WINING THE NOMINATION - Lincoln's Path to Success

I know that Abraham Lincoln read Shakespeare, which makes the events at the Illinois Republican state convention in Decatur on 9 May, 1860, so revealing. Three times the 22 delegates demanded that Lincoln “identify your work!”, and three times their nominee refused to claim which of the boards supporting his campaign banners had come from logs he himself had split. Like Julius Caesar three times refusing the crown of a Roman king, each display of modesty drove the crowd into a greater frenzy. It was this invention of “Lincoln The RailSplitter” which marked “Honest Abe” as a real contender for the Presidential nomination, one week later at the Republican National Convention. Clearly, Abraham was prepared to perform exactly the kind of theatrics required in politics.

Just a year earlier Lincoln appeared to have given up any Presidential ambitions. In March of 1859 he had written a friend, “Seriously, I do not think I am fit for the Presidency.” But two events in early 1860, changed his mind. First, at the end of February, Lincoln gave a speech at the prestigious New York City private college, the Cooper Union. His arguments against slavery in that speech were reprinted in newspapers across the north and received positively. And secondly, in the last week of April the Democratic Party convention in Charleston adjourned after 57 ballots, unable to agree on a nominee. With Democrats splitting into three wings, the young Republican party had a real chance to win the November election.

Senator William Seward was the presumptive Republican nominee. At 70 members, his own New York delegation was the largest. The dour NYC banker and merchant Edwin Morgan (above), also a Seward man,  was the Republican Party National Chairman. And the crafty Thurlow Weed, “The Wizard of the Lobby”, who had helped build Seward's reputation for more than two decades, was in Chicago, where the convention would be held. Even eight members of the Illinois delegation were suspected of preferring Seward to Lincoln. Chairman Morgan had even chosen the city of 100,000 on the lake as a bribe for Illinois Party Chairman Norman Judd., as was the tempting offer to name Judd, Seward's nominee for Vice President.

All that Lincoln had to offer was himself, but for a few that was enough. Their leader was the imposing Judge David Davis (above). He had presided over the Illinois Eighth Circuit Court, deciding almost 90 cases lawyered by Lincoln. And although he decided only forty in Lincoln's favor, Davis trusted the younger man enough to ask him to substitute for the judge occasionally. Davis described Lincoln as “a peculiar man; he never asked my advice on any question.” 

But when new lawyer Leonard Swett joined the circuit, he was introduced to Davis and Lincoln, dressed in their nightshirts, as they engaged in a boisterous pillow fight. Swett became Lincoln's most trusted friend. Also working for the prairie lawyer was Lincoln's longtime law partner, the big, jovial hard drinking Virginian born, Ward Lamon (above).

Judge Davis was an abolitionist. Lamon's family owned slaves and he hated abolitionists. Swett (above) preferred a good fight, a guitar and a jug of whiskey over politics. This diverse trio, along with a few dozen others, sacrificed their time and money to win the nomination for Lincoln. 

They started late, having to beg people to give up their reservations at the Tremont hotel (above). Davis spent $700 out of his own pocket to empty the needed rooms, and more to stock them with  whiskey and food, but on the Friday, four days before the convention opened, the Lincoln men were headquartered at the Tremont, ready to the seduce the arriving delegates.  Said Swett,  “I did not, the whole week I was there, sleep two hours a night.”

The delegates arrived by foot and horseback, carried on lake steamers or the dozen rail lines serving Chicago - 10,000 delegates, alternates, reporters and spectators, all converging five blocks from the Tremont, at a two story, 5,000 square foot timber building which had not existed five weeks earlier. They called the $6,000 structure “The Wigwam” (above). 

Writer Isaac Hill Bromley described the scene, “The stage proper (left) was of sufficient capacity to hold all the delegates, who were seated on either side of a slightly elevated dais...

 The galleries were reserved (FG) (for)...the miscellaneous public (center)...four or five thousand stood in the aisles and all the available unoccupied space....the delegates could be seen from all parts of the auditorium...Something of convenience was sacrificed to dramatic effect. The convention was just then ‘The greatest show on earth.”

