The "Robber Barons"

and the millions of Crédit Mobilier of America

(one of America's major financial scandals...)

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Collis P. Huntington, Thomas C. Durant, Jay Gould, James J. Hill, and the other larger-than-life figures who were the big bosses of the several railroad lines, were indeed often depicted by both, contemporaries and historians alike, as villains and robber barons. Recent historians, however, have often pointed out that these industrialists were a most diverse group and - far from all bad. On the other hand, there was one financial scandal in which the Union Pacific and its board were involved, and which those so-called 'robber barons' are especially associated for; a scandal that turned turned out to be one of the greatest in American history and that finally led the Union Pacific into bankruptcy. The 'Crédit Mobilier of America' was the trustee company of the Union Pacific, which, in truth, was created to skim off the profits of the Union Pacific Railroad. Using the government funds granted to the railroad, the Union Pacific directors, who were also the directors of the Crédit Mobilier, awarded padded construction contracts to severals minor construction companies of which, finally, they were also the directors and owners. When talking about the Crédit Mobilier, one name is always mentioned: Thomas C. Durant. He was vice-president of the Union Pacific, director of the Crédit Mobilier (the Union Pacific's trustee company), and, at the same time, building contructor of the company the Crédit Mobilier incorporated to lay the Union Pacific trackage! The clue is simple, but ingenious.

 

The Crédit Mobilier Scandal

(in text and image)

I As holder of his own building company T.C. Durant presented to the Crédit Mobilier a costs estimate of the stretch of trackage to be built; an estimate, of course, which proved slightly excessive.

II As manager of the Crédit Mobilier, which had been founded to administrate the money transactions of the Union Pacific, T.C. Durant accepted these excessive costs estimates and presented the to the Union Pacific of which...

III T.C. Durant was vice-president! He accepted the costs estimates, and thus the money (the federal bonds, the shares' dividends, and the earnings from selling the land grants), originally destined to the Union Pacific and its shareholders, was going straight to...T.C. Durant, owner of a minor construction company. By the way, simultaneously, he was also receiving the salary for his position as vice-president of the Union Pacific, and, you got it right, as manager of the Crédit Mobilier of America.

 

CREDIT MOBILIER OF AMERICA

(inofficial version)

I

owner of construction company

(T.C. Durant)

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II

manager of Crédit Mobilier of America

(T.C. Durant)

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III

vice-president of the Union Pacific

(T.C. Durant)

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shares   federal subsidies  land sales

 

Westward the Monarch Capital makes its way...

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T.C. Durant at the end of the track...(and shortly before the end of the UPRR)

 

back to: The Building of the Transcontinental Railroads

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