September 4, 1872

News broke that members of Congress had been involved in rail industry corruption. The Union Pacific Railroad company had been hired to build part of the transcontinental railway. Instead of hiring outside contractors to complete the construction, however, Union Pacific vice president Thomas Durant and Union Pacific’s other largest stockholders organized their own construction company—Crédit Mobilier—and awarded the UP building contract to themselves. Durant and other Crédit Mobilier executives reaped major profits for themselves from the construction, which was financed largely by government subsidies, overcharging for the cost of construction and nearly bankrupting Union Pacific. Durant also distributed Crédit Mobilier stock to several members of Congress who had been influential in railroad legislation. Union Pacific came to be worth almost nothing, and while Durant and other major UP stockholders had made themselves rich, many others were left with worthless securities. After Durant’s scheme came to light, eleven members of Congress were accused of accepting shares of Crédit Mobilier's stock and contributing to the corruption of the rail industry.

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