Railroads in the nineteenth century were inseparable from politics. State legislatures issued their corporate charters and determined where their lines would run. The federal government too played a role early on, as the Illinois Central in 1850 gained the first land grant to build its line--a whopping 2.9 million acres. Political parties--Whig, Republican, and Democrat--sought to turn these powerful entities to their electoral advantage. Corruption followed, of course. But the boundaries of corruption in the nineteenth century were largely undefined. Political and corporate men often justified their actions as legitimate, their malfeasance as warranted or sanctioned.
During the Civil War the Pennsylvania Fiscal Agency was sold out from under its founding president, Duff Green, a Southern Democratic political operative, by the remaining stockholders. The company went to the Union Pacific's quirky but ruthless financier, Thomas C. Durant who renamed the venture Credit Mobilier in 1864. Green had failed to build a southern transcontinental, but he had succeeded in creating a peculiarly modern instrument that Durant could use. He created one of the first shell companies in American history. It employed no one. Its entire purpose was to obtain credit and extend contracts with limited liability for its shareholders. The Union Pacific directors, many of them the shareholders in Credit Mobilier, contracted with Credit Mobilier to construct the railroad. Credit Mobilier, in turn, vastly overcharged the Union Pacific, thereby enriching its members. Later, directors in Credit Mobilier gave stock to various Congressmen, though for reasons unclear, and a bribery scandal shook U.S. politics in 1872. Yet, the corruption of the Credit Mobilier was less about bribery than a multi-layered fleecing. A debate developed within the Union Pacific over the public-private nature of the enterprise and led to heated accusations of fraud and mismanagement, particularly between Oliver Ames and Durant. Samuel Reed too was caught in the intrigue and internecine corporate battles that surrounded the construction of the Union Pacific Railroad.
In 1894 William Jennings Bryan campaigned in Nebraska for a seat in the United States Senate. A former Congressman and the editor of the Omaha World Herald, Bryan was a young and rising force in the Democratic Party. In this campaign against Republican John M. Thurston, the general counsel for the Union Pacific Railroad, Bryan attracted Populist support. The debates in Omaha and Lincoln attracted tens of thousands. The Republicans won the state legislature and elected Thurston to the Senate, but the campaign gave Bryan a national reputation and was Bryan's only statewide campaign before his nomination as the Democratic candidate for President in 1896.
Podcast from "The Making of Modern America" with William G. Thomas (MPEG-3 audio format).