Credit Mobilier Scandal: The Birth of the Gilded Age

On September 4, 1872, the New York Sun published a blockbuster exposé under the headline “The King of Frauds,” revealing a massive corruption scheme involving Union Pacific Railroad executives, a dummy construction company called Credit Mobilier of America, and approximately one dozen influential congressmen. This scandal marked the birth announcement of what would become known as the Gilded Age—an era of systematic political corruption and corporate malfeasance that would define late 19th century America.

Union Pacific executives had created Credit Mobilier in 1867 as a sham construction company to divert public funds intended for building the eastern portion of the Transcontinental Railroad. While the railroad actually cost only $50 million to build, Credit Mobilier submitted bills totaling $94 million, with executives pocketing the excess $44 million. To prevent investigation and ensure favorable votes, railroad officials bribed congressmen with Credit Mobilier shares at below-market prices—essentially guaranteeing them a share of stolen public money. In exchange, lawmakers granted the company generous government subsidies, vast land grants, and assured company leaders there would be no federal oversight.

The scandal implicated numerous high-ranking officials, including House Representative Oakes Ames and Vice President Schuyler Colfax, along with Ulysses S. Grant’s second vice president. The exposure damaged the Republican Party’s reputation and raised public awareness about the depth of political corruption in the post-Civil War era. Mark Twain’s 1873 novel “The Gilded Age” satirized this very scandal, giving the entire era its name. The Credit Mobilier scandal established a crucial precedent by highlighting the dangers of corporate influence in government, prompting discussions about ethical standards for public officials and sparking movements for campaign finance reform—debates that continue to resonate in American politics today.