Credit Mobilier Scandal

Definition

The Credit Mobilier Scandal was a major political scandal in the United States during the 1870s, involving the Union Pacific Railroad and the construction company Credit Mobilier. This scandal is significant as it highlighted widespread corruption in government and business, particularly in relation to infrastructure development, showcasing how companies exploited government contracts for profit at the expense of taxpayers.

5 Must Know Facts For Your Next Test

1. Credit Mobilier was created in 1867 as a construction company to build the Union Pacific Railroad, but it engaged in fraudulent activities to inflate costs and profits.
2. The scandal came to light when it was revealed that Credit Mobilier shareholders were bribing congressmen to secure favorable legislation and government funding.
3. Prominent politicians, including Vice President Schuyler Colfax, were implicated, which raised questions about the integrity of public officials during this period.
4. The scandal significantly damaged public trust in the government and led to calls for reforms in how public contracts were awarded.
5. The aftermath resulted in increased scrutiny of railroad companies and ultimately contributed to the establishment of regulatory measures to combat corporate corruption.

Review Questions

• What were the main tactics used by Credit Mobilier to exploit government contracts during its operation?
  • Credit Mobilier used tactics such as inflating construction costs, creating false invoices, and bribing government officials to ensure lucrative contracts with the Union Pacific Railroad. By manipulating financial records and engaging in fraudulent activities, they were able to siphon off huge profits from taxpayer-funded projects, showcasing how corporate greed can undermine governmental integrity.
• Analyze the impact of the Credit Mobilier Scandal on public perception of government integrity in the 1870s.
  • The Credit Mobilier Scandal significantly tarnished the reputation of government officials and diminished public trust in the political system during the 1870s. The involvement of high-ranking politicians in bribery and corruption highlighted systemic issues within both business practices and government oversight. This loss of faith led to increased demands for reform, contributing to movements aimed at regulating corporate influence over politics.
• Evaluate how the Credit Mobilier Scandal influenced future policies related to infrastructure development and corporate governance.
  • The fallout from the Credit Mobilier Scandal prompted a reevaluation of policies concerning infrastructure development and corporate governance. Lawmakers began pushing for stricter regulations on government contracts and greater transparency in dealings between corporations and government entities. This shift was essential in establishing frameworks that aimed to prevent similar abuses of power in future infrastructure projects, laying groundwork for ongoing discussions about corporate accountability.

Related terms

Union Pacific Railroad:

A major American railroad company that was part of the first transcontinental railroad project, heavily involved in the Credit Mobilier scandal.

Corruption: The abuse of power for personal gain, often seen in political or corporate contexts, as exemplified by the practices surrounding Credit Mobilier.

Railroad Expansion: The significant growth of railroads in the United States during the 19th century, crucial for economic development and also a backdrop for many scandals like Credit Mobilier.