How did railroads lead to corruption?

Railroads Were at the Forefront of Political Corruption “Railroads need monopoly franchises and subsidies, and to get them, they are more than willing to bribe public officials,” White says. The Central Pacific Railroad, for example, spent $500,000 annually in thinly disguised bribes between 1875 and 1885.



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Crédit Mobilier Scandal, in U.S. history, illegal manipulation of contracts by a construction and finance company associated with the building of the Union Pacific Railroad (1865–69); the incident established Crédit Mobilier of America as a symbol of post-Civil War corruption.

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Common knowledge has it that the transcontinental railroad was very much a product of its times – another Gilded Age monument to corruption, embezzlement, and the unjust enrichment of capitalists.

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The great wealth many railroad entrepreneurs acquired in the late 1800s led to accusations that they had built their fortunes by swindling investors and taxpayers, bribing officials, and cheating on their contracts and debts.

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As the railroads grew in power, they exerted increasing influence on local and state governments, eventually prompting Congress and reform-minded presidents to pass laws to regulate the new industry.

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But there was also a dark side to the historic national project. The railroad was completed by the sweat and muscle of exploited labor, it wiped out populations of buffalo, which had been essential to Indigenous communities, and it extended over land that had been unlawfully seized from tribal nations.

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Just as it opened the markets of the west coast and Asia to the east, it brought products of eastern industry to the growing populace beyond the Mississippi. The railroad ensured a production boom, as industry mined the vast resources of the middle and western continent for use in production.

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What wrongdoing were railroads guilty of? Stock watering (which enabled railroad stock promoters to inflate their claims about a given line's assets and profitability and sell stocks and bonds in excess of the railroad's actual value) as well as other corruption such as bribery.

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Railroads became a major industry, stimulating other heavy industries such as iron and steel production. These advances in travel and transport helped drive settlement in the western regions of North America and were integral to the nation's industrialization.

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How did railroad owners use Credit Mobilier to make huge, undeserved profits? Answer: By charging too much for railroad construction and paying off government officials.

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Crédit Mobilier Scandal, in U.S. history, illegal manipulation of contracts by a construction and finance company associated with the building of the Union Pacific Railroad (1865–69); the incident established Crédit Mobilier of America as a symbol of post-Civil War corruption.

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As white explorers and settlers entered Western territory, they disrupted a centuries-old culture — that of the Plains Indians. The arrival of the railroad and, with it, more permanent and numerous white settlement, spelled growing conflict between whites and natives. The troubles would erupt into an all-out war.

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Railroads discriminated in the prices they charged to passengers and shippers in different localities by providing rebates to large shippers or buyers. These practices were especially harmful to American farmers, who lacked the shipment volume necessary to obtain more favorable rates.

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But freight railroad abuses grew rampant. Money lined the pockets of greedy public officials who awarded generous terms to the railroads. Railroad companies set their own shipping rates. Sometimes it was more expensive for a small farmer to ship goods to a nearby town than to a faraway city.

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Railroads became a major industry, stimulating other heavy industries such as iron and steel production. These advances in travel and transport helped drive settlement in the western regions of North America and were integral to the nation's industrialization.

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The increase in railroad mileage made it possible to transport goods and people over long distances quickly and efficiently. This led to the creation of a national market for goods, which in turn encouraged mass production and mass consumption.

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Blasting through mountains to create tunnels was dangerous, as the main explosives included nitroglycerin. Native Americans thwarted the construction of railroads using violence. Many railroad workers had to physically defend themselves and some lost their lives.

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Monopolies as unfairly subsidized Railroads had the ability to condemn land to build their routes. They got subsidies of land, loans, bonds and other financial aid from federal, state and local governments. Their political contributions and favors secured them supporters in legislatures, Congress and the courts.

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The root of the railroads' trouble is that they were ordered to spend more in increased wages than they were able to earn from increased rates. Consequently, net income for 1920 well-nigh disappeared.

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By 1860 the South's railroad network was one of the most extensive in the world, and nearly all of it had been constructed with slave labor. Moreover, railroad companies became some of the largest slaveholders in the South.

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Small businesses and farmers were protesting that the railroads charged them higher rates than larger corporations, and that the railroads were also setting higher rates for short hauls than for long-distance hauls.

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