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The Crédit Mobilier scandal of 1872-1873 damaged the careers of several Gilded Age politicians. In one of the nation’s earliest political corruption scandals, a number of U.S. Congressmen, including the vice president, faced scrutiny and public outrage when it was revealed that Crédit Mobilier, a phony construction company set up to build the Union Pacific Railroad, had been financed with fraudulent bonds and used stocks to bribe government officials, resulting in hefty profits for its shareholders.

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The Scam

The fake Crédit Mobilier of America company (its deceptive name was based on the influential French bank Crédit Mobilier, but was not connected to it), ran a fraud scheme from 1864-1867, in which executives of Union Pacific Railroad bilked the U.S. government out of upwards of $44 million, overcharging for railroad construction costs and expenses, bribing top officials and manipulating contracts.

Rep. Oakes Ames

Rep. Oakes Ames, Republican from Massachusetts.

Led by Union Pacific’s Thomas C. Durant, the executives, who were also Crédit Mobilier investors, worked with U.S. Rep. Oakes Ames, a Republican from Massachusetts, to sell bargain shares to, and also bribe, a number of congressmen, including then Speaker of the House Schuyler Colfax, who was elected vice president on a ticket with Ulysses S. Grant in 1868. The officials were offered low-price stock options and payouts in return for no federal oversight of the company along with the approval of subsidies and various rulings that would keep actual railroad costs lower than what they claimed.

“We want more friends in this Congress, and if a man will look into the law (and it is difficult to get them to do it unless they have an interest to do so), he cannot help being convinced that we should not be interfered with,” Ames wrote in a letter to investor Henry S. McComb, according to the Washington Post.

The Exposé

Acting on a tip from a disgruntled McComb, who had been denied stock by Ames, the New York Sun newspaper published an expose of the scandal on September 4, 1872. Naming the congressmen involved—and in the thick of sitting president Grant’s reelection campaign—the story included correspondence between McComb and Ames, and reported that the sham corporation was granted $72 million in railroad building contracts when only $53 million was actually spent.

“The Credit Mobilier stock speculation shows that corruption does exist in high places,” Missouri newspaper the Lincoln County Herald wrote in December 1872, the Washington Post reports, adding that without vigilance by the public, “the first we know we’ll have been sold out to some giant railroad or other monied monopoly.”

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Political Fallout

Public outrage and numerous news editorials led to two House committees and one in the Senate to investigate 13 congressmen in December 1872, with Ames, New York Democrat Rep. James Brooks and Republican Sen. James Patterson of New Hampshire, facing expulsion.

“A charge of bribery of members is the gravest that can be made in a legislative body,” Speaker James Blaine of Maine, who appointed one of the investigative committees, said at the time. “It seems to me ... that this charge demands prompt, thorough, and impartial investigation.”

In the end, Ames and Brooks were censured for using political influence for personal financial gain in 1873, while all the rest, including Colfax and then-Rep. James A. Garfield, who went on to be elected president in 1880, and Sen. Henry Wilson, who replaced Colfax as Grant’s vice presidential running mate for reelection in 1872 in lieu of the scandal, were absolved of any charges.

The Grant-Wilson ticket went on to win the presidential election in 1872, but the scandal tarnished the Republican party and resulted in widespread public distrust of the U.S. government.

"Well, the wickedness of all of it is, not that these men were bribed or corruptly influenced, but that they betrayed the trust of the people, deceived their constituents, and by their evasions and falsehoods confessed the transaction to be disgraceful," the New York Tribune wrote on February 19, 1873.

Sources

The Crédit Mobilier Scandal,” History, Art & Archives, U.S. House of Representatives

Crédit Mobilier scandal exposed, Sept. 4, 1872,” Politico

"James Patterson Explusion Case," U.S. Senate

Buying ‘friends in this Congress’: The smoking gun that triggered a political scandal,” The Washington Post

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