. So common is the practice of lobbying these jobs through congress that it excites but little attention save in extraordinary cases, and elicits but little comment. The power and corrupting influence of these corporations have grown to such proportions that they and their friends in congress can disregard and defy public opinion, and compel all the departments of the government to yield to their demands. They plunder the people with impunity. They have transformed the government; while we are in name a republic, and theoretically the people govern, we are in fact an oligarchy, and corporations rule the country. If the reader has followed us thus far he will have seen that while the idea of public necessity has been put prominently forth as the excuse for the great donations made to railroad companies, and the apology for the special privileges granted to them, in fact, the real object has been to create by special charter a privileged class with facilities to amass fortunes, and by the power granted to this class of perpetual succession and exclusive right under the law, to compel the whole people to pay tribute to it. This power is so great at this time, that it controls the whole commerce of the country, and as we will hereafter demonstrate, it controls not only the financial, but also the judicial department, and reigns supreme in the general politics of the country. Looking at these charters the thought is presented to the mind, and the idea is incorporated in the charter, that the people of the whole country are petitioning congress to grant aid to these companies for the purpose of developing the country; that by a spontaneous movement on the part of the whole people congress is called upon to incorporate these different companies, and to grant lands and money to aid in the different enterprises as they are presented. To give color to this idea, the names of men from most of the states and territories are included among the incorporators, some fifteen or twenty of whom are named as provisional directors who are to hold their places until the first regular meeting of the company, and the election of officers. Congress fixes the time and place of meeting and the notice to be given to the stockholders, and to carry out the idea that it is to be a company in which all can participate, the charter provides that any person can subscribe stock and become a stockholder who desires to do so. In fact though, no petitions have been presented to congress, nor do any considerable number of the persons named as corporators know of the organization, or that their names have been used; nor is it intended that they should know; the fifteen or twenty interested parties who have formed their plan for a raid upon the treasury, are the only ones, besides their particular friends in congress, who are supposed to know anything about it. These fifteen or twenty men who have gotten up the scheme, meet and elect themselves directors, and are then ready for action. Having obtained their charters, and organized under them, the work of robbing the people begins. With their friends, and some of their directors in Congress, they have been able thus far to obtain all they have demanded. There is no authority for the assumption that the chartering of these companies is in obedience to the wish of the people, either expressed or implied. On the contrary, this action of congress has uniformly been in opposition to public opinion, and indeed it has excited popular remonstrance. None but the few who wish to get their hands into the public treasury have asked the interference of congress, or desired the government to aid in these enterprises. So great is their anxiety to aid in the development of the country that substantially the same companies undertake to construct all the roads for which congress will grant sufficient aid. All these railroad schemes which have received the special attention of congress were planned by a set of unscrupulous men, who combined to plunder the treasury.

The system of aiding in the construction of railroads by grants of land was inaugurated in 1850, by grants to the Illinois Central, and did not develop itself fully until 1862, when the plan of obtaining charters from congress, connected with grants of land and subsidies, was systematically adopted. Since the latter date, the practice has increased with fearful rapidity, and within the last four or five years it has assumed such immense proportions as to threaten the entire subversion of the government.

The greatest raid made upon congress for these grants and special charter privileges during any one term was at the session closing March 4th, 1868. When it is remembered that the public business did not require these roads, and that the people had not asked congress to aid in their construction, it seems incredible that in the fortieth congress representatives and senators should have introduced more than one hundred and fifty bills and resolutions to aid railroad companies. Yet such is the fact. A gentleman who spent much time in Washington, and examined into this matter writes as follows:

"The latest developments show that in the grandeur and number of their schemes of spoil and plunder, the congressional rings of railroad jobbers throw into the shade all other rings of the lengthy catalogue of confederate treasury robbers. * * * One hundred and fifty-nine railroad bills and resolutions have been introduced in the fortieth congress, and twice as many more are in preparation in the lobby; one hundred millions of acres of the public lands, and two hundred millions of United States bonds would not supply the demands of these cormorants. In other words, this stupendous budget of railway jobs would require sops and subsidies in lands and bonds, which, reduced to a money valuation, would swell up to the magnificent figure of half of the national debt!" He continues: "Among the jobs of this schedule is the Atchison & Pike's Peak railroad company, or Union Pacific Central branch, which, after having received government sops to the extent of six millions, puts in for seven millions more. Next comes the Denver Pacific and Telegraph company, which, having feathered its nest to the tune of thirty-two millions, puts in for a little more, and this company is reported to be a mere gang of speculators without any known legal organization whatever—a set of mythical John Does and Richard Roes, who cannot be found when called for. Next, we have the Leavenworth, Pawnee, & Western railroad, now known as the Union Pacific, eastern division, chartered by the Kansas territorial legislature in 1855, subsidized with Delaware Indian Reserve lands in 1861, and then in 1862, by a rider on the Pacific railroad law, granted sixteen thousand dollars per mile in United States bonds and every alternate section of land within a certain limit on each side of the line of the road, and the privilege of a first mortgage (by subsequent amendment) to secure bonds issued by the company to the amount of sixteen thousand dollars per mile. It further appears that a clique of seceders from the old company illegally formed a new company, and having by force of arms taken possession of the road, are pocketing the spoils which legally belong to the old company. All this, too, with the consent of the president, the secretary of the treasury, and congress. From another source we learn that some half dozen Pacific branch or main stem railroads, northern and southern, are on the anvil, involving lands and bonds by tens and twenties and hundreds of millions; that Senator Pomeroy of Kansas, has seven of these jobs on the docket; Senator Ramsey of Minnesota, four; Senator Conners of California, five; and Senator Harlan of Iowa, four. Senator Pomeroy, however, distances all competitors in the number and extent of his jobs, for as it appears, they include a line from Kansas to Mexico, three bills for roads from Fort Scott to Santa Fe, in Texas, a South Carolina road through the Sea Island cotton section, two or three lines from the Mississippi river through to Texas, and a little private Atchison Pacific—one of the nicest and fattest speculations ever worked through. Is not this a magnificent budget, and is not the audacity of these railroad jobs and jobbers positively sublime?"

We do not vouch for the entire accuracy of the statements above quoted, but we know that much contained in them is absolutely true. If the congressional committee now investigating the alleged Credit Mobilier frauds, perform their duty honestly and faithfully, we will probably learn that the John Does and Richard Roes referred to, were Ames, Alley, and other distinguished persons in congress and out of it. An expose by this committee of the sum total voted to this eastern division of the Union Pacific, and the actual cost of the road and telegraph lines, would show a large margin for division, a goodly portion of which found its way into the pockets of members of congress. Can it be claimed that the needs of government required these large subsidies of lands and money? Had the people requested congress to make these grants? Has the development of this country returned to the people a tithe of the wealth thus recklessly given away by congress? The people are now groaning under the burdens imposed upon them by reckless or dishonest legislation at Washington. We might well stop and inquire, from what source the power for this kind of legislation is derived. Mr. Washburn of Illinois, now United States minister at Paris, in a speech in congress, in the winter of 1868, seems to have comprehended the situation, and in opposition to the system of plundering the public treasury spoke as follows:

"With the unreconstructed states admitted into the Union, with full and equal protection for all men, in all of the states, and with manhood suffrage secured by legislation or constitutional amendments, the minds of the people will turn to questions of finance, of taxes, of economy, of decreased expenditures, and honest and enlightened legislation—to questions of tariff, and to questions of railroads, telegraphs, and express monopolies which are sucking the very life-blood of the people—to the administration of the revenue laws and to the robberies and plunderings of the treasury by dishonest office holders. Already the eyes of the people of this country are upon congress. I may say they are upon the republican majority in congress, for that majority is now responsible before the country for the legislation of congress. It can make and unmake laws in defiance of executive vetoes. The republican party triumphed because it was pledged to honesty and economy, to the upholding of public faith and credit, and to the faithful execution of the laws. * * * The condition of the country, the vast public debt, the weight of taxation, the depreciated and fluctuating currency, the enormous expenditure of public money, mal-administration of the government, the extortion of monopolies press upon our attention with most crushing force. The people elected General Grant to the presidency, not only on account of the great and inestimable services he had rendered the country, in subduing the rebellion, not only on account of his devotion to the great principles of the republican party, but because they believed him to be emphatically an honest man, and an enlightened statesman who would faithfully administer the laws without fear, favor, or affection. The time has come when we are imperatively called upon to take a new departure. Added to the other terrible evils brought upon the country by the war for the suppression of the great rebellion, in the demoralization incident to all great wars, and to the expenditure of vast and unheard of amounts of public money; to the giving out of immense contracts, by which sudden and vast fortunes were made; the inflation of the currency, which engendered speculation, profligacy, extravagance, and corruption, by the intense desire to get suddenly rich out of the government and without labor, and the inventions and schemes generally to get money out of the treasury for the benefit of individuals without regard to the interest of the government. While the restless and unpausing energies of a patriotic and incorruptible people were devoted to the salvation of their government, and were pouring out their blood and treasure in its defence, there was a vast army of the base, the venal, and unpatriotic who rushed to take advantage of the misfortune of their country, and to plunder its treasury. The statute books are loaded with legislation which will impose burdens on future generations. Public land enough to make empires has been voted to private railroad corporations; subsidies of untold millions of bonds, for the same purposes, have become a charge upon the people, while the fetters of vast monopolies have been fastened closer and still closer upon the public. It is time that the representatives of the people were admonished that they are the servants of the people, and are paid by the people; that their constituents have confided to them the great trust of guarding their rights and protecting their interests; that their position and their power is to be used for the benefit of the people whom they represent, and not for their own benefit, and the benefit of the lobbyists, the gamblers, and the speculators who have come to Washington to make a raid upon the treasury."

The above shows the light in which Mr. Washburn, four years ago, viewed the matters of which we are now treating. Since the delivery of that speech act after act has been passed by congress in favor of these corporations, giving them greater privileges, releasing them from their obligations to government, discharging their liability to government for many millions of money, and to accomplish this, imposing upon the people additional burdens and taxes for which no equivalent has been or even will be given. The determination to plunder the government and people, seems to control not only the adventurers who go to Washington to lobby their schemes through congress, but also congressmen themselves, who become chiefs among this class of money and land grabbers. They vote to the corporations, of which they are a part, large sums in money and lands, and then use the means thus obtained for the purpose of bribing and corrupting their fellow members in favor of other and larger robberies.

CHAPTER VI.

HOW THE LAND GRANT RAILROADS "DEVELOPE" A COUNTRY.

The ostensible object in granting lands to railroad companies was to aid new and undeveloped portions of the country in procuring necessary railroad facilities for communication with the rest of the world; and to assist, by donations of alternate sections, in their development and settlement.

