grant in these words, " 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," and "to promote the public interest and welfare by the construction of said railroad and telegraph line and keeping the same in working order, and to secure to the Government at all times (but particularly in time of war) the use and benefits of the same for postal, military, and other purposes."

The committee do not doubt that the proceeds of these lands and bonds, as well as of the first-mortgage bonds which the Government has provided to secure by a lien prior to its own, are held as an express trust by this company, and applicable alone to said declared purposes of the acts. Any distribution of the proceeds of either of these funds as profits or dividends to stockholders is illegal, as violative of the declared purposes of the trust.

We have, then, the case of a corporation which is a trustee, in the management of persons who have divided the trust funds among themselves, who have promised to pay for its capital stock in cash, which promises they have not kept, and on which they are still liable, and which the corporation neglects to enforce, and who have made contracts with themselves in reference to the trust fund, the profits on which contracts they ought in equity account for to the trust fund upon the most simple principles of equity. A suit can be maintained by any cestui que trust to compel the collection of these assets, and that the trustee shall hold them hereafter as part of the trust property. It will be no answer to this statement to say that the ultimate security of the United States has not been impaired. This is far from being true in fact. If it were true, the United States have a right to have the security which they stipulated for, even if it be more than is necessary.

If we are wrong in this opinion, there is no remedy except by resorting to the extreme power of repealing the act. Those questions are judicial questions, as we have said. We propose a simple method of raising and determining them in one suit, and of securing so far as we can the administration of the fund according to law in the future.

The committee, then, find that there are persons connected with the Credit Mobilier holding such bonds as are contemplated by the order of the House.

They are not holders of the same in good faith and for value, but did procure the same illegally.

We do not recommend that the United States refuse to pay these bonds or their interest without a judicial ascertainment of the facts.

We think that so many persons hold the first-mortgage bonds of the Union Pacific Railroad in good faith and for value that the said mortgage ought not to be set aside.

We report the facts as to the character of the organization known as the Credit Mobilier.

We refer for facts as to the members of Congress and officers of the Government connected therewith to the evidence taken before the committee of which Mr. Poland, of Vermont, is chairman, and to that herewith submitted; and

We respectfully report the accompanying bill, and recommend its passage.

J. M. WILSON.

SAML. SHELLABARGER.
GEO. F. HOAR.
H. W. SLOCUM.

H. Rep. 78-III

AN ACT to amend an act entitled "An act to aid in the construction of a railroad and telegraph line from the Missouri River to the Pacific Ocean, and to secure to the Government the use of the same for postal, military, and other purposes," and to secure the interests of the United States and of the people in the Union Pacific Railroad.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Attorney-General shall cause a suit in equity to be instituted in the name of the United States against the Union Pacific Railroad Company, and against all persons who may in their own names or through any agents have subscribed for or received capital stock in said road, which stock has not been paid for in full in money, or who may have received as dividends or otherwise portions of the capital stock of said road or the proceeds or avails thereof, or other property of said road, unlawfully and contrary to equity, or who may have received as profits or proceeds of contracts for construction or equipment of said road or other contracts therewith, moneys or other property which ought in equity to belong to said railroad corporation, or who may, under pretense of having complied with the acts to which this is an addition, have wrongfully and unlawfully received from the United States bonds, moneys, or lands, which ought in equity to be accounted for and paid to said railroad company or to the United States, and to compel payment for said stock, and the collection and payment of such moneys and the restoration of such property or its value either to said railroad corporation or to the United States, whichever shall in equity be held entitled thereto.

SEC. 2. That said suit may be brought in the circuit court in any circuit, and all said parties may be made defendants in one suit. Decrees may be entered and enforced against any one or more parties defendant without awaiting the final determination of the cause against other parties. The court where said cause is pending may make such orders and decrees and issue such process as it shall deem necessary to bring in new parties or the representatives of parties deceased, or to carry into effect the purposes of this act. On filing the bill, writs of capias and attachment may be issued by said court against any parties defendant, which writs shall run into any district, and shall be served as other like process by the marshal of such district, on which property, real and personal, may be attached to abide the event of the suit as like property may by law be attached on writs issuing from the circuit court in such district.

SEC. 3. That the books, records, correspondence, and all other documents of the Union Pacific Railroad Company shall at all times be open to inspection by the Secretary of the Treasury, or such persons as he may delegate for that purpose.

SEC. 4. That the laws of the United States providing for proceedings in bankruptcy shall not be held to apply to said corporation.

