Credit Mobilier Scandal
Credit Mobilier ScandalIn 1865 the United States had just concluded the Civil War, and plans of reconstruction of the Union were on the minds of every government official as their first priority, or so it seemed (Phillips 108). Everyone that is except Oakes Ames, a manufacturer, capitalist, and an elected member of the thirty-eighth Congress of the second district of Massachusetts (Brazad 251). After the war anything that would boost patriotism was passed by Congress and a transcontinental railroad was an ideal means by which to bind up the wounded Union (Phillips 107). Ames, in a way to get rich quick and get out, joined a corporation, of which he eventually gained full control, called Credit Mobilier (Wheeler 72). Credit Mobilier Corporation was given monetary and land grants from the government in order to complete the transcontinental railroad. The company took part in complex arrangements in which a several of the partners contracted with themselves for the construction of the railroad. As a result of this scandal, Credit Mobilier stocks paid dividends of three-hundred and forty-eight percent in the first year (Hoops 59). The real scandal took place not in the west, but in the House of Representatives, where Oakes Ames “sold” stock at par value to “where they will do the most good (McPherson 585).” In the investigation of the Credit Mobilier, only two men suffered disciplinary action from the Judiciary committee. However, many who were involved should have been subject to the same indictment for being involved in one of the greatest financial and political scandal of the 19th century.
Thomas Durant, an ingenious promoter and railroad executive, had originally conjured up Credit Mobilier in 1863 and saw it was an ingenious way of becoming rich. Durant had seen these possibilities while building the Mississippi and Missouri Line a few years earlier (Wheeler 72). Durant was a major supporter and proponent of the transcontinental railroad and was willing to put his wallet in front of his country by taking federal money and leaving as a result of Congress’s decision in 1862 (Nevins 255). This decision was to incorporate the Union Pacific Railroad Company to the Central Pacific Railroad, thus connecting the East to the West by a central route from the border of Iowa to the California-Nevada line (Davis 147). Durant and his fellow followers conspired to create just the device they needed. Durant, in March of 1864, took possession of an old company called the Pennsylvania Fiscal Agency and changed its name to Credit Mobilier (Nevins 256). This company was the perfect place from which to operate Durant’s plans. The government had chartered the agency to buy and sell railroad bonds as well as empowering the Agency, “To borrow and loan money with the limit upon the resources or without the resources of the company (Hoops 108).” Soon Oakes and his brother Oliver became involved with...
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