How did the construction of the railroad lead to government corruption?

In the most notorious instance of corruption connected to the railroads, Union Pacific Railroad executives formed a sham construction company, Crédit Mobilier, that submitted bills for nearly double the construction cost of the eastern portion of the Transcontinental Railroad and pocketed the overcharges.



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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 railroad opened the way for the settlement of the West, provided new economic opportunities, stimulated the development of town and communities, and generally tied the country together.

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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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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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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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During the post-World War II boom many railroads were driven out of business due to competition from airlines and Interstate highways. The rise of the automobile led to the end of passenger train service on most railroads.

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The Transcontinental Railroad reduced travel time from New York to California from as long as six months to as little as a week and the cost for the trip from $1,000 to $150. The reduced travel time and cost created new business and settlement opportunities and enabled quicker and cheaper shipping of goods.

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Good and bad The railroad is credited, for instance, with helping to open the West to migration and with expanding the American economy. It is blamed for the near eradication of the Native Americans of the Great Plains, the decimation of the buffalo and the exploitation of Chinese railroad workers.

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Once some railroad owners consolidated, combined, they gave secret rebates, or discounts to their “better” customers in an attempt to keep them in business with the railroad. This hurt many small businesses that could not compete.

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How did government grants to build railroads result in large-scale corruption? Railroad investors realized they could profit more by selling free government land grants than by operating railroads, so some bribed political representatives to vote for more grants.

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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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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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Even though railroads made life a little bit easier, it was hazardous to the environment, and the people, such as the destruction of natural resources, more pollution in the air also affected people causing even more diseases and made it much harder to breather with these conditions.

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