Whether these ends have been achieved is a matter of doubt. It is scarcely to be hoped that the people will ever be reimbursed for the vast extent of lands, and large amount of bonds, which have been so recklessly lavished upon so many railroad companies. When the proposition to grant lands to railroad companies was brought before congress, the right to donate them to private corporations was not admitted; the right of the states to have control of the lands was not questioned. Recognizing this latter right, the lands were granted to the states for the purpose of aiding in the construction of certain roads within their borders. It was not until 1862 that congress came to the front, created private railroad corporations, and endowed them with lands and money. Nor did these corporations commence their wholesale raid upon the public treasury until after congress went into the business of creating railroad companies. Is it true that the country has been benefited in proportion to the grants made? Are the people richer because of these grants? Has the country, as a general rule, been more rapidly settled and improved by this railroad legislation? We are aware that the idea is commonly entertained that the people receive an equivalent for these railroad grants in the increased facilities for travel and transportation of freights. Were it true that the roads receiving grants of land were more speedily constructed, or that transportation over them was less expensive, then we would admit that the benefits derived would in some degree be an equivalent for the aid afforded them. To ascertain the facts let us see how this legislation has affected the west, taking Iowa and Kansas as illustrations.

In the first place, for every acre of land given to railroads in these states the people have paid $1.25; inasmuch as they are charged $2.50 for the reserved alternate sections. Taking the land granted in Iowa, the amount charged to the people of this state is $9,009,841, or, taking the grants already certified to, the people are charged with $4,387,303. This sum, amounting to about $4.00 per head, has been taken from the people of Iowa and given to railroad companies, and must be charged against the benefits received. The construction of about eleven hundred miles of railroad in Iowa was aided by land grants. The cost, at $30,000 per mile, would be less than $33,000,000. The amount the people are obliged to pay into the public treasury for the reserved sections, in making up the account should be charged to the land grant roads, as also the increased price they are compelled to pay the companies for the donated lands, which range from $5.00 to $50.00 per acre; and this, too, of lands that under the general laws they could have entered at $1.25 per acre.

The amount taken from the people who settle in and improve the state and develop its resources, which they must pay to the government and these railroad companies before getting title to their lands, is about $25,000,000 more than would have been demanded of them but for these land grants. What have they received in return? The companies in Iowa receiving grants of land have not extended their lines across the state more rapidly than companies receiving no grants. In fact, roads built entirely with private means have been constructed more rapidly than these land grant roads. The companies receiving the grants did not keep pace with the settlement of the country; the people, as pioneers, were always in advance of the roads. It was only when the population of the country was sufficient to afford a paying business that the roads were extended. The excuse paraded by congress for making these grants was that the companies would advance their roads so as to draw after them an agricultural population. This has not been done. On the contrary, the lands outside of the boundaries of the railroad grants were the first settled, and the most rapidly developed. Has the result been different in Kansas? The number of miles of railroad in this state in 1870 was about seventeen hundred, of which nearly one thousand received grants of land, and the Kansas Pacific company $6,303,000 in subsidy bonds. Companies constructing these roads received land grants to the amount of 5,420,000 acres. At $1.25 per acre the grants amount to $6,775,000. This sum is charged upon the reserved sections as in Iowa, and must be paid by the people of Kansas. Add to this the $6,303,000 subsidy bonds, and the Kansas railroads have cost the people of that state and the public treasury $13,000,000, outside of the immense local aid voted to them by the different cities, towns and counties. The population of this state in 1860 was 107,206. In 1870 it was 362,872. Saying nothing about the increased prices to be paid to the railroad companies for the lands granted to them, or the large amount of subsidy bonds, and leaving out the immense amounts of local aid afforded to the different railroads, and the sum to be charged to the railroads for the extra price of the reserved sections is about $20.00 per head for the entire population. Looking at the facts as they are developed we conclude that the people have not been benefited by these grants of lands, that railroad companies are the only parties benefited, that the people are not richer because of these grants, but, on the contrary, they would have made money by giving to the railroad companies the actual cost of the roads.

Has the country been more rapidly settled and improved by reason of this special legislation? The leading idea advanced in favor of grants to railroad companies has been their necessity in developing the new states and territories. We are pointed to the new states of Iowa, Minnesota, Nebraska, Kansas, and Nevada, and the territories of Colorado, Utah, and Wyoming, and referred to the fact that these states have a population of 2,874,000, and 9,000 miles of railroad; and from this exhibit an argument is deduced in favor of these grants. The theory is that the population has followed the roads. Is this theory correct? In 1850 Iowa had a population of 676,913, and in 1870 a population of 1,191,729. In 1860 there were 655 miles of railroad, about three-fourths of which had received grants of land. In 1870 the number of miles of railroad had increased to 2,668. Of this increase not more than one-third was aided by land grants, private enterprise having constructed at least two-thirds of it; and the same kind of enterprise is still at work, and since 1870 has increased the number of miles to 3,250. The land grants were nearly all made to Iowa in 1856, yet the energetic and rapid building of roads was not shown until after the close of the war, nor until the people had advanced beyond the roads, and their necessities demanded them. Kansas in 1860 had a population of 107,209; In 1870 it had increased to 364,400. Prior to 1864 it had no railroads. In 1870 it had 1,501 miles, all of which, save forty miles, was built in four years. Nearly all of the Kansas roads were aided by grants, and some of them by subsidy bonds. In 1870 there was one mile of railroad in Kansas for every 242 inhabitants. To construct these roads in Kansas, counties, cities, and towns have taxed themselves by vote to the amount of $4,400,000, or about $9.00 to each inhabitant. This debt must be charged to the railroad account, and a similarly voted indebtedness in Iowa to the amount of about $6,000,000. The valuation of property in Iowa in 1860 was $205,166,000, and in 1870 $302,515,000. Thus while the population of the state had nearly doubled, and the lines of railroad had more than quadrupled, the valuation had increased less than fifty per cent, and at least one-half of this increase was in the value of railroads. Deducting from the increased valuation of property in Kansas the value of railroads there, and about the same state of facts appears. The figures in these two states will show, that so far from the donations of land and money adding to their wealth the reverse is true. And this position is supported by the exhibit of other states. In Pennsylvania the population has increased since 1860, 600,000. The mileage of railroads has nearly doubled in this time, and the valuation of property has increased from $719,253,000 to $1,318,236,000. In that state, where no government aid has been voted to railroads, the wealth of the state has nearly doubled, while in the same time in the state of Iowa it has not increased fifty per cent, land grants included.

The population of Nebraska has increased from 7,000 to 42,000 in the last decade. This state has 593 miles of railroad, or one mile of railroad to each seventy of its population, nearly all aided by grants.

California had a population in 1860 of 380,000. In 1870 it had increased to 560,000.

Colorado in the last decade increased from 34,000 to 40,000. In this territory there are 392 miles of railroad, all built by grants of lands and bonds.

Of course the roads through the territories are the Pacific roads, but as the states and territories were both cited as illustrations of the wisdom of congress in making grants to companies for the construction of railroads, we have examined the matter somewhat in detail to show the weakness of the argument. If we take the census of 1860 and that of 1870, and observe the increase in population, wealth, and railroad building, we will discover that the laws of trade, of supply, and demand have controlled the whole matter, and that the growth of the country has not been increased because of these grants from government. In all cases where the construction of railroads has approached the frontier line of settlement, it has drawn but little population after it, aside from the employes of the road. The real pioneer immigration, that which opens and improves the country, is doing now what it has done for the last generation, moving steadily to the west, followed and surrounded by railroad sharks and jobbers, who, after getting all they can from government, prey upon the people; and the people of the new states, instead of being blessed with the means of adding to their wealth, find themselves burdened with debt and taxes, fastened upon them by the construction of railroads, many of which are of doubtful utility. As a necessary consequence of the railroad taxes upon their lands, and the excessive charges imposed for the transportation of their produce, their farms do not appreciate in value, and the anticipated rapid increase in population and wealth of the locality is not realized. From a view of the whole situation, regarding the benefits accruing to the people from these grants to railroad companies, with what the people have paid for them, the withholding of these railroad lands from market, and the high prices charged per acre by the companies, together with the unjust privileges granted to these corporations, we conclude that the people of the new states and territories have not received an equivalent for the grants made to railroad companies. We are aware that a different opinion prevails, and that our conclusions will be controverted; but when it is remembered that thousands of people have left Iowa, or, coming from the east, have refused to settle in Iowa, because of the fact that lands could only be had by purchase from railroad companies at extravagant prices, and that for this reason vast tracts of Iowa lands are yet unimproved which would now be settled upon and cultivated had they not thus been withdrawn from the market, it must be admitted that Iowa would have had a greater population, and greater wealth, had her railroad companies received no land grants. And what is true of Iowa is also true, as a general rule, of other states and territories. Perhaps an exception exists in the far western territories, whose gold and silver mines are in themselves an exception to the general rule, and where agriculture has but few followers.

The advocates of the railroad land grant and subsidy bond system for the settlement of a country have the following to say in its favor. We quote from the Railroad Manual before referred to: "One of the most remarkable things connected with the progress of this country is the construction of railroads in advance even of the lines of settlement of our people. Such result is largely due to the grants made by government of lands for the encouragement of these works. Never was a policy more wise or more beneficent." No instances can be shown where railroads have been built in advance of the line of settlement, save when the objective point could only be reached by passing over an unsettled country, as in the case of the road from the Atlantic to the Pacific states. In all other cases, railroad companies have awaited the settlement and development of the country, and followed, not led, our pioneer corps. Of the wisdom and beneficence of these grants the people can judge from their acquaintance with the workings of the system, and the wholesale robberies and frauds practiced by the companies, to some of which we have already referred. Again the author says: "The government has been greatly the gainer in a pecuniary point of view, as it was enabled to sell the land reserved at twice the established rate." It is not clearly seen how this gain is made. The people, who are the government, give away one-half of their lands, and then pay into their treasury just money enough for the remaining half to make up the value of the lands they have given away. The only gain the government has made (and this is not a pecuniary one) is the reflection that the men who have received these large grants have become rich, while the people have been deprived of their lands at the original price; they must pay for one-half of them a double price, and for the residue just what they can buy it for from the corporations to whom their servants have donated it. This author says: "That the public has reaped the advantage of the construction of some ten thousand miles of railroads, that otherwise would not have been built." Is this true? In Iowa the land-grant roads were not built as fast as other roads having no grants, and the companies finally completed them because they were about to lose their lands by longer delay. And in other states and territories some of these land grant roads are dragging their slow length along, and are being constructed only as fast as the lines are settled with a sufficient number of inhabitants to make the business of the roads profitable. After showing that in certain states and territories there is now one mile of railroad for each three hundred inhabitants, the author adds: "This is certainly a most wonderful exhibit, and is one no other nation can display, and which in our case has only been secured by the wise, benevolent policy of our government, which in this way did more to give remunerative employment to the poorer classes than any other legislation could adopt." It is certainly a "most wonderful exhibit." It is one that "no other nation can display;" but its wisdom and benevolence are matters of grave doubt. If we add to this "wonderful exhibit" the $65,000,000 stolen from the people by corrupt men and interested legislation, with the $3,126,000 annual interest that the whole people are taxed to pay, because the Pacific railroad companies and the congressional Credit Mobilier have wrongfully appropriated this vast sum to their own use, it presents truly "a most wonderful exhibit," without a parallel in any country in the world, but its wisdom and benevolence are certainly wanting.

CHAPTER VII.

THE CREDIT MOBILIER, AND A VILLAINOUS CONTRACT.