There were just 465 voting delegates from 24 states, and the District of Columbia. As they arrived - but especially the delegates from the four swing states that would likely carry the November election,  Illinois, Indiana, Pennsylvania, and New Jersey -  they were met and courted by agents representing Seward, Lincoln and a half dozen other “favorite son” candidates. The Seward men,  headquartered in the upscale Richmond House, were particularly blunt in their tactics. Before the convention had even started, on Tuesday, 15 May, the Illinois delegation was offered a campaign chest of $100,000 for the fall election, if they would vote for Lincoln as Seward's Vice President. The same offer was made to the Indiana delegation, and New Jersey. It was an attempt to derail Lincoln, and win the nomination for Seward on the first ballot. But it backfired. Illinois party chief Norman Judd felt betrayed, realizing he was probably just one of many offered the V.P. spot. When the convention opened the next day at ten minutes after noon, Judd threw his full support behind Lincoln.

The 54 members of the Pennsylvania delegation were pledged to vote on the first ballot for their “favorite son”, Senator Simon Cameron (above).  Cameron, meanwhile had assured Thurlow Weed he would sell his delegation for a cabinet post, and Seward expected to win the nomination on the second or third ballot. In fact almost half of the Pennsylvania delegation hated Cameron so much, they were secretly prepared to vote for anybody else. The only question was for whom? 

In another sign Thurlow Weed had over played his hand, the dapper Illinois party chairman Norman Judd (above) managed to isolate the New York delegation in the back of the stage, and seated the Keystone delegates between the Indiana and Illinois delegations – 22 and 26 delegates each– where Illinois Lieutenant Governor Gustave Koerner and Indiana Gubernatorial candidate Caleb Smith could reminded the Pennsylvanians that Lincoln was an alternative to Seward and Cameron.

Missouri's delegate's were pledged to vote for Representative Edward Bates (above), despite his being an unrepentant Know Nothing, who despised Catholics and foreigners - such as the German Catholics in St. Louis, Chicago and Cincinnati.  

Bates was being marketed by the owner and editor of the New York Tribune, Horace Greeley (above). Even tho the newspaperman had never been west of Iowa, Greeley was an Oregon delegate, and would deliver Oregon's 8 votes, along with Missouri's 18, to Bates because Greeley was convinced Seward was too radical to carry the swing states.  Ohio's 48 delegates were pledged to support Salomen P. Chase, who was openly opposed to slavery, and therefore, according to the experts, even more un-electable, than Seward. 

Seward's perceived radicalism also worried party leaders in Maine and Massachusetts – 16 and 26 delegates respectively. The New York Senator (above, right) had told the truth, that democracy and slavery were in an "irrepressible conflict",  just as Lincoln had said "a house divided against itself, can not stand". But Seward told his truth in 1858, on the senate floor, and earned the hatred of Mississippi Senator Jefferson Davis (above, left). The perception was that Seward was the radical. So the New Engenders had already reached a quiet deal with most of the delegates from Pennsylvania and Ohio to jointly, that after the first ballot, they would abandon their favorite sons and support somebody, anybody, but Seward. The only question was, who? The name that kept coming up was Lincoln. 

Although he had been a favorite son candidate at the 1856 convention, Lincoln was still an unknown quantity to most of the delegates But thanks to Judge Davis' strategy, he had become, the convention's second choice. If they couldn't have Seward, or Bates, or Chase, then the vast majority of delegates was willing to nominate Lincoln. But to strengthen that argument, Judge Davis figured Lincoln had to get at least 100 votes on the first ballot, just under half way to the 233 needed to win the nomination.

It is true that Lincoln telegraphed from Springfield, warning Judge Davis that he would not make political compromises to become President. But years later Chicago Attorney Wirt Dexter suggested that Davis was guilty of the same sin he had accused Thurlow Weed of - offering duplicate rewards to politicians from several delegations. “You must have prevaricated somewhat”, suggested Dexter. To which Judge Davis shouted in his high pitched voice, “PREVARICATED, Brother Dexter? We lied like hell!”

