Each of these stories, and others like them, threaten to undermine the president’s reputation as the outsider populist who came to town to clean up Washington by highlighting what Americans once called “money power” — the corrupting effect of financial power and influence on democratic governance. Given that many Republicans and Democrats disregard its dangers, the Trump administration’s comfort with modern-day “money power” may seem inconsequential. But as a now-forgotten Gilded Age scandal shows, politicians who succumb to its temptations and put political gain and private gratification ahead of the public interest are playing with fire.
The capacity of wealthy corporate interests and speculators — the money power of the 19th century — to toss cash, stocks, bonds and other benefits at government officials to curry favor and win influence came into sharp relief as the Credit Mobilier scandal broke during the winter of 1872-1873. Remembered dimly — if at all — Credit Mobilier was a defining moment in the dismal politics of the Gilded Age, one that has taken on renewed relevance at a time when calls to “drain the swamp” reverberate at both ends of Pennsylvania Avenue.
Named after a French banking house, Credit Mobilier was the construction subsidiary of the Union Pacific, one of the two railroads that joined in 1869 to complete the transcontinental railway network. Many of Credit Mobilier’s largest stockholders were also large Union Pacific shareholders who essentially used Credit Mobilier to pay themselves to build the railroad — and pocket large profits in the process.
In an exposé published Sept. 4, 1872, Charles A. Dana’s New York Sun reported that one of its leading investors, a Massachusetts Republican congressman named Oakes Ames, had sold Credit Mobilier stock to other Republican members of Congress at advantageous prices. Although he denied demanding anything in return, Ames candidly admitted to a fellow Credit Mobilier investor that the sweetheart stock sales were intended to promote the interests of the company and the Union Pacific on Capitol Hill. “We want more friends in this Congress,” Ames wrote.
The disclosures in Dana’s feisty newspaper led to the formation of three congressional committees to investigate Ames’s stock sales and the operations of Credit Mobilier. The sums of money at stake were not large — lawmakers who invested in Credit Mobilier made less than $5,000 ($87,000 today), and most less than $1,000 — but that was not what many found so disturbing. Rather, it was the question of “the fitness of such a man for continued trust,” editorialized the Baltimore Sun. Moreover, the newspaper added, “that the legislation of the country should be influenced and controlled — notoriously and undeniably so — by such agencies and means, comes home, or should come home, to the breast of every citizen and patriot.”
In the short term, the scandal had no political impact. Sneering at its competitor, the ardently Republican New York Times dismissed the Credit Mobilier story as a partisan-fueled lie. Most voters agreed, returning Republican President Ulysses S. Grant to the White House in a landslide and boosting his party’s majority in the House. Republican hegemony in Washington seemed assured for years to come.
But as Washington shivered through the early winter months of 1873, the scandal’s toxic impact began to take its toll. Members of Congress paraded before the investigative committees to proclaim their innocence — only to be exposed as liars when Ames produced records of their transactions. The New York Tribune concluded that these lawmakers deplorably prevaricated, “either from a sense of wrong doing or from a cowardly fear of public opinion.”
As the congressional investigation dragged on, the influence of wealthy corporations and allied speculators in Congress came into focus. And in mid-January, Credit Mobilier founder Thomas C. Durant dropped a bombshell when he admitted that he had given $10,000 (the equivalent of $152,000 today) in the mid-1860s to Republican James Harlan of Iowa, who at the time was plotting a return to the Senate after serving as interior secretary.
Durant’s testimony rocked the Capitol and quickly came to be seen as an example of the corrosive effect of money power on members of Congress. The Senate committee investigating Credit Mobilier offered a stern verdict on Harlan’s willingness to take money from a notorious scoundrel like Durant. Such practices “strike directly at the fundamental principle of a republican government” and demanded “popular rebuke which can come only, and should come speedily, from the united voices of the virtuous citizens of the Republic, uttered at every stage of governmental action, from the lowest to the highest.”
After weeks of dissembling and revelations, public anxiety about money power grew, something Republican Luke Potter Poland of Vermont understood. As the House debated whether to expel Ames and Rep. James Brooks of New York, he flayed his colleagues for ignoring the dangers they courted.
“The excitement and fury of the press over this matter is but the spray and the foam of a ground-swell beneath, that has foundation in the minds of the people and is forming into a settled public opinion,” Poland admonished his colleagues. He warned that as the number and influence of wealthy corporate interests increased, the public’s confidence in its legislators declined. Americans understood that corporations tempting legislators with vast riches posed a risk to their rights and liberties.
Lawmakers paid no attention. No one implicated in the scandal was expelled. Ames and Brooks were censured by the House, but members who bought shares from Ames were absolved of wrongdoing on the specious grounds that they did not know they were receiving a bribe.
But Congress paid a stiff price for inaction. The scandal contributed to voter fury that was amplified by an ill-considered congressional pay raise and the economic crisis caused by a devastating stock market panic. Early signs of trouble came in the off-year elections of 1873. Republicans lost the governor’s mansions in Ohio and Wisconsin and Democrats — joined in many states by anti-railroad agrarian voters — made significant gains in state legislatures across the country. In congressional elections the following year, Democrats went from a 110-seat minority in the House to a 60-seat majority in the largest partisan swing of the 19th century.
Poland’s warning to Congress remains relevant today. While Trump’s approval rating is upside down, he has retained the support of his anti-Washington base, which recently provided the Republican Party with more in small-donor contributions than it has received in over a decade. But that support endures in spite of — rather than because of — Trump’s record on reform. Money power appears triumphant.
For the time being, Trump’s supporters seem willing to dismiss this state of affairs as “fake news.” But the history of Credit Mobilier shows it would be unwise to expect them to do so forever. To put Poland’s warning in a modern context, voters are likely to be furious when they conclude that the politicians they expected to “drain the swamp” have chosen instead to wallow contentedly in the muck.