SEC. 5. That no dividend shall hereafter be made by said company but from the actual net earnings thereof, and no new stock shall be issued, or mortgages or pledges made on the property or future earnings of the company without leave of Congress, except for the purpose of funding and securing debts now existing, or the renewals thereof. SEC. 6. That no director or officer of said road shall hereafter be interested, directly or indirectly, in any contract therewith, except for his lawful compensation as such officer. SEC. 7. That any director or officer who shall pay, or declare, or aid in paying or declaring, any dividend, or creating any mortgage or pledge prohibited by this act, or who shall offend against the provisions of the sixth section thereof, shall be punished by imprisonment not exceeding two years, and by fine not exceeding $5,000.

MINORITY REPORT.

I concur in the facts and figures presented in this report, so far as the same could be ascertained through the testimony of those who have been connected with the Union Pacific and Credit Mobilier Companies, and the legal remedies recommended by the committee; but I object to the adoption of the report as incomplete, under the resolution referred to this committee January 6, 1873, until some recommendation is embodied in the same in reference to certain members of Congress who have had transactions with Hon. Oakes Ames, as will be found detailed in the report of Hon. Luke P. Poland, as chairman, &c., believing that the same should be promptly considered and disposed of without further loss of time.

THOS. SWANN.

CREDIT MOBILIER AND UNION PACIFIC RAILROAD.

WASHINGTON, D. C., January 10, 1873.

The committee met at 10 a. m. Present: JEREMIAH M. WILSON, of Indiana, chairman; GEORGE F. HOAR, of Massachusetts; THOMAS SWANN, of Maryland; HENRY W. SLOCUM, of New York.

On motion, it was ordered that the chairman be authorized to conduct the examination of witnesses.

Ordered, that this committee will regard the action of the House directing the committee of which Hon. Mr. Poland is chairman to sit with open doors, as an instruction to this committee in this investigation.

Ordered, that the chairman be requested to confer with counsel appointed or to be appointed under resolution of the House of January 6, to ascertain whether aid can be rendered by them to the committee in this investigation.

JOHN B. ALLEY sworn, and examined as follows:

By the CHAIRMAN:

Question. Do you know of the existence of an organization or association, or corporation, by the name of the Credit Mobilier of America? -Answer. I do.

Q. Are you now, or have you at any time been, in any way connected with it? If so, when did your connection with it begin, and in what capacity were you connected with it?-A. I commenced as a stockholder in August, 1865. In May, 1867, I was elected a director. I continued at director, I think, till May, 1869 or 1870; probably May, 1870.

Q. Are you connected with it in any way now?-A. I am simply a stockholder now.

Q. Are you an officer of that organization at this time?-A. I am not.

Q. Have you been connected with it in any other way than you have stated at any time; if so, when?-A. Only as a stockholder and director. Q. Is this a corporation, or what is the character of the organization? -A. It is a corporation existing in the State of Pennsylvania.

Q. Upon what authority is this corporation organized? Give a history of its organization; the date of its organization; and if it ever had any other name, state what it was.-A. This organization was formed under a charter originally from the State of Pennsylvania, in 1859, which was called the Fiscal Agency of the State of Pennsylvania. That is my impression of its original title. After two or three years, it having done nothing, I believe, under the old organization, it was procured by the owners and managers of the Union Pacific Railroad Company, who in

tended it to be a contracting company for the building of the Pacific Railroad, as I understood. Then its name was changed from the Pennsylvania Fiscal Agency to that of the Credit Mobilier of America. I do not remember exactly at what time; probably in 1863.

Q. Who were the officers of the Union Pacific Railroad Company, who procured that charter or transfer?-A. I think the manager was the then vice-president of the Union Pacific Railroad Company, Thomas C. Durant, of New York; John A. Dix was president at that time.

Q. Were there any other officers of the Union Pacific Railroad Com-' pany connected with that transaction at that time?—A. I could not say about that; I suppose that Mr. Durant was the man who procured that charter, and, as I understood it, it was procured for the purpose of building this road.

Q. Are there any books or papers showing the character of that transaction and the persons connected with it in existence; and, if so, where may they be found?-A. There are, I suppose; Oliver W. Barnes was the secretary of the Credit Mobilier; he was a resident of Philadelphia then.

Q. Are these books or papers a part of the books and papers of the Credit Mobilier, and are they now in the custody of the officers of that corporation?-A. I presume they are; I said Mr. Barnes was secretary: I think, perhaps, he was the treasurer; he was, as I understood, in those early times of the organization of this company the principal man that I knew anything about.