On Friday, as the temperature and emotions inside and outside the Wigwam climbed, Thurlow Weed pulled a final rabbit out of his hat - retired bare knuckle champion, Tom Hyer (above). The 6'2”, 185 pound boxer earned his living as an enforcer for William “Bill The Butcher” Poole, leader of a notorious five points gang, until Bill had been shot and killed in an 1855 bar fight. 

The now 41 year old Hyer was reduced to a Know Nothing celebrity thug, and this Friday he was leading a brass band and 2,000 New York “pug-ugly” Seward (above) supporters, marching to the Wigwam, singing “Oh, isn't he a dar-ling! With his grace-ful ways,. And his eye so gay. Yes, he's a lit-tle dar-ling. To me he is di-vine. He loves me too, with a heart so true. This charming beau of mine.” 

It was an impressive and enthusiastic parade, until Hyer and his iron voiced shouters reached the convention hall, where their way was blocked by a crowd of perhaps 25,000 loungers and fast food sellers.  When they finally worked their way to the doors and presented their tickets, they were denied entrance to the Wigwam. The spectator gallery, even the standing space between the aisles was already full. And every person inside had a ticket,  just like all the pug-uglies now trapped outside.

1

The man responsible for this feat of legerdemain was Lincoln's hard drinking Virginian troubadour, Ward Lamon (above). He had printed up several thousand counterfeit tickets for the Wigwam, and the Lincoln supporters had presented their forgeries at 9 a.m., flooding the building an hour before Tom Hyer's parade arrived. The Seward forces made desperate calls for the Sargent-at-arms to check spectator tickets, but given that the day before Judge Davis had charged the Seward forces with handing out counterfeits, and that the building was crammed almost to bursting, the functionaries decided not to get involved in the infighting. Besides, the real battle was on the stage, among the delegates.

When Lincoln's name was placed in nomination, the screaming was so loud the Wigwam’s windows trembled “as if they had been pelted with hail.” Said Swettt, “Five thousand people leaped from their seats, women not wanting...A thousand steam whistles, ten acres of hotel gongs, a tribe of Comanches might have mingled in the scene unnoticed.” On the first ballot, Seward (above,being thrown overboard) led as expected, with 173 votes. But Lincoln (at the stern) was second with 102 votes. Cameron got 50 of Pennsylvania’s 54 votes, just ahead of Ohio's Salomen Chase's 49 votes. The best that Horace Greeley's (right of Lincoln) candidate Edward Bates (right of Greeley)  could collect was 48, with 8 other favorite sons getting less than 14 each.

Immediately Lincoln's men moved for a second ballot, before Thurlow Weed (above) could get the attention of the chairman, or could reach out to sway delegates. At the same time Judge Davis managed to solidify a deal with the sleazy Simon Cameron of Pennsylvania, agreeing to make him Lincoln's Secretary of War. In fact the Pennsylvania delegates had already agreed to bolt for Lincoln, and on the second ballot Weed gained 11 votes for Seward, but Lincoln gained 79, most of those coming at the expense of Cameron and Bates.

Seward's fate was sealed on the third ballot. He lost 4 more votes. Lincoln gained another 50 votes, most coming from Maryland, Kentucky and Virginia. The Rail Splitter was now just one vote away from the nomination. The Wigwam erupted in shouting, cheering and cursing, until the chairman of the Ohio delegation, David Cartter, got the chairman's attention, and stuttered, “I-I arise, Mr. Chairman, to a-announce the ch-change of four votes, from Mr. Chase to Abraham Lincoln!” .

Writer Bromley observed the pandemonium as delegation after delegation clamored for the Chairman's attention to shift their votes to Lincoln “On the platform near me...the Indiana men generally were smashing hats and hugging each other; the Illinois men did everything except stand on their heads; hands were flying wildly in the air, everybody’s mouth was open, and bedlam seemed loose. The din of it was terrific. Seen from the stage it seemed to be twenty thousand mouths in full blast…” The final count for the official third ballot gave Lincoln 364 votes. Lincoln had won.

