The Crédit Mobilier scandal
September 04, 1872
On this date, the New York Sun exposed the Crédit Mobilier scandal. Crédit Mobilier was a sham construction company chartered to build the Union Pacific Railroad by financing it with unmarketable bonds. It also provided a mechanism to dispense the immense profits from building the railroad to the board of directors and shareowners. One of the chief participants, Representative Oakes Ames of Massachusetts, sold shares at bargain rates to roughly a dozen high-ranking House colleagues, including then-Vice President Schuyler Colfax (the former Speaker of the House). Ames sought to secure political clout to benefit the company. Most of the Members sold their stock quickly, nullifying the large returns they could have received. However, Representative James Brooks of New York (who also was the Union Pacific government director) profited from a large block of shares. When the scandal became public, Speaker James Blaine of Maine appointed a select investigation committee chaired by Representative Luke Poland of Vermont in December 1872. Speaker Blaine noted that the “charge of the bribery of members is one of the gravest any legislative body is called upon to answer, and demands a prompt, thorough, and impartial investigation.” On February 27, 1873, the House censured Ames and Brooks for using their political influence for personal financial gain.
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