We now approach one of the grandest schemes for defrauding a people ever conceived in the breast of the speculator. Before considering the Credit Mobilier, and to show the utter rottenness of the policy of affording congressional aid to railroads, indulge us in a brief re-survey of the subsidy bonds issued to the Pacific railroad corporations. We may concede that at the date of the original charter of these companies, there were no congressman interested in the grand scheme, and that it was planned by outside combinations. The charter received various amendments, with additional aids and privileges after members of congress had became interested; these amendments were made while directors of, and contractors for, these Pacific roads were occupying seats in congress. Whether or not they voted for these amendments does not appear, but it is certain they did not oppose them. As we have already shown, the aid voted by congress was ample to build and equip these roads, taking the statements of the Railroad Manual upon the character of the country through which they pass, and the average cost of railroads, as the basis for our conclusion. The companies could have built the roads without using the capital stock they reported as paid up. The Union Pacific has made no public exhibit of the cost of its portion of the roads, and from this fact we are at liberty to infer that an honest exhibit would present a bad look. Facts enough have been disclosed to prove that the stockholders and directors of the Union Pacific company had formed a combination for the purpose of defrauding the government and the people. The letting of the contract for the construction of its division of the roads presents one of the most perfect combinations for private speculation at the expense of the public that was ever planned or executed. When this division was completed, according to the statements of the company it was indebted in the sum of $112,911,512. The cost of the whole line of road, at the highest price per mile given, to-wit, $50,000, would amount to less than one-half of the reported indebtedness of the company, including the paid-up capital reported as $37,000,000. To show what was done with the subsidy bonds issued to this company, we must look at the contract made by the directors with Oakes Ames for the construction of six hundred and sixty-seven miles of the road, and the subsequent transfer of this contract to the Credit Mobilier of America. Let us remember that, in addition to the bonds issued by government to the amount of $16,000 per mile for a part of the road, $32,000 per mile for a part, and $48,000 per mile for a part, congress, by a subsequent amendment to the charter, allowed the company to issue its own bonds, for a like amount per mile, as first mortgage bonds, and that at the time of making the contract now under consideration, the directors of the company, and of the Credit Mobilier were the same persons, some of whom were at that time and since members of congress. With these facts before us, we can see the reason for the excess of the debts over the cost of the road, as well as for many of the peculiar features of this singular contract. The executive committee of the company was composed of the following named persons: Oliver Ames (brother of Oakes Ames, contractor and member of congress), C. S. Bushnell, Springer Harbaugh, and Thomas C. Durant. The seven directors of the company who were made trustees, and who signed the transfer of the contract to the Credit Mobilier, were Thomas C. Durant, Oliver Ames, John B. Alley (a member of congress), Sidney Dillon, C. S. Bushnell, H. S. McComb, and Benjamin E. Bates; and the president of the Credit Mobilier was Sidney Dillon.

The grant of lands and bonds was made to the railroad company, as well as the right to issue their first mortgage bonds. All of the contracting parties were directors in the railroad company, and in the Credit Mobilier. As a body they controlled the whole matter. If a desire to protect the best interests of the company, and to deal honestly with the public had actuated these men, and not a determination to plunder the public, no reason can be shown for this strange contract; but if it was the intent of a combination of men to defraud the public and the government, then the contract and its assignments can easily be accounted for. All of the stockholders of the company, at the time the contract was made with Oakes Ames, by indorsement on the back of their certificates of stock, appointed the above named seven trustees, irrevocably to represent their stock at all business meetings and elections of directors, during the existence of the Ames contract. The following is a correct copy of the contract and assignments:

THE "OAKES AMES CONTRACT."—ITS ASSIGNMENTS TO THE CREDIT MOBILIER.

Agreement made this 16th day of August, 1867, between the Union Pacific railroad company, party of the first part, and Oakes Ames, party of the second part, witnesseth:

That the party of the first part agrees to let and contract, and the party of the second part agrees to contract, as follows, to-wit:

First. The party of the second part agrees and binds himself, his heirs, executors, administrators, and assigns to build and equip the following named portions of the railroad and telegraph line of the party of the first part, commencing at the one-hundredth meridian of longitude, upon the following terms and conditions, to-wit:

1. One hundred miles at and for the rate of $42,000 per mile.

2. One hundred and sixty-seven miles at and for the rate of $45,000 per mile.

3. One hundred miles at and for the rate of $96,000 per mile.

4. One hundred miles at and for the rate of $80,000 per mile.

5. One hundred miles at and for the rate of $90,000 per mile.

6. One hundred miles at and for the rate of $96,000 per mile.

Second. At least three hundred and fifty miles shall be, if possible, completed and ready for acceptance before the first day of January, 1868, provided the Union Pacific railroad company transport the material. The whole to be constructed in a good and workmanlike manner, upon the same general plan and specifications as adopted east of the one-hundredth meridian of longitude. The party of the second part shall erect all such necessary depots, machine shops, machinery, tanks, turn tables, and provide all necessary machinery and rolling stock at a cost of not less than $7,500 per mile, in cash, and shall construct all such necessary side tracks as may be required by the party of the first party, not exceeding six per cent of the length of the road constructed, and to be constructed under this contract. The kind of timber used for ties and in the bridges and in its preparation, shall be such as from time to time may be ordered or prescribed by the general agent, or the company, under the rules and regulations and standard as recommended by the secretary of the interior, of the date of February—, 1866.

Third. Whenever one of the above named sections of the road shall be finished, to the satisfaction and the acceptance of the government commissioners, the same shall be delivered into the possession of the party of the first part, and upon such portions of the road, as well as on that part east of the one-hundredth meridian now completed, the party of the first part shall transport, without delay, all men and material to be used in construction at a price to be agreed upon by the party of the second part, his heirs, executors, administrators or assigns, and the general agent, but not less than cost to the party of the first part.

Fourth. The party of the second part, his heirs, executors, administrators or assigns, shall have the right to enter upon all lands belonging to the company, or upon which the company may have any rights, and take therefrom any material used in the construction of the road, and may have the right to change the grade and curvature within the limits of the provisions of the act of congress for the temporary purpose of hastening the completion of the road; but the estimated cost of reducing the same to grade and curvatures, as established by the chief engineer, or as approved from time to time by the company, shall be deducted and retained by the party of the first part, until such grade and curvature is so reduced.

Fifth. The party of the second part, his heirs, executors, administrators, or assigns, is to receive from the company and enjoy the benefits of all existing contracts, and shall assure all such contracts and all liabilities of the company accrued or arising therefrom for work done or to be done, and material furnished or to be furnished, for or on account of the road west of the one-hundredth meridian, crediting, however, the party of the first part on this contract all moneys heretofore paid or expended on account thereof.

Sixth. The party of the second part, for himself, his heirs, executors, administrators, and assigns, stipulates and agrees that the work shall be prosecuted and completed with energy and all possible speed, so as to complete the same at the earliest practicable day, it being understood that the speed of construction and time of completion is the essence of this contract, and at the same time the road to be a first-class road, with equipments; and if the same, in the opinion of the chief engineer, is not so prosecuted, both as regards quality and dispatch, that then the said party of the first part shall and may, through its general agent or other officer detailed for that purpose, take charge of said work and carry the same on at proper cost and expense of the party of the second part.

Seventh. The grading, bridging, and superstructure to be completed under the supervision of the general agent of the company, to the satisfaction of the chief engineer, and to be of the same character as to the workmanship and materials as in the construction of the road east of the one-hundredth meridian.

It is, however, understood that all iron hereafter purchased or contracted for, shall be of the weight of not less than fifty-six pounds to the yard, and to be fish bar joints.

Eighth. All the expenses of the engineering are to be charged and paid by the party of the second part, except the pay and salary of the chief engineer and consulting engineer, and their immediate assistants, and the expenses of the general survey of the route.

Ninth. The depot buildings, machine shops, water tanks, and also bridges shall be of the most approved pattern, and they, as well as the kind of masonry and other material used, shall be previously approved by the general agent and chief engineer of the company, and all tunnels shall be arched with brick or stone, when necessary for the protection of the same.

Tenth. Payments to be made as the work progresses, upon the estimates of the chief engineer, in making which the engineer shall deduct from each section its proportion of the cost of equipment not then furnished, station buildings, superstructure, and cost of telegraph, but all materials delivered or in transit for the account of the company may be estimated for.

Eleventh. Payments hereon shall be made to the party of the second part, his heirs, executors, administrators, or assigns, in cash; but if the government bonds received by the company cannot be converted into money at their par value net, and the first mortgage bonds of the company at ninety cents on the dollar net, then the said party of the second part, his heirs, executors, administrators, and assigns shall be charged thereon the difference between the amount realized and the above-named rates; provided the first mortgage bonds are not sold for less than eighty cents on the dollar, and if there shall not be realized from the sale of such bonds an amount sufficient to pay the party of the second part, his heirs, executors, administrators, or assigns, for work, as stipulated in this contract, and according to the terms thereof, then such deficiency shall from time to time be subscribed by said party of the second part, his heirs, executors, administrators, or assigns, to the capital stock of said company, and proceeds of such subscriptions shall be paid to said party of the second part, his heirs, executors, administrators, or assigns, on this contract.

Twelfth. On the first one hundred miles on this contract, there shall be added to the equipment now provided for and intended to apply on this section as follows, viz: Six locomotives, fifty box cars, four passenger cars, two baggage cars, and a proportionate amount of equipment of like character be supplied to the second section of one hundred miles, after the same is completed.

Thirteenth. The amount provided to be expended for equipment, station buildings, &c., shall be expended under the direction of the party of the first part, and in such proportion for cars, locomotives, machine shops, station buildings, &c., and at such points as they may determine; the party of the first part to have the full benefit of such expenditures without profit to the contractor, or they may, in their option, purchase the equipment and expend any portion of said amount provided at any point on the road where they may deem the same most advantageous to the company, whether on the section on which said reservation occurs or not.

Fourteenth. The telegraph line is included herein under the term "railroad," and is to be constructed in the same manner and with similar materials as in the line east of the one-hundredth meridian.

The said parties hereto, in consideration of the premises and of their covenants herein, do mutually agree, severally, to perform and fulfil their several and respective agreements above written.

This contract having been submitted to the executive committee by resolution of the board of directors, August 16, 1867, and we having examined the details of the same, recommend its execution by the proper officers of the company with the Hon. Oakes Ames, the party named as the second part.

Oliver Ames,
C. S. Bushnell,
Springer Harbaugh,
Thomas C. Durant.
Executive Committee Union Pacific
Railroad Company.

Resolved, the foregoing contract between the Union Pacific railroad company and Oakes Ames, referred to the executive committee by a resolution of the board, August 16, 1867, to settle the details, be approved, and that the proper officers of the company be instructed to execute the same, subject, however, to the written approval of the stockholders of the company, as understood by the board of directors when the same was voted upon.

Resolved, that the option to extend this contract to Salt Lake be referred to the board, with recommendation that said option be accepted.

ASSIGNMENT OF CONTRACT TO SEVEN TRUSTEES.

Memorandum of agreement, in triplicate, made this 15th day of October, 1867, between Oakes Ames of North Easton, Massachusetts, party of the first part, Thomas C. Durant, of the city of New York; Oliver Ames, of North Easton, Massachusetts; John B. Alley, of Lynn, Massachusetts; Sidney Dillon, of the city of New York; Cornelius S. Bushnell, of New Haven, Connecticut; Henry S. McComb, of Wilmington, Delaware, and Benjamin E. Bates, of Boston, Massachusetts, parties of the second part, and the Credit Mobilier of America, party of the third part.