Buckeye newspaperman Murate Halsted disagreed. “The fact of the Convention was the defeat of Seward rather than the nomination of Lincoln.” That may have been true in May of 1860, perhaps even in March of 1861 when Lincoln took the oath of office as President. 

But on January 1^st, 1863, when the Emancipation Proclamation became law, Lincoln became more than a mere politician, more than a mere victor. He achieved the potential that diverse group of men from the 8^th Circuit Court had seen in Lincoln, the reason they had sacrificed and worked,to make him president, not because he could be, but because they knew he should be.

On that Friday evening, some of the delegates who had just voted to nominate Abraham Lincoln, were lining up out side of McVicker's Theater, to see Tom Taylor's two year old play, “Our American Cousin” (above). In one month short of five years, Abraham Lincoln would finally see the play, at Ford's Theater in Washington, the night he was murdered. And in 1869 the Wigwam burned down

- 30 -

THE PROFESSIONAL - Politics Is Not a Hobby

I hate the image of Lincoln that most Americans hold, the five dollar profile of “The Great Emancipator”. You see, Abraham Lincoln saved the Union and ended slavery not because he was a saint but because he was the greatest politician who has ever occupied the White House. And to those who despise “professional politicians”, my response is they have probably never seen a real professional in action. Such Pols  don’t come along often, but when they do, they make the puny impersonations that must usually suffice seem like clowns.

And Lincoln’s professionalism was best displayed in his handling of the biggest clown in his cabinet, a man you have probably never heard of but whose best work you see every day of your life, Salmon Portland Chase. If Chase had been half as smart as he was ambitious, he would have been President instead of Lincoln. That to his dying day he continued to think he deserved to be so, shows what a clown he really was.

Doris Kerns Goodwin has called Lincoln’s cabinet “A Team of Rivals”, but I think of it more as an obtuse triangle. At the apex was Lincoln. He was the pretty girl at the party. His suitors didn’t really want to know him, but they all wanted to have him. On the inside track was the brilliant, obsequious William Seward - the Secretary of State who thought of himself as Lincoln’s puppet master. And the right angle was Salmon Chase, Secretary of the Treasury, born to money and brilliant,  but with a stick up his alimentary canal. And on Tuesday, 16 December, 1862 , the competition between these two paramours of Old Abe's banged heads in the head of Senator Charles Sumner, the Chairman of the Senate Foreign Relations Committee and leading Senatorial Cassandra.

Sumner had come into procession of a letter written by Seward to the American Ambassador to France. In the letter Seward complained that “…the extreme advocates for African slavery and its most vehement opponents are acting in concert together to precipitate a servile war, the former by making the most desperate attempts to overthrow the federal Union; the latter by demanding an edict of universal emancipation as a lawful and necessary if not, as they say, the only legitimate way of saving the Union.” To Sumner this passage was proof that behind the scenes Seward was not fully committed to destroying slavery and the Confederacy. And it confirmed what he already heard from Chase.

Stephen Oates writes in “With Malice Toward None”, “Chase in particular felt snubbed and resentful…what bothered Chase the most was the intimacy between Lincoln and Seward…In talks with his liberal Congressional friends, Chase intimated that Seward was a malignant influence on the President...that it was (Seward) who was responsible for the administration’s bungling. So it was that Seward became a scapegoat for Republican discontent.” (pp 355-356)

Sumner convened what I call "The Magnificent Seven", the Republican Senate caucus. Once the Seward letter was read out loud, Senator Ira Harris from New York recorded the reaction. “Silence ensued for several moments, when (Senator Morton Wilkinson of Minnesota) said that in his opinion the country was ruined and the cause was lost…” Senator William Fessenden from Maine added his two cents worth. He had been told by a member of the cabinet there was “…a secret backstairs influence which often controlled the apparent conclusions of the cabinet itself. Measures must be taken”, Fessenden concluded, “to make the cabinet a unity and to remove from it anyone who does not coincide heartily with our views in relation to the war.”

