Credit Mobilier

Definition

Credit Mobilier was a financial company established in the 1860s that played a significant role in the construction of the Union Pacific Railroad, known for its involvement in one of the largest corruption scandals in U.S. history. This company became infamous for its deceptive practices, including overcharging the government for railroad construction and bribing politicians to protect its interests, ultimately contributing to a loss of public trust in the government and financial institutions during the Panic of 1873.

5 Must Know Facts For Your Next Test

1. Credit Mobilier was founded by investors in the Union Pacific Railroad as a means to profit from government contracts during railroad expansion.
2. The company was known for its practice of selling overpriced shares to members of Congress and government officials, which led to allegations of bribery and corruption.
3. The scandal surrounding Credit Mobilier was exposed in 1872, resulting in public outrage and a tarnished reputation for many politicians involved.
4. The fallout from the Credit Mobilier scandal contributed to a broader distrust of financial institutions and government officials during the economic downturn of the Panic of 1873.
5. The investigation into Credit Mobilier highlighted issues of corporate greed and unethical practices that characterized much of the Gilded Age.

Review Questions

• How did Credit Mobilier's practices contribute to the broader themes of corruption and corporate greed during its time?
  • Credit Mobilier's deceptive practices, such as overcharging for construction work and bribing politicians, exemplified the rampant corruption that was prevalent during the Gilded Age. The company's actions not only enriched its investors at the expense of taxpayers but also reflected a larger trend of corporate greed where profit was prioritized over ethical conduct. This culture of corruption ultimately eroded public trust in both corporations and government entities.
• Discuss the impact of Credit Mobilier on public perception of government and financial institutions leading up to the Panic of 1873.
  • The revelations about Credit Mobilier significantly damaged public confidence in government institutions and financial systems. As politicians were implicated in corrupt dealings, people began to view their leaders with skepticism, leading to widespread disillusionment. This loss of faith coincided with the economic instability that followed, as many citizens struggled during the Panic of 1873, further deepening their distrust in institutions that were supposed to safeguard their interests.
• Evaluate how the scandal surrounding Credit Mobilier influenced subsequent reforms in American business practices and governance.
  • The Credit Mobilier scandal acted as a catalyst for reform movements aimed at increasing transparency and accountability in business practices and government dealings. In response to widespread public outcry over corruption, new regulations were introduced to curtail unethical behaviors among corporations and politicians. These reforms laid the groundwork for future legislation aimed at regulating financial markets and ensuring ethical governance, reflecting an evolving understanding of corporate responsibility in American society.

Related terms

Union Pacific Railroad: A major American railroad company that was part of the first transcontinental railroad, which significantly expanded transportation and trade across the United States.

Panic of 1873:

A severe economic crisis that began with the collapse of a major bank, leading to a nationwide depression characterized by high unemployment and widespread business failures.

Gilded Age:

A period in U.S. history from the 1870s to about 1900 marked by rapid economic growth, industrialization, and significant political corruption.