Crédit Mobilier, one of the worst outrages in the history of Congress, affected national elections and gave “the Gilded Age” its name.
Editor’s Note: Robert Mitchell is an editor with the Washington Post News Service and the author of two books on American history, including Congress and the King of Frauds: Corruption and the Credit Mobilier Scandal at the Dawn of the Gilded Age, from which he adapted this essay.
On September 4, 1872, under the headline “The King of Frauds,” the New York Sun published a blockbuster exposé spread over three of its four pages that would become the birth announcement of the era in American history known as “the Gilded Age.” The Sun revealed that Rep. Oakes Ames of Massachusetts had peddled valuable stock in a contractor of the Union Pacific Railroad with the unlikely name of Crédit Mobilier to other members of Congress to win support for the company's interests on Capitol Hill. The Sun called it bribery, but Ames refused to concede that he had done anything wrong. By the time it was all over, few beyond Capitol Hill or his home state agreed.
Published as President Ulysses S. Grant coasted to re-election and a scandal-plagued second term, the scoop implicated many of the most prominent figures in Washington. At the top of the list was Vice President Schuyler Colfax, the Indiana editor-politician who allegedly received shares while Speaker of the House, and Treasury Secretary George Boutwell, a former congressman from Massachusetts.
The Sun charged that other recipients included James G. Blaine of Maine, who succeeded Colfax as Speaker; Representative Henry L. Dawes of Massachusetts, chairman of the House Ways and Means Committee; and James A. Garfield of Ohio, the rising star in the House Republican caucus who chaired the House Appropriations Committee. The affair also tarred Henry Wilson, the Massachusetts senator who succeeded Colfax as Grant’s vice president. Almost all of the leading figures named by the Sun were Republicans, but the newspaper also linked a prominent Democrat, James Brooks of New York, to the scandal.
The sweep of the allegations shocked the public. “If the standard of public morals at Washington has become so degraded that Wilson, Boutwell, Dawes, Blaine and Garfield cannot be trusted, then it is time there was a general cleaning out of the whole establishment,” the Chicago Tribune thundered. Boutwell and Blaine satisfied investigators that they were not involved, but virtually no one else linked to Crédit Mobilier emerged entirely unscathed.
Ames freely admitted selling Crédit Mobilier shares to his colleagues – and he was equally candid about his reasons for doing so. As he put it in a letter to Henry S. McComb, the railroad speculator whose lawsuit formed the basis of the story in the Sun: “We want more friends in this Congress & if a man will look into the law (& it is difficult to get them to do so unless they have an interest to do so) he cannot help being convinced that we should not be interfered with.”
The ramifications of the explosive but deeply flawed scoop were profound. The story spawned three congressional investigations — two in the House and one in the Senate. The House debated whether to expel Ames and a Democratic congressman from New York caught up in the scandal (both were ultimately censured, instead), while the Senate committee recommended the expulsion of a Republican member from New Hampshire (the Senate took no action on the recommendation). Crédit Mobilier permanently scarred the reputation of several prominent politicians and helped set the stage for a massive Republican defeat in the congressional elections of 1874.
The revelations of venality and duplicity informed a popular novel by Mark Twain and Charles Dudley Warner whose title, The Gilded Age: A Tale of Today, has lent its name to the corruption-laden decades that followed the Civil War. The scandal validated people's anxieties about corruption and concentrated economic power as new divisions challenged the primacy of the sectional issues that had riven American politics since the 1850s. Few other political scandals have had such significant repercussions.
Corruption has a long history in American politics, but rarely has it figured more prominently in the give-and-take of policy and partisanship than in the years that followed President Abraham Lincoln’s assassination in 1865. When President Andrew Johnson narrowly escaped conviction in the Senate on articles of impeachment, the suspicion of vote-buying hung over his victory. Democrats, eager to roll back political and economic gains made by once-enslaved blacks, attacked malfeasance in Republican-led Reconstruction governments south of the Mason-Dixon Line and in Washington.
The administration of President Ulysses Grant was widely assailed for tolerating corruption. On Capitol Hill and in state capitals across the country, railroads sought land grants, government-backed bonds, and other benefits by distributing bribes, travel passes, and other favors.
Crédit Mobilier, whose chief stockholders were major Union Pacific investors, had ostensibly been hired to build sections of the railroad as it extended west from Omaha. Despite government support in the form of generous land grants and bonds, the railroad struggled to make money for its investors. McComb charged that Crédit Mobilier was a shell corporation exploited by railroad investors to line their pockets and cheat the federal government, although that did not keep him from investing heavily in the enterprise.