It is sad to say there was not a first rate mind in that room. There might have been, but arrogance drops a smart person’s I.Q. by forty points or more. It can drop the average mind to zero. Not one of the seven seems to have suspected they were being manipulated by Chase, that it was Chase who had whispered Fesseneden's ear, and Wilkinsen' s ear as well. But each was convinced they they and they alone held the solution as to how to conclude the Civil War. It is startling to think that men who used an outhouse every day, could be that arrogant.

They skewered up their courage for two days before saddling up and calling on the President at 7 P.M. on Thursday, 19 December, 1862. For three hours they harangued poor Mr. Lincoln on the dangers of Seward. Lincoln remained agreeable but noncommittal, and proposed that they meet again the next night. And the amazing thing was that throughout the meeting Lincoln actually had William Seward’s resignation in his coat pocket.

Understand, Seward had not offered his resignation out of nobility. He was a politician. After hearing of the intentions of the Seven, Seward had a flunky deliver his resignation in private, as a back door demand that Lincoln pick Seward over Chase, the genial New Yorker over the prig from Ohio. Of course, the loss of support from New York would poke a fatal hole in Lincoln’s ship of state. So Seward was not expecting Lincoln to pick the prig for the poke

Lincoln’s problem was he also needed the prig. Chase’s handling of the Treasury  was brilliant. He was financing the entire war. It was Chase who had begun issuing official U.S. government backed paper currency, greenbacks. That had not been done since the American Revolution. It was Chase who had put the words “In God We Trust” on every bill, and it's still there today. Of course, Chase had also put his own face on every $1 bill, as a form of political advertising, but Lincoln was willing to tolerate that because Chase was honest in his job, and because without Ohio, the Union would lose the war.

The other factor was that the whispers about Seward’s “backstairs influence” were false. By December of 1862 it was dawning even on Seward that Lincoln was thinking for himself. When Lincoln had first heard about the Magnificent Seven’s deliberations (from Senator Preston King, the flunky who had delivered Seward’s resignation), the President had exploded. “Why will men believe a lie, an absurd lie, that could not impose upon a child, and cling to it, and repeat it, and cling to it in defiance of all evidence to the contrary?” Lincoln was beset by arrogance and delusion from all sides. It seems that everybody in Washington thought they were smarter than Lincoln. But the skinny lawyer from Illinois was about to prove them all wrong.

At ten the next morning Lincoln told his cabinet about the previous night’s meeting. He made no accusations, but Chase immediately blubbered that this was the first he had heard about any of this matter. The President, who had mentioned no names and made no allegations, asked them all, except Seward, to return that night to meet with the Seven. Seward felt the ground giving way under his feet. He had never expected Lincoln might pick Chase. At the same time, Chase was not entirely certain he had won.

That night the Seven were now an audience, along with the cabinet sans Seward,  to a bravo performance. Gideon Welles, the Secretary of the Navy (then a cabinet office) recorded the festivities. The President “…spoke of the unity of his Cabinet, and how although they could not be expected to think and speak alike on all subjects, all had acquiesced in measures when once decided. ...Secretary Chase endorsed the President's statement fully and entirely…” There were hours more of talking but right there, when Chase agreed with Lincoln, that was the end of Chase's mutiny. As the Magnificent Seven were leaving the White House a stunned Senator Browning of Illinois asked one the leaders of the mutiny how Chase could tell them that the cabinet was harmonious, after all his talk to them about back stairs influence. The reply was simple and bitter; “He lied.” Chase was done as a malignant political influence in the cabinet. No Republican was going to believe anything he ever said again.

The next morning Lincoln called both Seward and Chase to the White House. Welles was again present, I suspect as a witness for Lincoln. Wrote Welles,  “Chase said he had been painfully affected by the meeting last evening, which was a total surprise to him, and…informed the President he had prepared his resignation…“Where is it?” asked the President quickly, his eye lighting up in a moment."