That whereas, the party of the first part has undertaken a certain large contract for the construction of certain portion therein named of the railroad and telegraph line of the Union Pacific railroad company over the plains and through and over the Rocky mountains, which will require a very large and hazardous outlay of capital, which capital he is desirous to be assured of raising, at such times, and in such sums as will enable him to complete and perform the said contract according to its terms and conditions.

And whereas, the Credit Mobilier of America, the party of the third part, a corporation duly established by law, is empowered by charter to advance and loan money in aid of such enterprises, and can control large amounts of capital for such purposes, and is willing to loan to said party of the first part such sums as may be found necessary to complete said contract, provided sufficient assurance may be made to said party of the third part therein, that said sums shall be duly expended in the work of completing said railroad and telegraph line, and that the payments for the faithful performance of said contract by said railroad company shall be held and applied to reimburse said party of the third part for their loans and advances, together with a reasonable interest for the use of the money so loaned and advanced.

And whereas, said party of the third part fully believes that said contract, if honestly and faithfully executed, will be both profitable and advantageous to the parties performing the same, and therefore willing to guarantee the performance and execution of the same for a reasonable commission to be paid therefor.

And whereas, both parties of the first and third parts have confidence and reliance in the integrity, business capacity, and ability of the several persons named as parties of the second part hereto, and confidently believe that said persons have large interests as well in the Union Pacific railroad company as in the Credit Mobiler of America, they will execute and perform the said contract, and faithfully hold the proceeds thereof to the just use and benefit of the parties entitled thereto.

Therefore, it is agreed by and between the said parties of the first, second, and third parts hereto as follows; that is to say:

That said Oakes Ames, party of the first part hereto, hereby, for and in consideration of $1.00 lawful money of the United States, to him duly paid by the party of the second part, and for divers other good and valuable considerations herein, thereunto moving, doth hereby assign, set over, and transfer unto the said Thomas C. Durant, Oliver Ames, John B. Alley, Sidney Dillon, Cornelius S. Bushnell, Henry S. McComb, and Benjamin E. Bates, parties of the second part, all the right, title, and interest of, in, and to, the said certain contract heretofore made and executed by and between the Union Pacific railroad company and the said Oakes Ames, bearing date the 16th day of August, 1867, for the construction of portions of the railroad and telegraph line of said railroad company, to which contract reference is herein made for them, the said parties of the second part, to have, and to hold the same to them and their survivors and successors forever in trust.

Nevertheless, upon the following trusts and conditions and limitations, to-wit:—

1. That they, the said parties of the second part, shall perform all the terms and conditions of said contract so assigned in all respects which in and by the terms and conditions thereof is undertaken and assumed and agreed to be done and performed by the said party of the first part herein named.

2. That they, the said parties of the second part, shall hold all the avails and proceeds of the said contract, and therefrom shall reimburse themselves and the party of the third part hereto, all moneys advanced and expended by them, or either of them, in executing or performing the said contract, with interest and commission thereon as hereinafter provided.

3. Out of the said avails and proceeds to pay unto the parties of the second part a reasonable sum as compensation for their service, as such trustees, for executing and performing the terms and conditions of this agreement, which compensation shall not exceed $3,000 per annum to each and every one of the parties of the second part.

4. To hold all the rest and residue of the said proceeds and avails for the use and benefit of such of the several persons holding and owning shares in the capital stock of the Credit Mobilier of America on the day of the date hereof, in proportion to the number of shares which said stockholders now severally hold and own, and for the use and benefit of such of the assignees and holders of such shares of stock at the times herein set forth, for the distribution of said residue and remainder of said avails and proceeds, who shall comply with the provisions, conditions, and limitations herein contained, which are on their part to be complied with.

5. To pay over on or before the first Wednesday of June and September each year, or within thirty days thereafter, his just share and proportion of the residue and remainder of the said proceeds and avails as shall be justly estimated by the said trustees to have been made and earned as net profit on said contract, during the preceding six months, to each shareholder only in said Credit Mobilier of America, who being a stockholder in the Union Pacific railroad shall have made and executed his power of attorney or proxy, irrevocable, to said several parties of the second part, their survivors and successors, empowering them, the said parties of the second part, to vote upon at least six-tenths of all the stock owned by said shareholders of the Credit Mobilier of America, in the capital stock of the Union Pacific railroad company, on the day of the date hereof, and six-tenths of any stock in said Union Pacific railroad company he may have received a dividend, or otherwise, because or by virtue of having been a stockholder in said Credit Mobilier of America, or which may appertain to any shares in said Union Pacific railroad company, which had been so assigned to him at the time or times of the distribution of the said profits as herein provided; and this trust is made and declared upon the express condition and limitation that it shall not enure in any manner or degree to the use or benefit of any stockholder of the Credit Mobilier of America who shall neglect or refuse to execute and deliver unto the said parties of the second part his proxy or power of attorney, in the manner and for the purpose hereinbefore provided, or who shall in any way, or by any proceeding, knowingly hinder, delay, or interfere with any execution or performance of the trust and conditions herein declared and set forth.

And the above transfer and conveyance of said contract is made upon these further trusts and conditions, to-wit:—

1. The said parties of the second part, their survivors and successors, trustees as aforesaid, in all their acts and doings in the execution and performance of said contract, and in the execution of their several trusts and conditions herein set forth, shall act by the concurrent assent of four of their number, expressed in writing, or by yea and nay vote, at a meeting of said trustees, either or both of which shall be recorded in a book of proceedings of said trustees, kept for the purpose by their secretary, and not otherwise.

2. Said parties of the second part shall keep an office in the city of New York for the transaction of the business incidental to said trust. Meetings of said trustees may be held on call of the secretary on request of any two of their number; such call may be made personally or by mail.

3. The said trustees shall appoint a competent person as secretary, who shall keep a faithful record of all their acts, proceedings, and contracts, in books to be provided for that purpose, and shall cause to be kept suitable books of accounts and vouchers of all their business transactions, which books shall at all times be open to the inspection of any of said trustees.

4. The said trustees shall cause a monthly statement to be made, showing the amount due from the Union Pacific railroad company on account of work done or equipment or material furnished under the contract, according to the estimates of the engineer of the Union Pacific railroad company, as provided in said contract, a copy of which statement shall be furnished to the Credit Mobilier of America.

And the above transfer and conveyance of said contract is made upon the further trust and condition:—

1. That in case of death, declination, disability, by reason of sickness or absence from the country for the space of six months, or neglect to fulfil the duties and obligations of said trust for the same time by either of said trustees, the remaining or surviving trustees may declare the place of said trustee to be vacant, and to fill such vacancy by vote in manner aforesaid.

2. That in case any one of said trustees shall wilfully neglect or evade the performance of his duties as such trustee, or shall wilfully attempt to hinder, delay, obstruct, or interfere with the execution or performance of said contract, or the due execution or performance of said trust and conditions, according to the true intent thereof, or shall appropriate to his own use or benefit any money or other valuable thing belonging or appertaining to said trust, fund, or property, he shall not be entitled further to act as such trustee, or to receive any of the benefits of said trusts, either as shareholder in said Credit Mobilier of America, or otherwise.

The parties of the second part do hereby accept the said trust, and agree faithfully to execute and perform the same according to the terms, conditions, and limitations herein set forth.

The party of the third part, in consideration of the premises, hereby agree to advance, as upon a loan, to the said parties of the second part, their survivors and successors, all such sums of money, and at such times as maybe necessary, to enable said trustees, economically and promptly, to execute and perform the conditions of said contract, upon the call of said parties of the second part, their survivors and successors, such sums never to exceed in the whole the amount provided for in said contract, to be paid by the Union Pacific railroad company, for the execution and performance thereof, and to receive therefor interest at the rate of seven per cent per annum, payable semi-annually, on each sum so advanced, until the same are repaid.

And said party of the third part do further agree, for the consideration aforesaid, and for an amount equal to two and one-half per cent on the amount to be by them advanced, to be paid to them as commission, to, and do hereby guarantee unto, the parties of the first part and second part, the due performance and execution of the said contract, according to its terms and conditions, and do indemnify and hold harmless the said parties of the first and second part of and from all cost, liability, loss or damage to them, or either of them, arising from or on account of said contract, and to the faithful performance of the agreement, contracts, and conditions herein above specified to be done and performed by each.

And this conveyance and transfer is made upon the further trust and condition.

That the trustees shall adjust and pay over to the Credit Mobilier of America such portion of the net profits of the work done and material furnished on the first one hundred miles west of the one-hundredth meridian, as was done and performed prior to January 1, 1867.

In witness whereof, the party of the first part, the several parties of the second part, in their own proper persons, have hereunto set their hands and seals, and the party of the third part has caused these presents to be executed by its president, attested by its secretary with the seal of the said company, on the day and year above written.

Oakes Ames,
Thomas C. Durant,
Oliver Ames,
John B. Alley,
Sidney Dillon,
Cornelius S. Bushnell,
H. S. McComb,
Benjamin E. Bates.

Signed, sealed, and delivered in presence of Clark Bell.

The Credit Mobilier of America, by its president,

Sidney Dillon.

Attest: Benjamin F. Ham,
Assistant Secretary.

The first noticeable feature of this instrument is that the directors of the company contract with one of their own body to build six hundred and sixty-seven miles of its road.

Second, that they agree to pay to one of their own body nearly double the actual cost of the work. Aside from these facts, nothing striking appears in the contract. It is dated August 16, 1867. It was approved by the directors, and on the 15th of October following, only two months after its execution, it was assigned to the seven trustees for the consideration of one dollar and diverse other good and valuable considerations. These trustees agree to perform Oakes Ames' contract, but upon consideration that they shall hold all the avails and proceeds of the contract, reimburse themselves and the Credit Mobilier for all money expended on said contract, with interest and commission, and reserve to each of themselves $3,000 per year for services. The trustees are to hold all of the residue for the several persons possessing and owning stock in the Credit Mobilier, or to their assigns, but upon condition that all stockholders in the Pacific railroad company, who own stock in the Credit Mobilier, shall give an irrevocable proxy for their railroad stock to the trustees named in the agreement. The Credit Mobilier is to advance at seven per cent the money necessary for the prosecution of the work, and for a commission of two and one-half per cent, agrees to save harmless the parties of the first and second part from all loss or damages to them, or either of them, arising from, or on account of, said contract. The contracting parties are all stockholders and directors in the railroad company, and in the Credit Mobilier (whatever that may be) they are trustees for themselves. They loan to themselves the money they receive as a grant from government (voted to the railroad corporation while a part of their own members were members of congress); they pay themselves seven per cent interest for loaning to themselves their own money; also, two and one-half per cent commission for furnishing this money, donated by government, to themselves, besides $3,000 per year, each to themselves for their services in this most extraordinary transaction. In order to have funds with which to compensate themselves, they issue the first mortgage bonds on the road of the Union Pacific company to the amount of many millions, and then ask congress to relieve them from interest on the bonds received from government; and congress, composed in part of the persons signing the above quoted contract and assignment, relieves the company from $3,125,000 per year, for thirty years, and taxes the people with this vast sum, because the government requires "a more safe and speedy transmission of the mails, troops, &c., across the territories to the Pacific coast." We have nothing to do with the financial operations of this company, only as far as the people are affected by them. Bearing in mind that the eight persons concerned in and signing this contract and assignment, were all directors of the Union Pacific railroad company; that four of them were the executive committee; that one of them was the contractor, and all of them stockholders in the Credit Mobilier, probably at that time constituting that entire corporation; and that seven of them were trustees for some persons, company, or corporation, or what appears still more probable, for themselves, and Oakes Ames, the contractor, and we can account for the wholesale robbery of the people, perpetrated by these eight men with the aid of congress, as above shown.

