Crédit Mobilier Scandals (mar 1, 1864 – sep 4, 1872)

Description:

Most of the information known about the Crédit Mobilier of America was discovered and published in the New York Sun paper's expose of the scheme.

The Crédit Mobilier of America was established in 1864 by a group of Union Pacific Railroad executives, including Thomas Durant, to serve as a construction company for the Union Pacific Railroad. The concept behind Crédit Mobilier was to provide a means for financing and constructing the railroad while also generating profits for its investors. However, from its inception, Crédit Mobilier was entangled in a web of corruption and financial malpractice.

Crédit Mobilier was essentially a shell company set up by Union Pacific insiders to secure contracts for the construction of the railroad at highly inflated prices. The company would then subcontract the actual work to other firms, often at much lower rates, pocketing the difference as profits. This arrangement allowed the insiders to amass significant wealth at the expense of the Union Pacific Railroad and its investors.

One of the key elements of the Crédit Mobilier scandal was the issuance of stock to members of Congress and other influential figures at discounted rates. These individuals were effectively bribed with shares in the company in exchange for political favors, including favorable legislation and government contracts. This practice further enriched the insiders while undermining the integrity of the political process.

"Speaker of the House and future vice president Schuyler Colfax of Indiana signed on. So did Massachusetts senator and future vice president Henry Wilson, Ohio representative and future president James Garfield, James W. Patterson of New Hampshire, Henry Laurens Dawes of Massachusetts, John Bingham of Ohio, John A. Logan of Illinois, William B. Allison and James F. Wilson of Iowa, and two Pennsylvania representatives, William D. "Pig-Iron" Kelley and G.W. Scofield. Like Ames, they were Republicans all, and all voted on railroad matters. Lone Democrat James Brooks of New York, as a government director of the Union Pacific, was prohibited by law from owning company shares; he bought them in his son's name," (PBS).

During this time, Durant's actions were siphoning money from construction and delaying Dodge's progress. Durant in turn complained about Dodge's slowness. "He made erratic decisions about the route, undermining Dodge's studied proposals, and sent underlings to enforce them. It was not unusual for the engineer to return from a survey or from Washington to find the road being graded in a manner contradictory to his instructions." (PBS). "It was a blatant attempt to force acquiescence or resignation, and the engineer exploded at the man 'who has not an honest drop of Blood in his veins, who is connected with the Co. for the sole purpose of bleeding it and who the Co. say they cannot discharge for fear he will Black Mail it.'" (PBS). "in 1869, when Dodge was in Washington lobbying fiercely to keep the Union Pacific afloat, Durant threatened to suspend him for his absence." (PBS).

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