“I brought it with me,” said Chase, taking the paper from his pocket…”Let me have it,” said the President, reaching his long arm and fingers towards Chase, who held on, seemingly reluctant…but the President was eager and…took and hastily opened the letter. “This," said he, looking towards me with a triumphal laugh, “cuts the Gordian knot.” An air of satisfaction spread over his countenance such as I have not seen for some time. “You may go to your Departments,” said the President;…(This) “is all I want…I will detain neither of you longer.”

Both Seward and Chase spent a nervous night, not certain as to what Lincoln would do. They had both just been reminded who was in charge of this game. And it was not until a few days later that Lincoln sent a message to both Chase and Seward, saying that the nation could not afford to lose either of their talents. And it did not. Seward never tried to pull Lincoln's strings again. Chase petulantly continued to resign annually until late 1864, when Lincoln could finally afford to take him up on the offer. But never a man to waste talent, Lincoln appointed the clown to the Supreme Court, where Chase’s firm stance for racial equality would have the best influence on America’s future.

And that is what it looks like when a professional is on the job.

- 30 -

RAILROADING The Railsplitter - A Short History of Fraud in America

I have come to the conclusion that no one should be handed a Phd in economics or Masters in Business degree from any American university without an intimate understanding of the history of fraud in America. We have buried this knowledge, as if afraid of teaching our best and brightest how to cheat, despite there being clear evidence that no such primer is required. The energetic, the ambitious and the greedy have always found a way to profit from cheating. And the mantra of deregulation is another proof that a good education in cheating might at least warn the suckers. For example, did you know that one of the men who did the most to advance the greatest fraud upon the American people in the 19th Century was “Honest” Abe Lincoln?

Lincoln’s break through case as a lawyer involved the 6 May 1856 destruction of the “Government Bridge”. The bridge was actually owned by the Mississippi and Missouri Railroad, but by calling it "Government Bridge" the railroad attracted more investors. It was first bridge over the Mississippi River, between Rock Island, Illinois and Davenport, Iowa. Just two weeks after the bridge was opened to trains a steamboat, the old and leaky “Effie Afton”, ran into one of the bridge's piers which caused a fire that destroyed the boat and one span of the bridge. The owners of the Effie sued the owners of the bridge, claiming that bridges were a navigational hazard to river commerce.

The mercurial Charles Durant, one of the railroad’s officers, hired Lincoln to defend the bridge. In lieu of payment, Lincoln accepted $3,000 in railroad stock (the equivalent of about $66,000 today). After winning the case (he got a hung jury) Lincoln traveled all the way to Kansas to inspect the intended route of the future transcontinental railroad, which would be built by corporations that Durant ran and manipulated. And then, one of the first bills signed into law by President Lincoln was “The Pacific Railroad Act of 1862” which officially authorized the Central Pacific railroad to build east from California and the Union Pacific (whose vice president was Charles Durant) to build west from Council Bluffs, Iowa. This meant that Lincoln now owned some very valuable stock.

To pay for the construction across all those hundreds of empty miles, the railroad company was to be re-reimbursed for the total cost of building the line.  They were expected to make their profits from the grants of land they were awarded on either side of the rails. The completed railroad would make that land accessible, which would make it valuable. But the fact that Lincoln traveled all the way to Kansas to see the route and the property with his own eyes, showed that Lincoln knew enough not to trust the word of Charles Durant. And yet he had just turned this rapacious wolf loose upon the American taxpayers. Well, Lincoln had an excuse; he was a little distracted by the outbreak of the Civil War.

Doctor Charles Durant (Medicine had been his formal training), immediately showed his true genius by first buying out Union Pacific stockholder Herbert Hoxie for $10,000. This, in addition to stock he had already owned, gave Durant majority control of the railroad, even though the “Railroad Act” had limited individual stock ownership to avoid just the kind of manipulation Durant had in mind. Then Durant bought stock in competing railroads (on margin, of course), and spread rumors that they would soon be joined to the Union Pacific line, thus giving them a piece of the projected profits from the transcontinental trade.