But how the five non-stockholding directors, appointed by the president, who are presumed to act for the government and its interest, could have been ignorant of the whole matter, is not so easily understood. The act of congress of July 2, 1864, section 13, provides:

"That at least one of said government directors shall be placed on each of the standing committees of said company, and at least one on every special committee that may be appointed. The government directors shall from time to time report to the secretary of the interior, in answer to inquiries he may make of them touching the condition, management, and progress of the work, and shall communicate to the secretary of the interior, at the same time, such information as should be in the possession of the department. They shall, as often as may be necessary for a full knowledge of the condition and management of the line, visit all portions of the line of road, whether built or surveyed, and while absent from home, attending to their duties as directors, shall be paid their actual traveling expenses, and be allowed and paid such reasonable compensation for their time actually employed as the board of directors may decide."

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:

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.

We are aware that congress has assumed the negative of these propositions, and has granted charters to some of the most gigantic corporations of the country, under which charters they have organized and are doing business in states which, according to our interpretation of the constitution, as above stated, should have the absolute control of such companies. We shall attempt to demonstrate that the acts of congress granting charters to railroad and other private corporations are usurpations of power, in conflict with the provisions of the constitution, destructive of the rights of the people and of republican government.

What are the powers delegated to the general government by the constitution in questions of this character? Article I. Section 8, contains, among others, the following, as some of the powers conferred upon congress: "To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;" "To establish post offices and post roads;" "To make all laws which shall be necessary and proper for carrying into execution the foregoing powers and all other powers vested by this constitution in the government of the United States, or in any department or office thereof." The same section gives congress power to provide for organizing the army, &c.; and, in time of war, extraordinary powers, controlled only by the necessities of the case, are vested in congress. If congress have power under the constitution to charter private corporations, it must be derived from, or contained in, the provisions above quoted. Article IX. of the constitution reads as follows: "The enumeration in the constitution of certain rights shall not be construed to deny or disparage others retained by the people." And Section 10 reads as follows: "The powers not delegated to the United States by the constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people." And the framers of the constitution it would seem, for the purpose of making the line of demarcation between the powers of the states and the general government still more plain and definite, provided as follows: Article IV., Section 2: "The citizens of each state shall be entitled to all privileges and immunities of citizens in the several states."

We think that the above quotations from the constitution (and we have quoted all having any relation to the question we are discussing) prove conclusively that the powers conferred upon congress by the constitution are limited; that while within the scope of the delegated powers its action is supreme, there is inherent in it no general power to legislate upon subjects not named in the constitution, or not included by necessary implication. On the contrary, all the powers not expressly given are reserved to the states or to the people.

Is the authority to charter private corporations necessarily included in the delegated power to regulate commerce among the several states, or to establish post roads? We think not. What do we understand by the word "Commerce?" Webster defines it as follows: "1st. In a general sense, an interchange or mutual change of goods, wares, productions, or property of any kind between nations or individuals, either by barter, or by purchase and sale; trade; traffic. Commerce is foreign, or inland. Foreign commerce is the trade which one nation carries on with another; inland commerce, or inland trade, is the trade in the exchange of commodities between citizens of the same nation or state. 2d. Intercourse between individuals; interchange of work, business, civilities, or amusements; mutual dealings in life." And again: "To traffic; to carry on trade." In the absence of any definition given to it in the constitution, we must accept the above general definition of its meaning as being the sense in which it is used in the constitution.

Respecting trade with foreign nations or the Indian tribes, it can only relate to the interchange of commodities, or purchase or sale of articles of traffic. As incidental to this power, congress can prescribe rules for the regulation of navigation upon the high seas, including police regulations on board of vessels, because the oceans are the common or public highways of all nations, and each nation navigating the same is bound to protect not only its commerce, but its citizens or subjects. Nations hold commerce with nations across and upon the high seas, the citizens and subjects of each being protected by their own government. This commerce with foreign nations is not regulated by grants of private charters, but by acts of congress is open to all alike, save where, for the encouragement of certain branches of trade, certain bounties or privileges have been granted to particular parties for a specified time. But all such grants have been to parties navigating the high seas. The control of navigable streams within the United States does not depend alone upon the powers given to congress to regulate the commerce of the country, but depends also upon the further power vesting in the general government exclusive maritime jurisdiction. If we concede that the power to regulate commerce among the several states gives congress the exclusive right to regulate the commerce carried on upon our rivers, it would not follow that the power to charter railway companies is conferred. Navigable streams are public highways, open to the travel of all. No man, set of men, or corporations, can claim the exclusive right to navigate these rivers, nor could congress grant such exclusive right. The duty of protecting the rights of the citizen, and of making river transportation safe, and of protecting the rights of property, demand that the national, and not the state legislature, should be supreme in this particular jurisdiction, and hence this branch of commerce is placed in the custody of the nation. But keeping in mind the definition of the word, "Commerce," let us see what is meant by the term as applied to dealings between the states. We insist that it has no reference to the construction of roads, railroads, canals, or any other ways upon which commerce might be carried, or over which articles of trade or traffic might pass, but that it refers only to the dealing of the people of one state with another; that while the people of each state are under the supreme control of their state authority, all the privileges enjoyed by the citizens of any one of the states as to residence or traffic with the citizens of another state, are to be the same. No distinction can be made, and for the purpose of carrying out this provision of the constitution, and preventing the levy of tariffs or taxes by one state upon the citizens of another state, and for the purpose of guaranteeing to all citizens of the United States immunity from these unjust discriminations, the power to regulate commerce among the states was delegated to congress. Nor does it follow, that, for the purpose of regulating commerce among the states, congress can grant exclusive privileges and monopolies in any business not confided to one state. When the constitution was adopted, each state was independent; each had all the powers and prerogatives of a nation; each was supreme within its geographical limits; each might prescribe its own rules in relation to immigrants, and to trade and traffic with other states; it might discriminate in favor of its own citizens; it might impose tariffs on foreign imports, and deal with its sister states as with foreign nations. To prevent this, and to secure to all citizens of the United States equal privileges and immunities in all parts of the United States, the provisions of the constitution we have quoted were adopted. While the independence of the states was recognized and preserved, the power to regulate commerce, among them, was delegated to congress; not the power to withdraw from the state its right to legislate upon the subject of commerce among its own citizens, or the right to protect its own citizens in their dealings with the citizens of other states; but simply providing that no discriminations should be made on account of residence, and establishing equal rights and privileges of all citizens of the United States in all the states, free from discriminations sought to be enforced under local or state statutes and regulations. Should any one state attempt to deny to the people of another state the privileges guaranteed by the constitution, then it would be the plain duty of congress to interfere and "regulate commerce" between these states. But while a general national law might constitutionally be enacted upon this subject, it certainly cannot be claimed, that upon the pretext of regulating commerce among the states, congress can charter railroad companies, or any other companies organized for pecuniary profit. Nor can this power be claimed under the constitutional provision for the establishment of post offices and post roads. We admit that the grant of this power carries with it all such as are incidental; that by implication it includes within its terms the carrying and distribution of the mails, and all other matter necessarily connected therewith; and that congress might build, own, and control post roads, so far as the same might be found necessary for the transportation of the mails over the territory belonging to the United States, and to provide for the use of public roads for government purposes. Public highways are free to all. Over these highways, whether on land or water, congress can provide for the transportation of the mails, troops, army stores, munitions of war, and other public property. These highways are at all times open to the public. But while this is true, it does not follow that the government of the United States can take the absolute control of these public highways, and, by act of congress, deny the states a control over those within their borders respectively. The location and establishment of public roads within a state is a part of the local or police regulation, and while these roads are free to the passage of all, they are, by the provisions of the constitution and the universally accepted custom of the country, recognized as being under the exclusive control of the states within which they are situated. The fact that congress never has taken the control of the public roads of the country is a full recognition of the exclusive right of the states to control them. Then how can it be claimed that congress, under the constitution, possesses the power to charter railroad companies? Until within the last few years, no attempt was made to grant charters to railroad companies by the general government, nor indeed were charters granted for any purpose save in relation to the financial departments, as in the case of United States banks, fiscal agencies, &c., which were chartered for the public benefit, and not as private institutions. We are not positive that the constitutionality of these railroad charters has been determined by the courts of the United States, but we are aware of the fact that congress has deemed it necessary, in almost every instance where charters have been granted and aid voted, to declare, and place upon the record as a part of the charter, the reasons for granting it. The following are the reasons assigned in some of the charters, to-wit: In the charter of the Union Pacific railroad company—"For the purpose of aiding in the construction of said railroad and telegraph line, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores thereon."

In the charter of the Northern Pacific railroad company: "For the purpose of aiding in the construction of said railroad and telegraph line to the Pacific coast, and to secure the safe and speedy transportation of the mails, troops, munitions of war, and public stores." In all other cases the above quoted statement of cause is inserted in the charters, as though the right or authority to make these grants was so doubtful that it became necessary in every case to state the reason for the grant. If the present necessities of the government demand such special legislation, then the same reasons existed from the organization of our government; and if congress possesses the power under the constitution to make these grants, and to assume the absolute control of public or private roads through the states, then from the adoption of that constitution congress could have taken the absolute control of all the public roads in all the states of the Union. Before railroads were constructed, all overland transportation of mails, troops, munitions of war, &c., was over the public highways—highways that were and still are under the exclusive control of the states in which they lie. Over these public roads and such private ways as maybe selected, government has a right to transport the mails, troops, and public property, and no state has the right to prohibit or restrict this right. Still, no power is given by the constitution, nor is there any implied, under which congress can, under the plea of rendering more safe and speedy the transportation of mails, troops, &c., grant exclusive charters and privileges to private corporations. In the nature of things, as our government is organized, the right to charter and control all corporations organized for pecuniary profit remains with the states. This power has never been delegated to the general government, nor prohibited to the states, or people. There can be no doubt upon this point, when we remember that the general government is limited to the delegated powers; and that it is supreme only in those matters which are delegated to and vested in it by the constitution. This position is fully sustained by the adjudication of the supreme court of the United States. In Marshall, on the federal constitution, page 164, we find the following: "This government is acknowledged by all to be one of enumerated powers. The principle that it can exercise only the powers granted to it, would seem too apparent to have required to be enforced by all those arguments which its enlightened friends, while it was depending before the people, found it necessary to urge. That principal is now universally admitted." Again, on page 301, the author says: "In our complex system presenting the rare and difficult scheme of one general government whose action extends over the whole, but which possesses only certain enumerated powers and of numerous state governments, which retain and exercise all powers not delegated to the union, contests respecting power must arise. Were it otherwise, the measures taken by the respective governments to execute their acknowledged powers would often be of the same description, and might sometimes interfere. This, however, does not prove that the one is exercising, or has the right to exercise, the power of the other."