See also: "A Special Issue on Presidential Misdeeds," by Edwin S. Grosvenor
Ames’s defenders denied he had fraudulent intentions, but they conceded that Crédit Mobilier was designed to raise capital and limit the liability of Union Pacific stockholders. The arrangement was necessary, they argued, because the federal legislation that authorized construction of the transcontinental railroad required the sale of Union Pacific stock at prices too high ($1,000 per share initially, later lowered to $100) to attract investors. “The government has not been wronged or cheated in any way that I am aware of,” insisted the former congressman and Crédit Mobilier investor John Alley.
That opinion was not widely held. One of the congressional committees formed to investigate Crédit Mobilier concluded that the railroad-funding scheme allowed financial speculators, with little or no risk, to pocket an enormous windfall at taxpayer expense. “The Government never consented to trust its property to men who had not put their own money into the enterprise,” the panel concluded.
At one level, the Crédit Mobilier story is a tale of hard-nosed Washington politics. Democrats and liberal Republicans exploited the revelations to pummel mainstream Republicans and the Grant administration during the presidential campaign of 1872. While the story made little difference in the outcome of the election, it proved to have a life of its own. After Grant’s landslide victory, congressional Republicans scrambled to get ahead of the scandal with an investigation into the allegations of bribery, but they bungled in their attempts to manage the inquiry. Democratic attorney Jeremiah S. Black, a cunning Washington insider, worked all sides of the affair, representing McComb, leaking the story to the Sun, and counseling one of the Republican lawmakers linked to Crédit Mobilier.
Blunders by members of Congress and the committees that investigated the scandal magnified public outrage and transformed Crédit Mobilier from just another episode of partisan mudslinging into a genuine political sensation that filled the columns of the nation’s newspapers for months. But the emergence of the scandal as a defining event of the Gilded Age has as much to do with the changing nature of American politics in the years after the Civil War as did the sensational headlines and political miscalculations.
As the American economy staggered toward industrialization, Crédit Mobilier called attention to the cozy relationship between members of Congress and the railroads that was becoming increasingly troublesome to many Americans. The detailed and unseemly revelations that emerged from the scandal raised disturbing questions about the exercise of influence by corporate interests in Washington that far exceeded concerns about the relatively small sums of money involved. The modest profiteering by lawmakers implicated in the scandal was fairly insignificant, except as it pertained to “the fitness of such a man for continued trust,” the Baltimore Sun conceded. “But 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.”
The scandal also illustrated the growing power of the press. Beginning with the scoop by the New York Sun, the nation’s increasingly independent daily newspapers and their band of correspondents in Washington drove events and shaped public opinion as it related to Crédit Mobilier. Facing a steady stream of front-page stories and indignant editorials from New York to Sacramento, Congress was unable to sweep the scandal under the rug. Lawmakers were unused to the scrutiny and didn’t like it. Reflecting the fury of many of his colleagues, one of Ames’s defenders denounced the newly aggressive press as “a damnable engine of libel and slander.”
Politicians didn’t appreciate their misbehavior being scrutinized.
When Congress acted on the allegations in a way that fell far short of the expectations of outraged editors, and then compounded its problems by voting for a generous pay increase for its members just months before the onset of a stock market panic, the political consequences were severe. Democrats picked up almost 100 seats in the House in 1874 to take control of the chamber for the first time since the late 1850s.
Because the expose appeared during the presidential campaign, skeptics waved it off as nothing more than an assault on the Republican Party. Even today, it might be tempting to view the scandal through the lens of partisan politics, but the story of Crédit Mobilier defies simplistic political stereotypes. Many Republican members of Congress coddled the railroads, but others denounced the operations of Crédit Mobilier and the Union Pacific. As the investigation into the scandal neared its conclusion, a number of Republicans appeared eager to dismiss the affair, while others cautioned against haste and offered prophetic warnings about its significance.
At the same time, congressional Democrats assailed Republicans for complicity with Crédit Mobilier, even though one of their own colleagues was implicated. They also denounced the investigation as a partisan sham, despite the involvement of two Democrats in leading the inquiry. The varied responses to the Crédit Mobilier scandal in both parties make it impossible to assign partisan blame for the abuses it highlighted.
Though it burst forth in the era of the steam engine and the telegraph, the Crédit Mobilier scandal remains relevant in the digital age. It offers a timeless display of dishonesty, greed, and folly, leavened by moments of comedy, courage, and principled eloquence. It is a testament to the truth of Ben Bradlee’s famous observation, made more than 100 years after the Sun exposed the Crédit Mobilier stock sales, that “the truth, no matter how bad, is never as dangerous as a lie in the long run.” The scandal illustrates how, in a period of political and economic tumult, the specter of corruption can undermine confidence in elected leaders and can drive public opinion. Above all else, its echoes reverberate whenever anyone in Washington is suspected of coddling powerful interests in exchange for campaign contributions or other special favors.
The Crédit Mobilier scandal shook Washington less than a decade after the guns fell silent at Appomattox, but the tremors still rumble today.