Same Insiders, Two Companies

Crédit Mobilier was the construction company building the railroad for Union Pacific. The problem was that many of the people making money through Crédit Mobilier were also stockholders, directors, or promoters of Union Pacific.

A normal railroad had reason to negotiate construction costs down while a contractor had reason to push them higher. Here, some of the people deciding what Union Pacific would pay also benefited when Crédit Mobilier was paid more. The conflict of interest, more than profit by itself, is what made the arrangement different from a normal business contract.

Union Pacific

Approved and paid construction contracts.

Overlapping Insiders

Could influence both sides of the arrangement.

Crédit Mobilier

Received construction payments and distributed profits.

1873 political cartoon showing financiers and politicians riding a train that crushes working men. — Matthew Somerville Morgan, “The American Juggernaut,” 1873. Library of Congress, LC-USZ62-114825. No known restrictions on publication. The cartoon reflects contemporary criticism of railroad, financial, and political power; it is used here as context rather than direct evidence of the Union Pacific–Crédit Mobilier contracts.

Sources: Wilson Report, 1873, 14–18; Paul Kens, “The Crédit Mobilier Scandal and the Supreme Court.”

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