Crédit Mobilier Scandal

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Crédit Mobilier Scandal

The Reconstruction era after the Civil War was a time of chaos, reorganization, and corruption that affected not only lesser state officials but also federal government agents. The Crédit Mobilier affair, which had its early beginnings in 1864 but was not publicly investigated until 1873, is an example of the corrupt practices that characterized the period. In 1864, Thomas C. Durant, an administrator of the Union Pacific Railroad, bought the Pennsylvania Fiscal Agency, which was chartered in 1859. The agency was renamed Crédit Mobilier of America and its proposed purpose as a construction company was the building of the Union Pacific Railroad. The federal government had granted the railroad generous loans and contracts for its construction, and the administrators of the railroad planned to divert this money into the Crédit Mobilier Company, allowing the stockholders of the company to enjoy huge profits. Government officials first became involved in 1865 when Oakes Ames, congressional representative from Massachusetts, and his brother Oliver bought shares of stock in the Crédit Mobilier and, indirectly, in the Union Pacific Railroad. The Ames brothers soon became the power behind the Union Pacific, and, in 1866, Durant was replaced by Oliver Ames.

The building of the railroad was fraudulently financed for approximately $50 million more than was necessary. In addition, Oakes Ames sold a large number of shares of stock in Crédit Mobilier at a reduced rate to several of his fellow congressmen. This move on the part of Ames was to allay any suspicious interest in the undertakings of the two companies and to encourage legislation beneficial to the railroad. This maneuver occurred in 1867, and for the next five years rumors surrounding the activities of Ames and other government officials circulated.

The scandal erupted in 1872 when the details of the Crédit Mobilier Company became an issue of the presidential campaign of that year. Several important officials were involved including vice presidential candidate Henry Wilson, incumbent vice president Schyler Colfax, future president and member of the House of Representatives james a. garfield, and Speaker of the House James G. Blaine. An investigation began in 1873. The punishments for such behavior were surprisingly lenient, however, and the Crédit Mobilier Company and Congressman Ames were merely publicly censured.

References in periodicals archive ?
Congress displayed even less wisdom in managing financial affairs, and was swallowed up in 1872 by the Credit Mobilier scandal, which saw members of Congress standing in line for what amounted to bribes from the railroads.
When the Credit Mobilier scandal broke in 1872, the House of Representatives voted to censure Oakes Ames and he died shortly after, some say from shame.
The ample wall space also facilitated the creation of galleries depicting topics such as engineering the transcontinental railroad, erecting the built environment of railroad expansion and financing the iron horse as well as the Credit Mobilier scandal and the Panic of 1873.
Clair expedition (1792), James Wilkinson and intrigues with Spain (1810), the burning of Washington (1814), Andrew Jackson's invasion of Florida (1818-19), the Rip Rap imbroglio (1826-27), the Second Bank of the United States (1832), Sam Houston and the Indian rations contract (1832), the assault on Charles Sumner (1856), the Harper's Ferry incident (1859-60), the Buchanan administration (1860), the conduct of war activities (1861-65), reconstruction (1865-66), the impeachment of Andrew Johnson (1867), postbellum violence in the southern states (1871-72), and the Credit Mobilier scandal (1873).
The Credit Mobilier scandal came to a head when the New York Sun published the names of congressmen who had received shares of Union Pacific stock virtually free from Rep.
As a result, the Credit Mobilier scandal, which stemmed from the construction of the Union Pacific, shook public confidence in joint ventures between the government and the private sector.
Blaine, on the basis of letters he had written, was accused of having profited from the Credit Mobilier scandal involving the building of the Union Pacific Railroad.
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