The Credit Mobilier scandal was a symbol of corruption in the post-Civil War era that highlighted changes in business and political ethics in the United States of America. This series of shocking events took place from 1872 to 1873 and ended with a massive political scandal that tarnished the reputation of Ulysses S. Grant’s administration.
Explanation:
What was Credit Mobilier? When the Union Pacific Railroad company decided to build the eastern segment of the transcontinental railway, it organized a construction company called Credit Mobilier. However, this company was created not just for railroad building, but also to divert profits from the construction straight to the pockets of the Union Pacific executives. The construction of the eastern railroad line was a project of national significance and therefore collected a great amount of capital and federal government financing. Such circumstances created the opportunity for unprecedented financial and political corruption on multiple levels, including the president’s administration.
Who was responsible for the scandal? September 4, 1872 was the day that the scandal broke. The New York Sun daily newspaper, which was popular for its political and economic opinion, published an article exposing 11 members of Congress for receiving about 3,000 shares of Credit Mobilier stock from Massachusetts Representative Oakes Ames. Ames was a successful manufacturer and, along with Thomas C. Durant, a major investor in the Credit Mobilier company.
The information that the New York Sun used for its scandalous issue was based on a court case involving Durant’s ally, Henry McComb, and Union Pacific. The evidence from this case included the compromising correspondence of Oakes Ames about the distribution of the stock below its real value among his fellow congressmen and senators, including Speaker of the House of Representatives Schuyler Colfax. In return for an immense profit from selling the stock, the congressmen approved unnecessary federal subsidies and turned a blind eye to the excessive costs of railroad construction.
According to the Washington Post, Ames wrote in one of his letters to McComb, “We want more friends in Congress, and if a man will look into law, (and it is difficult for them to do so unless they have an interest to do so), he cannot help being convinced that we should not be interfered with.”
What was the reason for the publicity scandal? The motives behind the New York Sun’s publication were predominantly political, as the article appeared right at the time of presidential election campaign, when the Republican Ulysses S. Grant was running for re-election. The Sun was a democratic paper and therefore supported Grant’s opponent, Horace Greeley, who was a Democratic candidate. Greeley’s supporters came up with a plan to discredit Republican candidates by dirtying the image of the entire Republican party.
When the scandal became public, Speaker James Blaine of Maine came up with the initiative to establish an impartial investigation committee with Representative Luke Poland as its chairman. The committee recommended no penalties for people involved in the scandal, except for Oakes Ames and James Brooks. On February 27, 1873, the House censured Ames and Brooks for illegal usage of political power for personal financial profit. All in all, the affair not only tarnished the careers of many politicians, but reflected the disturbing tendency for illegal operations in business and politics.