Making Reconstruction Pay: Railroad Frauds in the South
The railroad bond frauds in the postwar South are not mentioned often by Northern authors writing about the incomplete social revolution called "Reconstruction." One of the most notorious criminals was Northern General Milton Littlefield mentioned below, who gained initial fame gathering recruits for the army with bounty money, most of which stuck to his hands. After the war, he allied with North Carolina scalawag George Swepson to bribe Northern adventurers-turned-Southern-legislators (elected by the newly enfranchised freedmen) for the purpose of approving the railroad bonds he concocted. After natives regained control of North Carolina government in 1870, attempts were made to extradite Littlefield for his crimes but sufficient carpetbaggers remained to save his oily skin.

Read more about Littlefield’s escapades in Jonathan Daniels "Prince of Carpetbaggers."
Bernhard Thuersam, Director
Cape Fear Historical Institute

Making Reconstruction Pay: Railroad Frauds in the South
"Saddled with an irresponsible officialdom, the South was now plunged into debauchery, corruption, and private plundering unbelievable—suggesting that government had been transformed into an engine of destruction.  Whatever the motives, the results were devastating to honest government, for they opened up to dishonest speculators…the exploitation of Southern credit in the name of railroad development. In these robberies stand high the names of George Swepson and Milton S. Littlefield in North Carolina and Florida.
The process was simple…It consisted merely in the State lending its credit to private companies in their efforts to construct railroads by buying their stock, by guaranteeing the payment of railroad bonds, and by giving them a fixed sum for each mile constructed, and in the last two methods taking a mortgage on the railroad.  It was only through the dishonesty of State officials (Northern carpetbaggers, black officeholders and a few Southern scalawags) that the great stench in railroad aid arose.
In violation of law they delivered bonds before the railroads were built, and the dishonest promoters sold these bonds for what they could get and never built the roads Sometimes legislatures also loaned more per mile than the roads were worth when finished so that even with the railroads turned over to the States, considerable losses were suffered.  North Carolina authorized almost $28 million of railroad bonds and actually delivered…$17.5 million on account of ill-kept records.”
(The History of the South, Volume VIII: The South During Reconstruction, E. Merton Coulter, 1947, LSU Press)