Also found in: Dictionary.
The ambitious project of linking East to West via the Union Pacific Railroad provided the fruits for one of the biggest congressional scandals of the 1870s.
The building of the Union Pacific Railroad in the 1870s is one of the dramatic, and often romanticized, chapters in the taming of the West. It took a great expenditure of raw human energy in tough, brutal labor to lay thousands of miles of tracks across what had been a great wilderness in order to link the eastern with the western states; and, of course, it also took a great amount of financial energy to supply the lumber, steel, food, and other necessities required by such a vast undertaking. Throughout history we see only a few truisms that remain constant. Unfortunately, one of the eternal constants is that when there is an opportunity to make a lot of money, some participants in the project will find a way to steal more than their rightful share.
On the eve of the 1872 presidential election the New York Sun broke the story of the scandal behind the Union Pacific Railroad. Major stockholders in the railroad had formed the Crédit Mobilier, a company that would receive most of the contracts to build the Union Pacific. The greedy stockholders gave or sold shares in the construction of the railroad to equally greedy congressmen, who surreptitiously increased the conspirators’ profits greatly by approving large federal subsidies for the project. By approving federal funds for inflated expense budgets, the congressmen and the other stockholders were essentially stealing government money.
The Speaker of the House, James G. Blaine, a Maine Republican, set up a committee to investigate the extent of the congressional abuses—though he himself was implicated in the scandal. The investigation sullied the ending presidential term of Ulysses S. Grant and darkened the political careers of his vice president, Schuyler Colfax, and the incoming vice president, Henry Wilson. Oakes Ames of Massachusetts and James Brooks of New York were censured by the House. Representative James A. Garfield was implicated in the scandal, but enough voters accepted his protestations of innocence to elect him president in 1872.
(Société Générate du Crédit Mobilier), a large French joint-stock bank established in 1852. Its founders were the Perier brothers, financiers, and Fould, a banker.
The original capital assets of Crédit Mobilier amounted to 20 million gold francs, increased in 1866 to 120 million gold francs. The Crédit Mobilier financed railroad construction on a wide scale, competing with the family bank of Rothschild, which had monopolized this field, and it participated in the establishment of industrial companies and banks in France, Germany, Austria, and a number of other European countries. The principal operations of Crédit Mobilier were the issue of and speculation in stock shares in companies it established. Napoleon III protected the shady transactions of Crédit Mobilier, using the bank for his own purposes. The bank's chiefs sought “to make themselves the owner and Napoleon the Lesser the supreme dictator of all of France's diverse industry” (K. Marx in K. Marx and F. Engels, Soch., 2nd ed., vol. 12, p. 25). As a result of stock market speculations, the bank failed in 1867 and survived only through the aid of the Bank of France. In 1871, Crédit Mobilier was liquidated. Marx exposed the speculative nature of Credit Mobilier in three articles in the New York Daily Tribune in June-July 1856 (ibid., pp. 21–37).
K. A. SHTROM