Washington Babylon by Mark Hyman

Author:Mark Hyman
Language: eng
Format: epub
Tags: N/A
Publisher: Post Hill Press
Published: 2019-08-19T16:00:00+00:00

CHAPTER 9

Influence Peddling

“One question, among many raised in recent weeks, had to do with whether my financial support in any way influenced several political figures to take up my cause. I want to say in the most forceful way I can: I certainly hope so.”

—Charles H. Keating, Jr. of Financial Lincoln & Savings regarding campaign contributions to five US Senators

Crédit Mobilier

The steam locomotive made its debut in England in 1804. It quickly began to overtake horse-drawn carts on rail as a more effective method to move goods. Steam locomotives were being used to connect English cities, first with goods and then with people. By the 1820s, the steam locomotive had become the most efficient way to transport passengers.

The earliest steam locomotives in the United States were imported from England. Chartered in 1827, the Baltimore and Ohio Railroad became the first locomotive company in the US. B&O was an attempt to compete with the use of canals and inland waterways to navigate trade routes to the West. By May 1830, the B&O was up and running with its first section of rail open for business. Other railroads began to appear and, over the next two decades, track was being laid and steam locomotive-driven trains were being added throughout the East Coast.

Westward expansion in America was occurring throughout the middle of the nineteenth century. However, travel to the West Coast was time-consuming. Many travelers would take the months-long trip by ship around the southern tip of South America. Crossing the western mountain ranges and the great prairies was deemed impractical and dangerous.

Congress wanted to shorten the time needed to travel from coast to coast. It enacted the Pacific Railroad Act of 1862, which was intended to incentivize private construction of a nearly 1,800-mile, transcontinental railroad and a companion telegraph line. The 32nd parallel was designated as the route and there would be generous land grants for rights-of-way. The Central Pacific and the Union Pacific were the two companies selected to complete the construction. The Union Pacific was capitalized with $100 million from the federal government. In addition, the Railroad Act created financial incentives for each mile of track laid by each company.

In 1863, the Central Pacific began building from Sacramento eastward and the Union Pacific started building westward from Omaha. The two railroad companies would eventually meet at Promontory, Utah, in May 1869 when the ceremonial final spike was driven into the track to commemorate linking the two rail lines.

In May 1864, the directors and major shareholders who chartered the Union Pacific also chartered a duplicate company named Crédit Mobilier of America, but the participation of the same people in the two different companies was kept secret. Union Pacific officials claimed Crédit Mobilier was a separate entity hired by Union Pacific as the general contractor to build the rail line. In reality, the business relationship was an elaborate scheme for shareholders of Union Pacific to shield themselves from the financial risks of the Union Pacific and to guarantee themselves profits from Crédit Mobilier.

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