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.

Cartoonist Joseph Keppler offered a satirical portrayal of the Crédit Mobilier Scandal by depicting politicians involved in the affair as residents in a hospital ward. In actuality, punishment was lenient: Representatives James Brooks and Oakes Ames were merely censured.
CORBIS

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.