The Credit Mobilier scandal exposed a massive abuse of taxpayer money by the federal government and businesses vying for government contracts. The scandal involved many prominent politicians, mostly Republicans, including Vice President Schuyler Colfax and future President James Garfield.
Background to Credit Mobilier
During the Civil War, Congress had created the Union Pacific (UP) Railroad, and this company was granted massive amounts of land and taxpayer money to build a transcontinental railroad. UP executives created their own construction company, the Credit Mobilier of America, to build the railroad line.
Since the stockholders for UP and Credit Mobilier were identical, these investors essentially hired themselves to do the work. The investors and their accomplices billed the government for construction, which was about twice the actual cost of building the line. The conspirators then pocketed the rest of the money, which totaled about $33 million.
