The Credit Mobilier Scandal of 1872: Definition & Overview

Instructor: Jason McCollom

Jason has a PhD.

In the 1860s, the Union Pacific Railroad created the Credit Mobilier Company as a front to bribe U.S. congressmen and funnel money to its construction projects. Read about how these dealings became public in the Credit Mobilier Scandal.

The Credit Mobilier Scandal of 1872

Since time immemorial, politicians have been tempted with bribes and have been part of all sorts of shady deals. Every generation has witnessed a major government leader brought to his knees by a scandal. The biggest political bombshell of the post-Civil War period was the Credit Mobilier Scandal of 1872, in which the Union Pacific Railroad bribed federal lawmakers in return for various business favors.

In the 1860s, the Union Pacific Railroad was tasked with building a portion of the transcontinental railroad. Union Pacific corporate leaders decided to set up a dummy corporation to divert public funds for their personal use. In 1867, they created such a dummy corporation: the Credit Mobilier of America construction company.

The completion of the transcontinental railroad

Union Pacific representatives made clandestine deals with federal lawmakers. They offered congressmen stock in the Credit Mobilier company, which was basically a guarantee of a share of the public money that would be funneled through the company. In return for the stock options, the congressmen granted the company generous government subsidies and vast land grants. The lawmakers also assured Union Pacific leaders that there would be no federal oversight of their company, including their financial and business dealings.

Such corruption was done in a blatant manner, and both Union Pacific and congressional stockholders in Credit Mobilier got rich. Credit Mobilier representatives were so sure of themselves that they handed out company shares on the floor of the U.S. House of Representatives! The Credit Mobilier Scandal included prominent federal politicians of the era: the Speaker of the House of Representatives, and even the vice president of the United States, Schuyler Colfax.

Schuyler Colfax

The Aftermath and Significance of the Credit Mobilier Scandal of 1872

Because of the blatant manner in which the participants swapped favors, the Credit Mobilier Scandal broke in 1872. A congressional investigation ensued and brought all the details to the public's attention. It ended Colfax's political career, as he was dropped from the vice presidential ticket that year. It also led to the censure of two congressmen. Dozens of additional government officials had their reputations tarnished beyond repair.

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