The capacity of wealthy corporate interests and speculators — the money power of the 19th century — to toss cash, stocks, bonds and other benefits at government officials to curry favor and win influence came into sharp relief as the Credit Mobilier scandal broke during the winter of 1872-1873.
Remembered dimly — if at all — Credit Mobilier was a defining moment in the dismal politics of the Gilded Age, one that has taken on renewed relevance at a time when calls to “drain the swamp” reverberate at both ends of Pennsylvania Avenue.
Named after a French banking house, Credit Mobilier was the construction subsidiary of the Union Pacific, one of the two railroads that joined in 1869 to complete the transcontinental railway network. Many of Credit Mobilier’s largest stockholders were also large Union Pacific shareholders who essentially used Credit Mobilier to pay themselves to build the railroad — and pocket large profits in the process.
In an exposé published Sept. 4, 1872, Charles A. Dana’s New York Sun reported that one of its leading investors, a Massachusetts Republican congressman named Oakes Ames, had sold Credit Mobilier stock to other Republican members of Congress at advantageous prices. Although he denied demanding anything in return, Ames candidly admitted to a fellow Credit Mobilier investor that the sweetheart stock sales were intended to promote the interests of the company and the Union Pacific on Capitol Hill. “We want more friends in this Congress,” Ames wrote.
The disclosures in Dana’s feisty newspaper led to the formation of three congressional committees to investigate Ames’s stock sales and the operations of Credit Mobilier. The sums of money at stake were not large — lawmakers who invested in Credit Mobilier made less than $5,000 ($87,000 today), and most less than $1,000 — but that was not what many found so disturbing. Rather, it was the question of “the fitness of such a man for continued trust,” editorialized the Baltimore Sun. Moreover, the newspaper added, “that the legislation of the country should be influenced and controlled — notoriously and undeniably so — by such agencies and means, comes home, or should come home, to the breast of every citizen and patriot.”
In the short term, the scandal had no political impact. Sneering at its competitor, the ardently Republican New York Times dismissed the Credit Mobilier story as a partisan-fueled lie. Most voters agreed, returning Republican President Ulysses S. Grant to the White House in a landslide and boosting his party’s majority in the House. Republican hegemony in Washington seemed assured for years to come.
But as Washington shivered through the early winter months of 1873, the scandal’s toxic impact began to take its toll.