page_title: Crédit Mobilier scandal
section_title: Bribery
hierarchical_section_title: Crédit Mobilier scandal / Bribery
caption_attribution_description: Oakes Ames. Library of Congress description: "Hon. Oakes Ames of Mass."
context_page_description: The Crédit Mobilier scandal, which came to public attention in 1872, was a two-part fraud conducted from 1864 to 1867 by the Union Pacific Railroad and the Crédit Mobilier of America construction company in the building of the eastern portion of the First Transcontinental Railroad. The story was broken by The New York Sun during the 1872 campaign of Ulysses S. Grant.
  First, a fraudulent company, Crédit Mobilier, was created by Union Pacific executives to greatly inflate construction costs. Though the railroad cost only $50 million to build, Crédit Mobilier billed $94 million and Union Pacific executives pocketed the excess $44 million. Then, part of the excess cash and $9 million in discounted stock was used to bribe several Washington politicians for laws, funding, and regulatory rulings favorable to the Union Pacific.
  The scandal negatively affected the careers of many politicians and nearly bankrupted Union Pacific. The scandal caused widespread public distrust of Congress and the federal government during the Gilded Age.
context_section_description: In 1867, Crédit Mobilier replaced Thomas Durant with Congressman Oakes Ames. 
  Ames, still a member of Congress, distributed cash bribes and discounted shares of Crédit Mobilier stock to fellow congressmen and other politicians in exchange for votes and actions favorable to the Union Pacific. Ames offered to members of Congress shares in Crédit Mobilier at its discounted par value rather than the market value, which was much higher due to its superb (but fraudulent) profits and exclusive contract with the Union Pacific Railroad. It also declared substantial quarterly dividends on its stock.
  Those allowed to purchase shares at par value could reap enormous capital gains simply by offering these discounted shares on the market, knowing that they would be purchased at a higher price by investors desiring to own stock in such a profitable company. These same members of Congress made the company appear to be profitable by voting to appropriate additional government funds to cover Crédit Mobilier's inflated charges. Ames's actions became one of the best-known examples of graft in American history.
caption: Oakes Ames
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