As to the power of congress to create corporations, an argument has been drawn in its favor from the provision of the constitution, which declares that congress shall have the power of making "all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this constitution in the government of the United States, or in any department thereof." The question before the court arose out of the attempt of the state of Maryland to tax the United States bank, a corporation chartered by congress. In this case the power was upheld on the ground that the bank was necessary in the administration of the finances of the government, that being one of the matters vested in or delegated to the general government, the power to charter the bank was incidental to the granted power. But on the question of the power of congress to create corporations, Mr. Marshall says, page 167: "The creation of a corporation, it is said, appertains to sovereignty. This is admitted. But to what portion of sovereignty does it appertain? Does it belong to one more than another? In America the powers of sovereignty are divided between the government of the Union, and those of the states. They are each sovereign with respect to the objects committed to it, and neither sovereign with respect to the objects committed to the other. We cannot comprehend that train of reasoning which would maintain that the extent of power granted by the people is to be ascertained, not by the nature and terms of the grant, but by its date. Some state constitutions were formed before, some since that of the United States. We cannot believe that their relation to each other is in any degree dependent upon this circumstance. Their respective powers must, we think, be precisely the same as if they had been formed at the same time. Had they been formed at the same time, and had the people conferred on the general government the power contained in the constitution and on the states the whole residium of power, would it have been asserted that the government of the union was not sovereign with respect to those objects which were entrusted to it, in relation to which its laws were declared to be supreme? If this could have been asserted, we cannot well comprehend the process of reasoning which maintains that a power appertaining to sovereignty cannot be connected with that vast portion of it which is granted to the general government, so far as it is calculated to subserve the legitimate objects of that government. The power of creating a corporation, though appertaining to sovereignty, is not like the power of making war, or levying taxes, or of regulating commerce, a great substantive and independent power which cannot be implied as incidental to other powers, or used as a means of executing them. It is never the end for which other powers are exercised, but the means by which these objects are accomplished. No contributions are made to charity for the sake of an incorporation, but a corporation is created to administer the charity. No seminary of learning is instituted in order to be incorporated, but the corporate character is conferred to subserve the purposes of education. No city was ever built with the sole object of being incorporated, but it is incorporated as the best means of being well governed. The power of creating a corporation is never used for its own sake, but for the purpose of effecting something else. No sufficient reason is therefore perceived why it may not pass as incidental to those powers which are expressly given, if it be the direct mode of executing them."

Taking the above definition of corporations, and their use, in the administration of the government, we can have no difficulty in distinguishing the cases in which congress can grant charters to any company or association. It is only when some of the delegated powers require the aid of corporate acts in their administration, that the right exists in congress to grant charters, as incidental to the grants. The grants of charters to railroad companies cannot be claimed as incidental to any express delegation of power to the general government. If railroads are private property, they cannot be chartered or controlled by congress. If they are to be taken and treated as public highways, then they are as exclusively under and subject to the control of the respective state governments, as common highways. The state legislatures have exclusive control of them in either case. If they are treated as private corporations, then under the rights reserved to the states, as well as by long usage, their exclusive control is retained by the states. If they are public roads, the same local or state laws apply to them as to all other public roads. Admit that congress has the right to grant charters for railroads, then it follows that it can control them. Admit that they are public roads, and that they are to be taken and treated as common highways, and congress at once assumes the local and police regulations of all the public roads in all of the United States.

To this doctrine we cannot subscribe, but insist that the exclusive power to charter and control railroad corporations remains with the people to be exercised by and under the exclusive control of the state governments. Nor can congress, rightfully, under the constitution, charter railroad corporations in the territories. The power vested in congress "to dispose of and make all needful rules respecting the territory or other property belonging to the United States," does not authorize the creation of private monopolies. When territorial governments are formed, they are clothed with many of the attributes of sovereignty. These governments are at liberty to legislate and to provide for the well-being of the people, and subject to the provisions of their "organic law," have the complete control of local and police regulations. They can construct highways, erect public buildings, impose taxes, grant charters, including charters to railroad companies. That territorial governments can charter railroad companies, and that general government has so acknowledged is proven by the acts of congress in donating lands and bonds to companies chartered by territorial legislation. This was done in the case of the Leavenworth, Pawnee, & Western railroad company, chartered by the territorial legislature of Kansas; and other instances are common. The power to grant charters cannot vest in the states, and territorial governments, and at the same time exist in the general government, for the reason that the supreme power must exist in one or the other. If this were not so, one government could destroy what the other had created. The privileges acquired by a corporation under the one could be entirely annulled by the other. Private rights would be subject to the adjudication of two separate and distinct tribunals, created and sustained by distinct governments, the one claiming to be supreme, because the right to exercise the power had been granted to it, and the other denying such grant, and because of this denial claiming the power as still remaining with the state government. This course would be destructive of the rights of the people, as well as of our system of government. Concede to congress the right to charter railroad companies, and there is no limit to the monopolies that can be forced upon the people of the whole country. Land companies, loan, and interest companies, manufacturing companies, and in short all conceivable projects of speculation can obtain charters from congress, and our government becomes entirely personal in character, without restraint or constitutional limit. The assumption by congress of the power to create private corporations is a fatal stab at our system of government, destructive of state rights, and a wanton violation of the constitution.

CHAPTER IX.

STATE RIGHTS AT THE BAR OF A CORRUPT CONGRESS.

None of the subjects of legislation have tended to destroy constitutional safeguards and debase public morals so much as congressional legislation, with its grants of land and bonds, and other special benefits in favor of railroad corporations. This species of legislation has well nigh destroyed republican institutions. While our government is republican in name it is in fact controlled by an oligarchy. The whole government has become a prey to the class of corporations above named, and is administered in their interest. Their influence controls the legislative department, the courts of the country, and its finances. This is a sweeping assertion, but who will deny it. Further, the very men who by their votes in congress have created these monopolies, have themselves in many instances received pecuniary consideration for their votes, either in corporate stock, or direct payment. This last assertion is now (January 9, 1873) being supported by results arrived at by committees appointed to investigate charges of corruption made against members of both branches of congress.

Having assumed the right to grant charters and aid to these corporations in violation of the constitution, it was but one step further in the same direction for congress to enact other unconstitutional laws, regulating and combining railroads receiving their charters from state legislatures, laws which enable these roads to so combine their operations as to control the entire interests of the country. These acts are numerous in the published laws of congress. We will refer to some of them, and direct the reader to the following, of a general nature: On the 15th of June, 1866, congress passed the following unconstitutional act in the interest and for the benefit of railroad corporations: See Second Brightley's Digest, page 528, "That every railroad company in the United States, whose road is operated by steam, its successors and assigns, be and is hereby authorized to carry upon and over its road, boats, bridges, and ferries, all passengers, troops, government supplies, mails, freight, and property, on their way from one state to another state, and to receive compensation therefor, and to connect with roads of other states so as to form continuous lines for the transportation of the same to the place of destination. Provided, that this act shall not affect any stipulations between the government of the United States, and any railroad company for transportation and fares without compensation, nor impair or change the conditions imposed by the terms of the acts granting lands to any such company to aid in the construction of its road, nor shall it be construed to authorize any railroad company to build any new road, or connection with any other road without authority from the state in which said railroad, or connection, may be proposed." Commenting upon this extraordinary statute, the editor says: "In the preamble to this extraordinary assumption of power, on the part of the federal congress, they prefer to base their authority for it on the power to regulate commerce among the several states, to establish post-roads, and to raise and support armies. But it has been decided that the constitutional power to establish post-roads is confined to such as are regularly laid out under state authority; the government of the United States cannot construct a post-road within a state of the Union without its consent. The post-roads of the United States are the property of the states through which they pass. The United States have the mere right of transit over them for the purpose of carrying the mails; the government could not have an injunction to prevent the destruction of a mail-road." Citing the case of the Cleveland, Painesville, & Ashtabula railroad company vs. The Franklin canal company, in the circuit court of the United States, the editor adds: "Congress certainly can confer no rights on a railroad company incorporated by a state government, which are withheld from it by the charter of its creator."

The above quoted act assumes that congress has full power to regulate the connection of railroads in the different states, as well as the carrying trade upon the same. It strips the several state governments of all power to interfere, and in case of any controversy takes from the state courts the power to determine the rights of the respective parties; the act of congress could be pleaded, and, as a necessary consequence, the United States courts would have exclusive jurisdiction. It cannot be claimed that this act can be supported under any express delegation of power to the general government, nor can it be supported as being incidental to any express grant. It is an usurpation not warranted or sustained by any part of the constitution. This one section quoted, destroys the right of any state of the Union, or of two or more of them, to legislate upon the subject of uniting or connecting railroads meeting on the lines dividing them, and also takes from the states the right to regulate the carrying trade within their own respective borders. Congress had no more authority under the constitution to enact this law, than to provide by statute for the construction of public highways when they meet upon the line dividing states, or to provide for the passage of teams from one state to another, and the transportation of freights over the common highways within or across a state. The whole power under the constitution is reserved to the states. Prior to the creation of these great railroad monopolies by congress, an attempt at such legislation would have been deemed unconstitutional, but as soon as the whole affairs of government passed into the hands of the few, and when the protection of their interests demanded it, the act was passed, and has remained upon the statute book as one of the laws of the land. This act is about the only one that openly and broadly covers the whole ground, and assumes to regulate the internal affairs of the states, but there are numerous acts passed in relation to land grants and the companies chartered by congress, which have the same effect. In some cases the absolute control of roads constructed under charters obtained from state legislatures, or under state laws, has been taken from the states by acts of congress, and placed under the jurisdiction of the general government. In most instances where this has been done, members of congress, or their near relatives, were large owners of stock in the companies to be benefited by the act. To speak more plainly, the acts granting special privileges to particular companies, and placing them under the jurisdiction of the federal government, were passed for the benefit of congressmen and others in high official position. Let us examine some of these acts. Among the stockholders and directors of the Union Pacific and its branches, there are found at least eight persons who were members of congress at the date of the act of congress creating the corporation, and also at the date of the material amendments to the charter. Some of these congressmen are still stockholders and directors, and were directors when congress released these companies from payment of interest on the bonds they had received from the government. Another land grant company having congressmen among its stockholders and directors, is the Leavenworth, Lawrence, & Galveston; also, the Iowa Falls & Sioux City; also, the Cedar Rapids & Missouri River; also, the Burlington & Missouri River; also, the Atlantic & Pacific; also, the New Orleans, Mobile, & Texas; also, the Northern Pacific; also, Sioux City & Pacific; also, the Fremont, Elkhorn, & Missouri Valley. The number might be extended, but enough is given to sustain our charge. Most of the above named companies were organized under state laws, or received their charters from state or territorial legislatures. For the purpose of consummating certain speculative ends, congress has treated with contempt state laws and state authority. Where charters have been granted under state authority, and the companies were rightfully under the control of the states within which their roads were located, acts like the following have been passed by congress: "That the Leavenworth, Pawnee, & Western railroad company, of Kansas, are hereby authorized to construct a railroad and telegraph line from the Missouri river, at the mouth of the Kansas river, on the south side thereof so as to connect with the Pacific railroad of Missouri;" and then follow the details for constructing and operating the road, and placing it under the control of the general government. In the case of the Central Pacific company, chartered by the state of California, congress passed the following act:—

"The Central Pacific railroad company of California, a corporation existing under the laws of the state of California, are hereby authorized to construct a railroad and telegraph line from the Pacific coast, at or near San Francisco, or the navigable waters of the Sacramento river, to the eastern boundary of California."

