10. With dozens of Congressmen, the Speaker of the House, and the Vice President owning fraudulently purchased stock in a railway company, the Crédit Mobilier of America scandal struck at the heart of Washington’s elite
In 1864, the Union Pacific Railroad was chartered by Congress, with contracts offered to private enterprises seeking to fulfill the endeavor. Failing to initially attract interest, generous incentives were provided, including loans of between $16,000 and $46,000 per mile of track, totaling more than $60m, as well as a land tract worth $100m. Founded in the same year, the Crédit Mobilier of America, building the eastern section of the First Transcontinental Railroad, successfully negotiated contracts with Congress that vastly overpaid them for their services. Paid more than $94m, Crédit Mobilier incurred costs of only $50m for their work.
Reporting a profit of only $23m, the undisclosed $20m was divided up among the directors and leading shareholders of the company in secret. Including fifteen leading Washington politicians, who had been offered below market-value stock prior to the contracts being tendered, the deceit was leaked in the midst of the 1872 election. Involving Vice President Harry Wilson and Speaker of the House James Garfield, subsequent investigations discovered as many as thirty percent of Congress owned stock in Crédit Mobilier. Despite the scandal, Grant won re-election and Garfield would become the 20th President of the United States in 1881.