White House gossip

by Edna M. Colman

Back in 1862, the march of progress demanded better facilities for transportation across the plains, mountain ridges, and forests of the vast land beyond the Mississippi River than were afforded by the prairie-schooner caravans. In order that the great gaps of distance should be bridged in shorter time and by easier, safer means, the government authorized the construction of a Pacific railroad, a logical move, since the railroads were stretching their network of ties and tracks and switches in many directions. This Pacific railroad, built by 1869, at a terrific cost in money and with a prodigious amount of trickery, reached from Omaha, Nebraska, to Ogden, Utah, a distance of 1,029 miles, where the Central Pacific terminated its stretch of 878 miles from San Francisco. Thus it was made possible to come by train from San Francisco to New York, a distance of 3,322 miles. By the time ten years had elapsed after its inception, its directing and promoting agents were before the great court of public opinion, branded for crimes, with marks more loathsome than that of Cain, as a result of the disclosures brought forth in the investigations conducted in the two Houses of Congress.

In consequence, the Crédit Mobilier held the centre of the stage; nothing else was discussed; argument and debate were at white heat; and every man who feared implication lived upon the rack in a torture of suspense. Two members of the House, Oakes Ames, of Massachusetts, and James Brooks, were slated for expulsion, while the same sentence threatened Senator James W. Patterson. But Congress became too demoralized and too apprehensive as to where the accusing finger would tag another victim to take any more decisive action than censure. Ames and Brooks, weary, ill, and shaken by the efforts to make of them the scapegoats, died in the opening days of the new administration, within two months of the investigation. James Brooks, who had been a trusted government director of the Union Pacific, died April 30, 1873; while the bluff, free-handed manufacturer, Ames, followed him a few days later, on May 8, 1873.

Ben Perley Poore explains the Crédit Mobilier in part as follows:

“The Crédit Mobilier made a great deal of talk, although comparatively few people knew what it was about. Under various acts of Congress granting aid to the Union Pacific Railroad, that corporation was to receive 12,800 acres of land per mile, or about 12,000,000 acres in all, and government 6 per cent. bonds for the amount of $12,000 per mile for one portion of the road; $32,000 per mile for another portion; and $48,000 per mile for another. In addition to these subsidies, the company was authorized to issue its own first-mortgage bonds to an amount equal to the government bonds and to organize a capital stock not to exceed one hundred million dollars. All of this constituted a magnificent fund, and it soon became evident that the road could be built for at least twenty million dollars less than the resources claimed. The honest way would have been to build the road as economically as possible and give the government the benefit of the saving. Instead, the directors concocted a scheme whereby they could command the whole amount, and after building the road, divide the surplus. They decided to become contractors and hire themselves to build the road.

“To complete their fraud successfully, without exciting public attention, and to cover their tracks, was a complicated matter. They secured several attorneys skilled in the intricacies of railroad fraud, and with falsified statements and some advice, the machinery of the transaction was arranged satisfactorily. Samuel J. Tilden was their attorney. In order to avoid personal liability and give the movement the appearance of legality, the directors purchased the charter of the Pennsylvania Fiscal Agency and changed its name to the Crédit Mobilier of America. This was in 1864, and at this time two million dollars’ worth of stock had been subscribed to the railroad company and two hundred eighteen dollars paid in. Samuel J. Tilden had personally subscribed twenty thousand dollars. The first thing the Crédit Mobilier did was to buy in all of this stock and to bring the Railroad Company and the Crédit Mobilier under one management and the same set of officers. Then the directors of the Railroad Company, through certain middlemen, awarded the contract for building the road to the Crédit Mobilier; in other words, to themselves, for from twenty thousand to thirty thousand dollars per mile more than it was worth. Evidence which afterwards came to light in the Congressional investigations showed that the Crédit Mobilier made a cash profit in the transaction of over thirty-three million dollars, besides grabbing up the stock of the road at thirty cents on the dollar, when the law plainly provided that it should not be issued at less than par.