Substantially the same provision is found for most of the corporations above named, and in all those cases, the authority to construct the road is followed by a provision for aid by the general government.

It might be pertinent to inquire why it became necessary for congress to assume the control of railroads already chartered under state authority. It cannot be claimed that the states acted without authority in granting the charter; nor can the authority of the general government to take from the states the control of railroads within their border, be supported by any grant of power contained in the constitution. On the contrary, the power is reserved to the states, and its exercise is denied to the general government. It cannot be urged that the interests of the people are subserved by this assumption of power; on the contrary, these acts of congress take from the public its rights reserved by the constitution. But one answer can be given, these acts were passed for the promotion of selfish and corrupt ends. In support of this, we need only state the fact, that in almost every instance where congress has attempted to re-charter companies organized under state authority, and granted them aid, members of congress who were members at the date of the passage of the acts, were stockholders, and not unfrequently directors. Some congressmen who have been members for the last ten or twelve years, are stockholders in several of the companies, and at least one member of congress of twelve years standing is now a director in at least three companies that received grants of land, one of them getting large amounts of subsidy bonds, for all of which he voted, and for which, as often as occasion served, he has used his vote and influence in procuring additional privileges. We do not claim that every member of congress is interested in railroads; but we do assert that there are many senators and representatives who are personally interested, and that the proportion is so great that whenever it is desirable to have legislation it can be obtained without difficulty. To prove that the chartering and endowing of railroad companies is one of the principal occupations of the national legislature, we have only to look through the acts of congress the last two or three sessions. At the first session of the forty-second congress fourteen railroad bills were passed, some of them conferring grants to companies yet in embryo, having no being save upon paper, but presenting "great expectations" to our congressmen, who combine the business of granting charters and building railroads, and who find no indelicacy in becoming stockholders and directors in the corporations to which they, as congressmen, have voted lands and money. Some of these roads, under the acts of congress, present great inducements for investments, and in due time will receive proper attention. The effect of this species of legislation has been most baneful. The national congress, once the most pure and patriotic body in the world, has become the headquarters of all the unscrupulous men of the nation. It is under the control of dishonest and reckless men. Elections to seats in that body have become of such value, that to secure them men do not hesitate to pay more than the salary for the entire term. Nor do candidates always pay their own money. It is often furnished by rings and interests which require special legislation. It is now well understood that senators and representatives are in the market like other commodities. The purchase is made either in large donations of $10,000, $20,000, $30,000, or more from single corporations, or by shares, stock or bonds in companies chartered by congress, and afterwards fostered and protected by congressmen. So common has this practice become that it is not now considered disreputable. What in former years would have been deemed bribery and corruption are now nothing but fair business transactions. We recall a case which illustrates the purity of former legislation compared with what we see in our own day. Some thirty years ago, certain parties desired a charter for a denominational college. A Rev. Mr. Strong was appointed to visit the capital and interest the legislature in behalf of the charter. He was introduced to a Mr. Cushing, to whom he presented his case, and whom he sought to interest in favor of the grant. The grant of the charter was likely to meet with opposition, and to remove certain objections, Mr. Strong was anxious to have Mr. Cushing examine into the matter fully, and as an inducement for making such an examination he was told that the friends of the measure would compensate him liberally for the time he might spend in such examination. This Mr. Cushing interpreted as an offer to bribe a member of a legislative body, and he felt bound to resist it. Accordingly he laid the matter before the house. That body by unanimous vote, ordered the sergeant-at-arms to arrest Mr. Strong, and bring him to the bar of the house. After an investigation into the truth of the charge, Mr. S. was found guilty and publicly reprimanded by the speaker. This happened before legislators had learned to speculate upon their official position. It was in simple times, when those elected to office supposed their first duty was to serve their country, and when it was an irrecoverable disgrace to receive a bribe. It was at a time when our law-makers had too much self-respect to purchase their election with tens of thousands of dollars, and then reimburse themselves by taking stock in, and dividends from, giant corporations chartered and created by themselves. How is it now? Let the facts answer. Class or personal legislation, for special combinations, or in certain interests, is the rule, and legislation for the benefit of the whole people is the exception to that rule. Congressmen, to secure an election, expend large sums of money, and when elected their first care is to get even. To accomplish their purpose, they resort to unconstitutional legislation, such as granting exclusive privileges or jobs to individuals, for which indirect pecuniary consideration is received. But this alone would not suffice to reimburse them for their great outlay. The greatest source of profit to congressmen has been, and unless it is checked, will continue to be, found in railroad legislation.

CHAPTER X.

AN UNSETTLED ACCOUNT—A GUILTY DIRECTORY.

We now invite the attention of the reader to the account as it now stands with the subsidy bonds voted by congressmen to companies in which many who voted were stockholders and directors.

As the law stood prior to April, 1871, all railroad companies that had received government lands were required to pay the interest once in six months as it accrued. This interest had not been paid, and the secretary of the treasury withheld, to apply on the accrued interest, the amount earned by the different companies by the transportation of the mails, troops, &c., for government. Congress, composed in part of stockholders and directors in these same companies, passed a law ordering the secretary to pay in money to the different companies one-half of the amount thus earned, and left it optional with the companies to pay, or not to pay the interest on their bonds. This they have not done, and the interest account of these companies with the government stands about as follows:—

Making the total amount of payments the sum of $3,708,935, and the amount that these companies owe government, as the accrued interest on subsidy bonds, $12,861,640. This is the amount due in July, 1872. Add the interest accruing since that date and these companies owe the government not less than $16,000,000 interest on their bonds. This amount, as well as future interest, and the principal of the bonds was at one time secured to the government; but when congressmen and their friends get a controlling interest in the companies, they procured the passage of an act, supported by their own votes, which destroyed the security held by the government, and relieved the companies of the payment of this large amount of interest, thereby compelling the people to pay it, while the stockholders, including some of the same congressmen who had voted in favor of the act, received dividends on their stock and on their Credit Mobilier stock to the amount of two and three hundred per cent; thus, by the abuse of the power vested in themselves as members of congress, compelling the people to pay the interest the companies should have paid, and pocketing in the shape of dividends the money so dishonestly obtained. If we needed any further proof to establish the fact that these Pacific railroads were in fact congressional jobs, that members of congress were looking to their own interests rather than to the interests of the people, we need but glance at the interest account of the Sioux City & Pacific company. The excuse pleaded of the "necessities of government," will not avail in this instance. While the interest account of this company is about $400,000, the account for the transportation of troops, mails, &c., over its road, amounts to the sum of $1,642, one-half of which has been applied on the interest account of the company, and the other half, under the act of congress, has been paid by the secretary of the treasury to the company. The conclusion is irresistible, that the personal interest of congressmen, rather than the wants of the public, has controlled their action.

Connect with the incorporation of railroad companies, and special legislation in their favor, the legislation in favor of "Indian rings," "whisky rings," "patent right combinations," and the numerous other kinds of special legislation, with the advantages presented to legislators to make personal gain from all these sources, and we can well understand why men are willing to spend such large sums to secure an election to the United States senate, or house of representatives. The baneful effects of the modern code of political morality are not seen in the legislative department of the government only. The same disregard of the rights of the people, and a determination to protect and aid combinations in their efforts toward self-aggrandizement, made at a sacrifice of those principles which are supposed to govern all persons holding places of trust, honor, or confidence, seem to influence to a great degree those holding high position in other departments of the government. The acts of congress chartering the Pacific railroad companies make it the duty of the president of the United States to appoint five government directors for these roads. Under the statutes these directors cannot own stock in the companies, nor have in them any personal interest whatever. They are supposed to be free from any bias for or against the companies: but they are appointed to represent the government, and to guard against and report to the secretary of the interior all abuses on the part of the companies, and at such times as they are required to so report, to also make such suggestions as in their opinion shall best subserve the interests of the public. It is made their duty to personally inspect the roads, during their building and after their completion. At least two of these government directors must have a place on all important committees appointed by the companies for the management and prosecution of their business. Any dishonesty on the part of the companies in letting contracts for the construction of their roads, or any misapplication of the grants made by congress, must have been known to these five government directors, or some of them, if they had properly discharged the duties imposed upon them by law. The formation of an inside ring, under the title of "The Credit Mobilier of America," composed entirely of the directors and stockholders of the Union Pacific company, the letting of the contract for the construction of the road to one of the directors of the railroad company, who was also a director in the Credit Mobilier (and a member of congress), at more than double its actual cost, the transfer of this contract to certain trustees who were directors in both companies, in the manner stated in a preceding chapter of this work, and the declaration of large dividends on the stock of the companies at a time when the work on the road was barely begun, and before any dividends could possibly have been earned,—all these facts must have been known to the government directors, and concealed by them from the government. When it is remembered that some of these government directors were members of congress at the date of the passage of the acts chartering the roads, there is but little question that the same influences controlling them in voting these large subsidies to the companies also controlled them as government directors in their supervision of the roads. This conclusion is strengthened on seeing that some of them became owners of stock in the Credit Mobilier.

The same corrupting influences have been felt in other departments of the government. The abuses practiced in the collection of customs by the officers at the different ports of entry, as shown at the recent investigations made by authority of congress, are but the natural sequence of the questionable course of the legislative department. The great frauds practiced by parties having contracts for furnishing supplies to the Indian tribes are traceable to the same source. This assumption by congress of the power to grant charters to private monopolies, its unconstitutional interference in matters reserved to state control, its determination to foster these gigantic corporations by princely grants, with the corruption incident to these selfish and greedy combinations, are the direct cause of the dishonesty prevailing everywhere among our public officers, and besides other rank growth have led to the imposition of burdens upon the people, oppressive to the last degree. The controlling purpose of a large portion of those elected or appointed to government offices seems to be to accumulate wealth without regard to the propriety or honesty of the means employed. In their eagerness to benefit themselves, all consideration for the public good, or respect for their obligations as sworn servants of the people, are of secondary importance. They accept office from purely selfish motives, and enter upon their duties with the same object in view animating those who embark in trade, manufactures, or commerce, viz: private gain. Seemingly viewing the offices they hold as being their own private property, they use them as the banker uses his money—for purposes of speculation. Not unfrequently they permit themselves to be bought and sold, like any other articles of merchandise. While we do not claim that all public officers were pure prior to the legislative creation of the monopolies we have been examining, we do claim that previous to that sad departure, honesty was the rule, and not the exception. It was when congress entered upon the business of chartering railroad companies, donating public lands to them, and voting them money from the public treasury, that the rule changed; and when, in addition, congressmen became principal owners and directors in these companies, while still retaining their seats in congress, they placed themselves upon the record as unfaithful to their trust, and struck a blow at public morality which will be fatal to our popular government, unless resisted by the whole moral power of the nation.

