
There’s no exact science on how many people you need to run a successful political scandal. I imagine it was more about substance in the powerful people you can turn than the number.
If you are trying to swindle the United States Federal Government of money, you can cut to the chase a lot quicker if you can pocket a few Congressmen. But if you manage to throw in a vice president, well, you are doing a heck of a job in expediting your payday.
This edition of Okay History Political Scandals takes us back to the Gilded Age, where the country expanded and money was to be made in all sorts of ways. One way was to control the railroads. Lock in on those contracts and fatten your pocket by making sure the government doesn’t come sniffing around.
DOGE of 2025 would have loved to have found the fraud of 1872 because it caught a few Congressmen and caused a popular sitting president to need to switch out his vice president in the middle of a reelection.
Let’s dive in.
# 33. The Credit Mobilier Scandal
Introduction
We may have Fake News, but we created Fake Companies in the good old days. And those Fakers made a lot of money.
Union Pacific Railroad Company was created back in 1864, when the Pacific Railroad Act was passed. Along with another company, they would work to build the eastern portion of the Transcontinental Railroad.
Facing massive construction costs and needing to attract investors, Union Pacific executives created a separate entity in 1868 called Credit Mobilier of America. This company was formed to handle construction but was actually a front for overcharging the government and funneling profits to insiders.
They made the company sound French because there was a legitimate French company with the same name. This was like the first phishing scam that we all fell for at some point.
With everything in place, it was time to recruit some friends in Washington.
Background
Greed is a great motivator. I remember a movie character in the 1980s who said Greed is Good. The guys at Union Pacific certainly thought so. So did Congressman Oakes Ames, from Massachusetts, who became the lead Faker by selling shares and bribing his colleagues, including Vice President Schuyler Colfax. Where did people come up with these names?
Union Pacific insiders like George Francis Train and Thomas Durant, under the guise of Credit Mobilier, charged Union Pacific exorbitant fees for construction work. In turn, Credit Mobilier made massive profits and distributed shares at discounted rates back to Ames, Colfax, and others to avoid scrutiny and ensure political protection.
That’s correct. A guy named Train paid off people in Congress while overcharging the federal government tens of millions of dollars to build railroads for trains.
Everybody made millions. It stopped because greed is also a significant factor in people’s downfall.
Outcome
Henry McComb, a former Civil War colonel and investor in other railroads, was left out of Ames's greedy cash grab when he wouldn’t sell him more shares. McComb then went to the press, and everything went off the rails.
In 1872, The New York Sun exposed the scandal and named names during a presidential election. McComb shared his correspondence with Ames, and the entire country saw the greedy underbelly of rich people and their influence on our elected officials.
Reaction
After a congressional investigation, thirteen members of Congress were identified in this scam, which damaged the federal government's reputation. Ames and another Congressman were censured, but guys like Colfax, future president James Garfield, and 1872 running mate Henry Wilson walked away untouched.
President Grant was particularly affected because it appears that everyone in his administration spent a lot of time, attention, and resources making themselves rich.
It’s awful when people distrust the government. It’s easy to do when the government does something so systematically that the loss of trust is justified, as it was here. But in general, if you think the government is inherently corrupt, you are generally an unhappy person.
What do you think about this scandal? Are you surprised we didn’t end up expelling anyone? How much of this stuff can be blamed on Grant?
Okay, so what do you think? Let’s take a poll:
Blessed Easter and Passover to everyone. If you do not celebrate either, I wish you a restful and recharging weekend. I know I need it. It will be 87 here in DC tomorrow!
I’ll see you back here on Monday. Thanks for your support of Okay History. Let me know if you need anything!
Okay,
Chris
"President Grant was particularly affected because it appears that everyone in his administration spent a lot of time, attention, and resources making themselves rich."
But Grant himself didn't benefit financially from these things- he just looked the other way while they happened. He was never a terribly good businessman. and was almost reduced to dire poverty after he left the office for participating in an equally phony brokerage scheme (without his knowing it was phony).