“Oakes Ames, the Massachusetts mechanic, who had made a fortune in the manufacture of shovels, had embarked in the construction of the Pacific railroad. Finding legislation necessary, and knowing how difficult it was to secure the attention of Congressmen to schemes that did not benefit them or their constituents, he distributed the shares of this Crédit Mobilier, as he expressed it, where it would do the most good.’”

Ames being a member of Congress and a manager of the scheme was peculiarly appreciative of the value of Congressional assistance in behalf of the Crédit Mobilier. It looked as though its purpose was to drain money from the Central Pacific railroad and from the government as long as possible. Any legislation on the part of Congress designed to protect the interest of the government would naturally be unfavourable to the Crédit Mobilier, and it was the aim of the corporation to prevent any such legislation. The price agreed upon for building the road was so exorbitant and afforded such wicked profit to the Crédit Mobilier that it was almost certain some honest friend of the people would demand that Congress should protect the Treasury from such robbery. Accordingly, it was determined to interest in the scheme enough members of Congress to prevent any protection of the National Treasury at the expense of the unlawful gains of the Crédit Mobilier. Oakes Ames, being in Congress, undertook to secure the desired hold upon his associates. The plan was to secure them by bribing them, and for this purpose a certain portion of the Crédit Mobilier stock was placed in the hands of Mr. Ames, as trustee, to be used by him as he thought best for the best interests of the company. Mr. Ames went to Washington, December, 1867, for the opening of the session of Congress. Within a month, he entered into contracts with a considerable number of members of Congress of both Houses to let them have shares of stock in the Crédit Mobilier Company at par, with interest thereon from the first day of the previous July.

Ames was not the only member of the Company engaged in placing stock where it would benefit the corporation. Doctor Durant, President of the Pacific Railway, was engaged in securing his friends in the same way, and he received a portion of the stock to be used in this manner. Mr. Henry S. M’Comb of Delaware was also interested in a scheme to put in his claim for a part of the stock which was being used as a corruption fund for his friends. The claim involved him in a quarrel with Ames, and the stock he claimed was assigned to Ames. In 1872, the quarrel reached such a pitch that M’Comb made the facts public and published a list of the Congressmen with whom Ames had said he had placed his stock, giving the number of shares sold to each. This list included Schuyler Colfax, Vice President of the United States; Henry Wilson, Senator from Massachusetts; James W. Patterson, Senator from New Hampshire; John A. Logan, Senator from Illinois; James G. Blaine, Member of the House from Maine, and Speaker; W. D. Kelly of Pennsylvania; James A. Garfield of Ohio; James Brooks of New York; John A. Bingham of Ohio; Henry L. Dawes of Massachusetts; and others who were not in Congress at the time of the exposé. A storm of excitement was created over the country at the prominence of the names. As a rule, all implicated denied emphatically having ever owned or purchased Crédit Mobilier stock. They declared themselves incapable of holding the stock, saying that it would be a crime against morality and decency to be connected in any way with the Crédit Mobilier. It was a mistake on the part of Congressmen to deny their connection with the Crédit Mobilier. Frank acknowledgment of purchase and the statement that they had relinquished it as soon as its true character was known would have saved their faces before the world. They would have escaped with being regarded as silly, but the denials caused Ames to announce that the charges were true, and that he could and would prove them so. And he did.

When Congress assembled in December, 1872, Blaine, the Speaker, wishing to vindicate himself, claiming his character had been unjustly assailed, asked the House to appoint a committee to investigate the charges brought by Ames and M’Comb and bring in a report of their findings. Mr. Poland, of Vermont, was made Chairman. Efforts to keep the investigation secret failed, as the indignant public demanded and obtained an open trial.

The committee’s report to the House failed to sustain the denials of members as to ownership of stock, although it acquitted all but one of the charge of having been bribed. It fastened the ownership upon all but Mr. Blaine, and showed them all as convicted of falsehood. In several cases, their denial was met by the production of their checks, as was true in the case of Colfax. Blaine denied it, and the committee report sustained his denial.