And here we might well pause, and ask, what security have the people for the continuance of republican government? These gigantic corporations are in their nature anti-republican; they tend to a centralization of power; they compel the people to submit to their demands; they are under the protection of congress, under whose special legislation they are permitted to disregard state laws; their ramifications extend throughout the country; their artifices and money control the votes of the people; they elect their friends to both the senate and house; they organize and send strong bodies of men to the lobby of congress and state legislatures, well supplied with money to obtain the passage of laws in their interest, and to prevent such legislation as would be detrimental to them, and in favor of the people; they have their friends and emissaries in every department of the government, and throughout the country, and they exercise a controlling influence not only at Washington, but at almost all the seats of state government. The offices filled by appointment of the executive and confirmation of the senate, are too often the agencies of this same influence. We would not be understood as saying that the president acts corruptly in these appointments; we mean that the influences that secure many of the presidential nominations are the same as used by these corporations in the election of their senators and representatives. The appointment of judges of the supreme court of the United States has, in at least two instances, within the last few years, been made through the influence and in the interest of these monopolies. These corporations are also represented in the cabinet. It is well understood that the removal of Attorney General Ackerman, and the appointment of his successor, was done by these corporate influences. The fact that the secretary of the interior, to whom reports should have been regularly made of the progress and condition of the Pacific railroad, was silent, while private fortunes were being fraudulently taken from the public treasury, proves that he also was under the same influence. It can be accepted as an established fact, that all the departments of the government are to a great extent controlled by corporations and combinations of speculators whose interests are adverse to those of the people, and the result is, that statutes are enacted, executive offices appointed, and decisions of court rendered in the favor of these powerful classes, while the rights guaranteed to the people by the constitution are disregarded.

The influence of corporations is also powerful in the administration of state governments. While no such gigantic monopolies as the Pacific railroad have been organized in any state yet, either by special charters granted by state legislatures, or under general incorporation laws, railroad corporations in large numbers have been organized, and by combining their influence, have obtained control of most of the state governments; they have been granted special and exclusive privileges, and by the use of money and patronage have been able to control state conventions, state legislatures, and state courts. As a logical result, the people are taxed, while railroad companies are practically free from taxation; subsidies to corporations are authorized and declared to be constitutional, and the people are obliged to submit to rates of charges for transportation of freight that amount to a confiscation of the farm products of the country. We need not enter into a history of state grants to railroad companies, for it is familiar to all; the same corrupt practices incident to national, attend state, legislation. In many instances, corporations have organized under state statutes, or obtained special charters from state legislatures, located their roads, procured local aid, and then obtained from congress land grants for their roads, and have thus become powerful in the states where they are located, while other companies have built their roads exclusively with the means afforded by local aid voted under state laws, and loans of money or sale of bonds; but in every instance so planning and contriving that the entire road shall pass into the exclusive control of a select few, leaving to those who furnished the local aid no rights or privileges in connection with the company, or the road, save that of paying extortionate freights and burdensome taxes.

CHAPTER XI.

THE SOLE PURPOSES OF TAXATION.

Taxes can only be levied, and collected, for public purposes; but all the property of the country can be taxed to its entire value, when the public good requires it. The exigency demanding high rates of taxation is left to the determination of the legislatures of the states, and of the general government. No taxes can be legally levied or collected save for the support of the government, state and national, and subject to the restrictions incorporated in the constitution. All other taxes imposed upon the people are unconstitutional, illegal, and oppressive, and should be declared absolutely void. Direct taxation, for the support of the general government, has never been practiced in time of peace. The usual method for raising a sufficient revenue for its support has been by duties, or tariff imposed by acts of congress upon imports. This has always been deemed the best method for raising the revenue necessary for the support of the government. The powers and duties of the general government are limited and restricted by the constitution of the United States; and as its legislative, executive, and judicial powers are thus limited, it follows that its power to impose taxes upon the people is limited in the same manner, and that it can tax for no purpose save for defraying the expenses of its different departments in the exercise of the powers delegated by the federal constitution. This conceded, all that can be claimed by those who administer the affairs of the nation, unless they transcend the constitutional limit, is conceded. The power to appropriate the lands or money of the public to private parties or corporations not being found in the constitution, nor implied in any of the granted powers, all such appropriations are usurpations; they are donations of the people's money and property to private corporations and individuals in violation of the constitutional restrictions; and no authority is vested in congress to tax the people, either directly or indirectly, for the purpose of making return of the money and property thus wrongfully taken from them. A private corporation is not a public necessity; its franchises are private property, and even if the United States owned the whole of its stock, and took the entire control of its business, it could not become a public corporation, for the reason that congress does not possess the power, under the constitution, to create private corporations. The fact that the United States owned the stock and controlled the corporation would not impart to it any of the attributes of sovereignty, but in so far as the general government was interested in the corporation, it would be treated as any other private party, and would be amenable to the same law and subject to the same jurisdiction as private parties or individuals. If the action of the general government can confer none of the attributes of sovereignty upon a private corporation—if it has no constitutional authority to donate lands or money to railroad companies—how can it lawfully collect taxes from the people, either by direct levies, or in duties upon articles of commerce, for the purpose of re-imbursing the government for the lands donated to corporations, or to pay either the principal or interest on the bonds given to these corporations? As well might congress levy a direct tax upon the property of the people for the purpose of donating to a private party sufficient means to build a residence; there is not found in the constitution any warrant for either of such levies. Both alike are unwarranted usurpations of power, not to be justified under any grant of power from the people to the federal government. To admit that the congress of the United States possesses the power to tax the people for any purpose save for the support of the general government, is to admit that the constitution is elastic, subject to any congressional construction, and liable to be used as an instrument for promoting personal and private ends. Congress had no power to vote subsidy bonds to railroad corporations, as we have already shown; nor could it release these corporations from the payment of these bonds, and the interest as it accrues, and collect the amount from the people in duties on imports, or in any other kind of taxes. No such power was ever delegated to the general government by the people. This power cannot be found in any part of the constitution. While this is true, the people are now taxed annually to the amount of many millions of dollars to pay the interest on the bonds issued to the Pacific railroads. Taxes are also collected to the amount of $18,000,000 or $20,000,000 to pay the interest on the banking capital of the country, the stock of a gigantic corporation, chartered by congress, but in the hands and under the control of private parties and companies. While the general government, under the constitution, has the control of the money of the country, and its coinage, value, etc., and can provide such means as shall be deemed best for the administration of the national or public finances, it has no power to enter into private banking; and because it has not this power, it cannot create private banking institutions and tax the people for their support. Any tax levied upon the citizen by the general government for any purpose whatsoever, save for the necessary expenses in the administration of the same, in all of its departments, in accordance with the letter and spirit of the constitution, is without authority, and violates the fundamental law. The levy of taxes in aid of private corporations subserves none of the purposes of the government, and is the exercise of a power not possessed by congress. Our position is fully sustained by legal adjudications, and by the writings of eminent jurists. Chief Justice Marshall, in his writings upon the constitution, has considered this point. He says, on page 345 of his work: "It is, we think, a sound principle, that when a government becomes a partner in a trading company, it divests itself, so far as concerns the transactions of the company, of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates, and to the business which it transacts. * * * As a member of a corporation, a government never exercises its sovereignty. It acts merely as a corporator, and exercises no other powers in the management of the affairs of the corporation than are expressly given by the incorporation act. The government of the Union held shares in the old Bank of the United States; but the privileges of the government were not imparted by that circumstance to the bank."

If there exists any authority in the general government to create a corporation for any purpose, it is in relation to the finances of the country. The necessity of a fiscal agent of some kind would seem to warrant the creation of a banking corporation. But, if the power is conceded, it does not follow that the people should be taxed to provide a bounty, payable semi-annually, to the private companies who are engaged in banking, and who alone receive the profits arising from the business. Yet the act of congress creating the banks provides for the payment of semi-annual interest on the capital invested; and this interest is collected from the people. All railroad corporations, created by act of congress, are absolutely private corporations. The insertion in the charter of the words—"to secure the more safe and speedy transportation of the mails, troops, munitions of war, and government supplies"—found in all of these charters, does not change the character of the corporations. The grants are made to private parties; the roads are under their control; they receive aid from the general government, but in their own names own and control the roads, and can, at any time, dispose of the roads and franchises, and the general government has no power to prevent any action the companies may choose to adopt so long as they regard the provisions of their charters. No statesman or jurist of our country has at any time, until within the last few years, claimed that congress could create corporations for private purposes; on the contrary, in all of the earlier decisions of the federal courts, it was uniformly conceded that congress did not possess the power to create such corporations. Chancellor Kent, Chief Justice Marshall, and other eminent writers, are all agreed that, under the constitution, congress cannot create a private corporation. If congress had no constitutional right to create railroad corporations, how can it possess the power to tax the people to pay their debts? The people are now paying at least $8,000,000 per annum in shape of taxes for the purpose of liquidating the interest due from railroads chartered by congress in violation of the fundamental law of the land. This large amount of taxes is collected and applied by the general government in payment of interest due from railroad companies, because the influence of congressmen and their friends, in these companies, was sufficiently powerful to override constitutional barriers, and to procure the passage of an act enabling the parties holding the stock to pocket the earnings of their roads and make good the deficit in their interest account by taxing the people.

The whole history of congressional legislation does not present a case of such entire disregard of the provisions of the constitution, and such dishonest and corrupt legislation as is contained in the acts of congress relating to the Pacific railroads. It is questionable whether another instance can be found in this or any other country, having a constitutional government, where legislators, by direct vote, have taken millions of money from the public treasury and given it to private corporations of which they were members and directors, and to make good the amount thus taken from the treasury have provided by law for its collection from the people in the shape of taxes and duties! When we remember that congress does not possess the power to charter private corporations; that in so doing it violates the letter and spirit of the constitution; upon what principle can it claim the right to tax the people for the benefit of these private corporations? We repeat, no country in the world, governed by a written constitution, offers a parallel case. Not even in France, under the personal government of the late emperor, would such an unwarranted act have been attempted.

We are aware that it is claimed that railroad corporations are public corporations—and this granted, taxes may be rightfully levied and collected for their benefit. But we do not grant this, and shall, in the following pages, essay to demonstrate that all railroad corporations are private, being owned and controlled by private citizens, and not by the state or national government. But admitting they are public and not private corporations, the general government even then cannot legally charter or control them, because the power for that purpose has never been delegated by the states or the people; and it follows that the general government cannot rightfully impose taxes upon the people for the support of corporations over which it can have no control. If congress can levy taxes for the construction and support of railroads, and take the management and control of them, it certainly can take the entire supervision of all the highways in all the states, provide for their construction, and tax the people at will for that purpose. This being admitted, no local or police regulation in any of the states is exclusively under the jurisdiction of the state governments; but the general government may at any time take the absolute control of the governmental affairs of the several states, and thus complete the centralization of power now so rapidly developing in all the departments at Washington. The assumption of the right to tax the people for any and every purpose that to congress shall seem expedient, irrespective of constitutional prohibition, is at once destructive of the rights that were supposed to be guaranteed and preserved to the whole people by the constitution. If the will of those men who happen to occupy seats in congress (and that will too often controlled by personal interest) is to govern, then all constitutional government is at an end, and the liberty and property of the citizen have no constitutional safeguard. Taxes to the entire value of all the wealth in the country may be levied by the general government, and the citizen of this republic holds his entire estate at the will of the persons who fill the offices of the country. Under the system of congressional legislation that now obtains, the laboring and producing classes are being rapidly reduced to a state of servitude that would grace the most despotic government.