When those railroad stocks then went up, Durant sold them out. Eventually the suckers realized there would be no joining, and the stocks fell to below their original value. With the Civil War raging Durant had just cleared $5 million profit the equivalent of about $100 million today), and he had yet to lay an inch of rail.

Durant was hot tempered, erratic and prone to manic depression. But he had a genius at making money this way. And what he had done so far was just the prologue. Doctor Durant now came up with an idea he had learned from the French construction of the Suez Canal.

In early 1864 the good Doctor Durant sent his director of publicity, George Francis Train, on a search for just the right corporate vehicle. Train found what he was looking for in the Pennsylvania Fiscal Agency, one of the innumerable stock schemes chartered by the states to fund "The American people’s railroad to the Western Sea.” None of these shell companies ever laid a single length of rail, but this one still had an effective charter and it was for sale, cheap. Train bought the company and renamed it Credit Mobilier, a name vague enough to leave you unsure just what they did. Then he sold shares in this new company for nominal amounts (often even on credit) to the principle stockholders of the Union Pacific Railroad - the majority going, of course, to Doctor Durant.

As the completion in this little of slight-of-hand, the Union Pacific signed an exclusive “no bid” contract with Credit Moblier (meaning themselves) to supply the Union Pacific with all labor, grading, rails, ties, spikes, bridges, abutments, rolling stock and engines needed to actually build and run the railroad; let the fleecing begin

The original engineer of the Union Pacific had calculated that the first 100 miles of track would cost $30,000 per mile to build. But Credit Moblier billed the railroad $60,000 per mile, which was taken directly from the pocket of the federal government. The route also began to meander across the landscape, like a drunken sparrow in flight. Each twist and turn added miles to the bill presented to the Federal government. By the end of construction in 1869, the profit from this padding of the construction bills produced a profit for the stockholders of Credit Mobilier of $50 million (equal to about $800 million today). Remember this was not the side of the equation that was supposed to provide a profit for the builders.

Better yet, for the principle investors, the Union Pacific Railroad was something new on the American scene, a “limited liability corporation”. Under the old rules stockholders were liable for any debts the company ran up. A bankrupt company meant bankrupt investors. But investors in the Union Pacific Railroad Limited, including Doctor Durant, Mr. Train and several members of Congress who had been given Union Pacific stock (because they would control any investigations into Credit Moblier) were liable only for the amount they had invested in the U.P. And in many cases that was nothing.  And what little they did have invested, they sold out before the public found out what shoddy work had been done.

By 1869 when the “the people’s railroad to the western Sea”, was completed, it was also bankrupt. It had been looted by Credit Mobilier. The U.P. stock wasn’t worth the paper it was printed on. And, of course, by then, the principle investors in Credit Mobilier were off looking for other railroads to loot.

Only after literally thousands of more scams just like this one would congress close the loophole in this particular invitation to fraud, making shell companies like Credit Mobilier illegal, allowing for the seizure of all profits made from them, and assessing fines for even setting them up. This is called regulation. And by regulating the stock market the government attempts to limit the profits made on Wall Street to the actual profits from the real companies the suckers think they are investing in.

It’s enough to make you realize that if Lincoln had not been murdered in 1865, his reputation might have been more closely tied to that of Doctor Durant than it is today. When ever the  truly powerful in this nation have been caught red handed, they hide behind limited liability.  Without limited liability  the bank executives called before Congress in 2008 to explain how they profited from creating the mortgage bubble, would never have had the guts to blame working class citizens for taking on home loans they could not afford.  In the area of economic crime, experience and history makes me want to blame the people with college degrees in finance and business who drew up thousands of those contracts, long before I blame the engineering graduates and high school graduates who signed just one of them. And if you don’t agree, you just don’t know your American history like you should.

- 30 -