For want of “a thorough and honest investigation”
The normally feisty editorial page of Charles A. Dana’s New York Sun seemed unusually downcast.
It was Nov. 29, 1872. Horace Greeley, the great editor of the New York Tribune who had once employed Dana as his managing editor, lay at death’s door. Greeley died later that day – bringing an end to one of the most remarkable careers in the history of American journalism – only weeks after voters overwhelmingly rejected his quixotic bid for the White House.
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The staff of the New York Tribune, Horace Greeley (third from left, sitting) and Charles A. Dana (second from left, standing). Library of Congress photo.
In the midst of the presidential campaign, the Sun – which backed Greeley and was an outspoken critic of President Ulysses S. Grant – published an explosive story detailing sweetheart stock deals involving members of Congress and a lucrative subsidiary of the Union Pacific.
Oakes Ames, a financier heavily invested in the Union Pacific and a Republican member of Congress from Massachusetts, sold the shares in the company – Credit Mobilier – to Republican colleagues with the expectation that ownership of the stock would make them more inclined to support the interests of the railroad. “We want more friends in this Congress,” Ames indiscreetly confided to Henry S. McComb, a Credit investor who would later sue him.
The story implicated many of the biggest names in Washington, including Vice President Schuyler Colfax; his successor, Henry Wilson of Massachusetts; James A. Garfield and John Bingham of Ohio, Henry Dawes of Massachusetts, and William “Pig Iron” Kelley of Pennsylvania. The Sun also named House Speaker James G. Blaine and Treasury secretary George Boutwell as Credit Mobilier purchasers, although no evidence would emerge to implicate them.
The Sun’s scoop attracted considerable attention but ultimately made no difference in the outcome of the campaign. Grant carried all but six states and led Republicans to a massive majorities in the House.
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Horace Greeley. Library of Congress photo.
Now, as Dana’s mentor lay dying weeks after voters seemed to have shrugged off the Credit Mobilier story, the Sun raised the white flag. A “thorough and honest investigation of the Credit Mobilier is not to be expected at the hands of this Congress,” the Sun predicted. The Sun endorsed the call by the liberal Springfield Republican for the expulsion of Ames even as it cast doubt on its likelihood.
“But is it probable that Mr. Ames would consent to be expelled without attempting to defend himself?” the Sun asked. “And would not the mischief done to prominent members of both parties, and especially of the Republican party, by such a defense be greater than any possible harm that might come from ignoring the whole subject and letting Ames remain quietly in his place for the few months remaining to the present Congress?”
It turned out that Dana’s pessimism was premature. Before spring returned to Washington, no fewer than three congressional committees were investigating Credit Mobilier’s business practices and reach on Capitol Hill.
The Sun’s editorial rested on sound, if cynical, political logic – and raises one of the great questions surrounding the story of the Credit Mobilier scandal: why would Republicans pursue an investigation into a scandal when there were powerful incentives to ignore it?
In fact, there were several reasons, involving politics and principle, for congressional Republicans to get to the bottom of the affair.
For one thing, there had long been unease about Credit Mobilier among Republicans and blue-stocking opinion leaders. In 1869, Republican Representative Cadwallader C. Washburn of Wisconsin denounced Credit Mobilier (named after a prominent French banking house) for inflating railroad construction costs to allow its stockholders – who were also Union Pacific investors – to fraudulently enrich themselves.
Through Credit Mobilier, Washburn charged in a House speech, the Union Pacific “practically contracts with itself to build the road, and that the enormous figures they exhibit as representing the cost of the road are absolutely fictitious.”
Washburn’s speech followed a scathing article about railroad finance by Charles Francis Adams Jr. in the North American Review that took direct aim at Credit Mobilier. Government-backed railroad construction threatened the honest operation of government, Adams warned, and Credit Mobilier exemplified why. “The members of it are in Congress,” Adams wrote of Credit Mobilier. In “Washington they vote the subsidies, in New York they receive them, upon the Plains they expend them, and in the Credit Mobilier they divide them.”
Republicans like Washburn who represented the farm states of the Old Northwest were also well aware of the rising anger with monopolistic railroad practices. Membership in the nominally apolitical Patrons of Husbandry – known more commonly as the Grange – spread like wildfire in the Mississippi Valley and South in 1872 and into 1873, fueled by disenchantment with railroads.
The Grange was not a partisan organization, but that did not mean its members were disinterested in politics. When it came to politicians, Grangers wanted to know one thing, a Nebraska newspaper noted: “Is he liable to be bought by the railroads? In other words, is he the staunch loyal friend of the husbandman?”
Republicans also realized that the scandal – by detailing the tawdry eagerness of elected representatives to pocket a tidy sum from a shady business – cast a dark cloud over Congress. Republican Representative George McCrary of Iowa, a member of one of the committees that investigated Credit Mobilier, noted that respect for law depended on respect for those who wrote the law. McCrary’s chairman, Republican Luke Potter Poland of Vermont, warned his colleagues that they needed to act vigorously to convince the public that they were not in thrall to the “money power” of wealthy corporations and speculators.
Perhaps no one exemplified Republican concern about Credit Mobilier more than Garfield. Even though he was implicated in the scandal – and would later be found to have bought Credit Mobilier shares, despite his denials under oath – Garfield met with Blaine to urge an investigation.
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The U.S. Capitol from Behind the Scenes in Washington.
It was a risky move, but Garfield had been advised by Jeremiah S. Black, an influential Democratic lawyer who was representing Henry S. McComb in his suit against Ames, that he had nothing to fear. Ames may have intended the sweetheart sale as a bribe, Black reasoned, but since Garfield did not know the motives for the sale, he was not guilty of taking a bribe.
But things did not go according to plan. Pressure from newspapers forced the closed-door proceedings to open to the public. Members of Congress who denied buying shares from Ames were shown to have lied when Ames produced proof of their transactions. The committee led by Poland focused on the motives of Ames and a leading House Democrat, James Brooks of New York, but made no attempt to examine how the stock sales may have affected the actions of those who bought the shares. In the end, only Ames and Brooks were sanctioned by the House, and their punishment — censure — was less severe than the expulsion recommended by Poland and his colleagues.
The political melodrama transfixed Washington and the rest of the country. One Garfield ally advised the lawmaker that back home, “People have been asking, whereunto shall this thing grow?”
The failings of the House investigation into the scandal infuriated the public and contributed to voter anger with Republicans in 1873 and 1874. The well-intended plan of party leaders was overshadowed by unhappiness with the outcome. In the end, Republicans paid a high price for Credit Mobilier – not for ignoring the scandal, which Dana predicted and would have made short-term political sense, but because they botched the job.
Congress and the King of Frauds: Corruption and the Credit Mobilier Scandal at the Dawn of the Gilded Age is now available for pre-order at amazon.com.
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