Credit Mobilier
Crédit Mobilier was a scandal during the latter years of US reconstruction when congress with improper influence, commissioned for the construction of railroad tracks by Union Pacific. Union Pacific was offered quite a lucrative government contract which provided generous support for the railroad through loans and large land grants—alternating sections of land along the track for future development. To exploit this arrangement, insiders within Union Pacific created a separate construction company called Crédit Mobilier of America. Although Crédit Mobilier appeared independent, it was secretly controlled by many of the same Union Pacific executives.
Union Pacific commissioned work from Crédit Mobilier at highly inflated prices. Because they controlled both companies, these insiders profited by pocketing the difference between the actual construction costs and the inflated amounts paid—much of which was ultimately backed by government subsidies.
US Congressman Oakes Ames played a key role in turning a blind eye to this defraudment of the American Government. He distributed shares of Crédit Mobilier stock to influential members of Congress at below-market prices to discourage oversight and ensure continued political support for railroad funding.
When the scandal became public in 1872, it implicated several prominent politicians and damaged public trust in the federal government, highlighting widespread corruption during the era and paving way for the era of the trust busters to move in.