Q. Can you now give the names of the persons who were parties to the original organization of this Credit Mobilier ?-A. Thomas C. Durant was president; Henry C. Crane, of New York, was assistant treasurer, and I think Oliver W. Barnes was the treasurer. Who the secretary was I do not know, and who the other parties at that time in control were I do not remember, if I ever knew.

Q. Was this association organized upon articles of association signed by the persons engaged in this enterprise, and were their stock-books opened?-A. Yes; it was a regular corporation and had very good powers as a corporation; it was procured by these parties as an agency to build the Pacific Railroad. They regarded it as utterly impossible to build the road under the bill which was given them by Congress, except through the intervention of a contracting company or a corporation like this; they took this corporation for that purpose, as I understood, merely as a contracting company.

Q. Where has the business office of the Credit Mobilier been kept since its organization?-A. They had what is called a New York agency, or bureau, which did the business principally, although it was a Pennsylvania corporation. They had a right, under authority which was given them by the Pennsylvania legislature, to establish an agency or bureau, as they called it, in New York, which they did, and their business was transacted chiefly there.

Q. Have you with you any printed or written copies of any papers to which reference has been made in your testimony?-A. No, sir; I have

not.

Q. Was the office or business place of this company ever transferred or removed to the city of Boston?-A. No, sir.

Q. Where was this office in the city of New York?-A. Most of the time, I believe, it was 20 Nassau street.

Q. Where was the office of the Union Pacific Railroad Company ?— A. That was in the same building-the same block.

Q. Were these two offices kept in the same room?-A. I think not.

Q. Who are the officers of the Credit Mobilier now?-A. Sidney Dillon is president; Benjamin F. Ham is secretary and treasurer; and Dillon, Ham, and Roland G. Hazard, I believe, are directors; I do not know who the other directors are. They have been changed since I have been there.

Q. Where is the office of this company now?-A. The New York agency is still kept up, and the business chiefly transacted there.

Q. Has it no other office or place of business except New York ?— A. It has; in Philadelphia, at 524 Walnut street, I think. I may be mistaken as to the number. The New York office is now at 52 Wall street.

Q. Where does Mr. Ham reside?-A. He resides in New Jersey, some twelve or fifteen miles from New York. I think in Elizabeth, or not far from there.

Q. Who is the custodian of the books and papers of the Credit Mobilier at present?-A. Mr. Ham, I believe.

Q. Where are these books; at the Philadelphia or New York office?A. I believe a part of them are in Philadelphia, and part in New York. Q. How long has Mr. Ham held that office?-A. I think since May 19, 1869.

Q. Who preceded him as secretary?—A. I think Mr. Crane did. Q. Has there ever been any other secretary except Mr. Crane and Mr. Ham ?—A. I do not think there has since I have had any knowledge

of it.

Q. Are there books or papers showing the amount of the capital stock, the names of the stockholders, the amount of stock held by each, the money paid in on stock, the contracts and the money expended, and the dividends declared and paid?-A. Yes, sir.

Q. Are you now in any way connected with the Union Pacific Railroad Company; and, if so, in what way?-A. I am not; and have no interest in it of any consequence.

Q. Are you a stockholder?-A. I have a very few shares.

Q. State the names of the officers and directors of that company.A. Horace F. Clark, president; John Duff, vice-president; E. H. Rollins, treasurer and secretary; H. B. Wilbur, auditor. Directors: Horace F. Clark, New York; Augustus Schell, New York; James H. Banker, New York; Oliver Ames, Boston; John Duff, Boston; Elisha Atkins, Boston; Oakes Ames, Boston; L. P. Morton, New York; R. E. Robbins, Boston; James Brooks, New York; G. M. Dodge, Council Bluffs, Iowa; Sidney Dillon, New York; C. S. Bushnell, New Haven; Geo. M. Pullman, Chicago; F. Gordon Dexter, Boston. Government Directors: B. F. Wade, Jefferson, Ohio; Hiram Price, Davenport, Iowa; James F. Wilson, Fairfield, Iowa; J. C. S. Harrison, Indianapolis, Indiana; David S. Ruddock, New London, Connecticut. Q. Where is the business office of the Union Pacific Railroad Company now?-A. In Boston.

Q. Who is the custodian of the books of that corporation?-A. The treasurer, Mr. Rollins, I suppose. The books are at the office of the company, in Sears' building, Boston.

By Mr. HOAR:

Q. At the time of the contract made with the Credit Mobilier Company for the construction of a part of the Union Pacific Railroad, how much of the capital stock of the Union Pacific Railroad Company had been subscribed and actually paid in, according to the best of your recollection?-A. Not a great deal had then been paid in; perhaps two or three hundred thousand dollars.