Land Grants
In some cases, there were the amounts of 21 million acres involved, similar in size to VT, MA, and CT combined. Such "right of way" amounted to 10% of the State of Nebrasca.
An organization called "Credit Mobilier", basically a director's company. The Cridit Mobilier scandal involved the railroad overpaying the construction firms, which were owned by the same people who owned the railroad, and then passing on massive payments to investors, some of whom owned the railroads, as well as Congressmen.
In the case of Durant, he wanted the already surveyed routing changed, so as to reap more land grant acres. That did not happen, but then everyone was trying to fatten their pockets. Pricey gifts to the Chairmen of Committees in Congress, bribery, fraud, embezzlements, shady deals, graft, and corruption was the "order of the day". But in 1872, there was a burst in the gigantic scandal on the financial status of investors, directors, etc., but by then most all had become wealthy.
The financial implications of the UP included,
VP of the U.S. Schuyler Colfax, with rumors of bribery of future Presidental Candidate James B.aine, future President James Garfield, and even President Ulysses Grant. The Scandal?? Only $50M of the government loands of $73M could be justified as true costs. Hence the initiative creators of Credit Mobilier, Oakes and Oliver Ames were censured by Congress.
The situation with the CP's President Collis Huntington had a "twist" in the investigation, and escaping any penalty. Coincidentally, 2 months prior to the investigation, all his records were burned in a fire, which destroyed his business. (Sound famliar with the present IRS scandal"). But the NY SUN carried the articles as:
The Acme of Fraud - The Credit Mobilier Outdone - The Central Pacific Ring -and- $211,299,328 Gobbled!
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But then there were also the Angry Farmers.
Many a farmer of the mid - 19th Century, attracted by quick profits as well as prospect of improved access to markets, mortgaged his land for money to buy stock in the building of a nearby railroad. But when the line was completed, it too often skinned him coming and going, charging unacceptable high freight rates both for crops shipped and goods bought.
Many of the farmers were given acreage by the railroad with the promise of purchasse at $2.50 and acred or higher. However, once the land was improved, that price was increased to $25-35 an acre by the railroads's "land agents". Hundreds of people were evicted due to the clause "or higher" in the contract, and unable to pay.
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During the Depression of 1973, the Philadelphia and Reading Railroads, once acclaimed as the most profitable companies in the world, went bankrupt. The MP, UP, and the AT&SF all fell into bankruptcy as well. During that depression, 500 banks and 15,000 business folded.
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This part on the finances is really not complete as it does not establish how these companies were reestablished years later, but the info does show some of the "workings" of how our land, finances, and companies operated.
Hope you enjoy.
