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. Oliver Ames , Oakes Ames (1804–1873) was a U.S. manufacturer and five-term member of the United States House of Representatives. He was the principal financier of… Union Pacific Corp , 1717 Main Street, Suite 5900 Dallas, Texas 75201-4605 U.S.A. Fax: (214) 743-5656 Web site: http://www.up.com Public Company Incorporate… Union Pacific Railroad , Union Pacific Railroad, transportation company chartered (1862) by Congress to build part of the nation's first transcontinental railroad line. Under… Thomas Clark Durant , Durant, Thomas Clark DURANT, THOMAS CLARK As a financier and an executive of the Union Pacific Railroad in the early 1860s Dr. Thomas C. Durant (1820… Credit Mobilier Of America , CRÉDIT MOBILIER OF AMERICA, the classic case of corruption in the Gilded Age, concerned conflict of interest and institutional duplicity. When in 186… Collis Potter Huntington , Collis Potter Huntington Collis Potter Huntington (1821-1900), American railroad builder, was a promoter and manager of the Central Pacific Railway a… Credit Evaluation and Approval Credit Authorizer, Checker, and Clerk Credit Accumulation Transfer System Credit Acceptance Corporation Credence Systems Corporation Crébillon, Prosper Jolyot de Creatures the World Forgot Credit Where Credit is Due credit where credit is due, give Credit/Debit/Travel Cards Credner, (Karl) Hermann Georg Creed in Eucharistic Liturgy Creed, Clifford Anne (1938–)
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The Transcontinental Railroad | Article
For Union Pacific executive Thomas Durant, it was a money-making machine. It was a revolutionary business model previously unknown on American soil. It was secretive and utterly opaque to the reporters who eventually tried to discover its workings. And it wasn't illegal at the time -- though it should have been. Durant chartered a company named Crédit Mobilier of America to garner profits from railroad construction, guaranteeing he and other insiders would realize a fortune from the railroad without exposing themselves to the project's high-stake risks. Structuring a Scam All the Pay, None of the Risk Power Struggle "We Should Not Be Interfered With"
"Whitewash!" No Happy Ending For more on the Crédit Mobilier and its relevance to business scandals today, read New Yorkerfinancial columnist James Surowiecki's essay, "Durant's Big Scam." |