Transcript The Crédit Mobilier Scandal Railroad Corruption

Railroads expand and dominate
1856
30,000 miles of track 1890 180,000 miles of track
The Workers
Chinese immigrants for the
Central Pacific
2,000 killed In 1888 alone!
20,000 injured
In 1888 alone!
Irish immigrants & Civil War
veterans for the Union Pacific
First Transcontinental Railroad - May 10, 1869
Central Pacific RR meets the Union
Pacific RR at… Promontory, Utah
United States
was physically
united
The Transcontinental Railroad
Promontory, UT
Omaha, NB
Sacramento, CA
Central Pacific starting in
Sacramento, California
The Great
Race
Union Pacific starting in
Omaha, Nebraska
United by time
1869: railroads support plan by C.F. Dowd to
create time zones worldwide
Why?
So that they could schedule their trains
United States had four times zones
November 18, 1883 railroad crews synchronized their
watches and “railroad time” was born
• cities, and towns
before railroads - independent, self-sufficient
Railroads, cities, and towns
after railroads - interdependent, specialized
Minneapolis - major
grain industry
Specialization
of big cities
Chicago - major
stockyards
Please write and answer the
following question in your notes:
• What were the effects of railroad
expansion?
Railroad Corruption:
The Crédit Mobilier Scandal
Union Pacific RR
create
stockholders
hires
Pays three times
the cost of
construction
A construction
company called
Crédit Mobilier
build
Railroad corruption
Crédit Mobilier Scandal
Union Pacific RR
create
stockholders
hires
extra goes back to
RR stockholders
A construction
company called
Crédit Mobilier
build
Railroad corruption
Crédit Mobilier Scandal
Union Pacific RR
create
stockholders
hires
extra goes back to
RR stockholders
Later some of the
money goes to pay
off politicians
A construction
company called
Crédit Mobilier
build
Please write and answer the
following question in your notes:
• How did RR owners use Credit Mobilier to
make huge, undeserved profits?
How we went from Granger Laws to the
Interstate Commerce Act
Granger Laws
Munn vs. Illinois
Grangers (Populists)
elect state legislators,
pass laws that lower RR
rates, prohibit
discriminatory rates
Railroads challenge
Granger Laws, go to
Supreme CourtRailroads lose - states can
regulate RR for public
benefit
Interstate Commerce Act
Congress passes Act in 1887 to
allow federal government
regulate RR between states ICC (Interstate Commerce
Commission) set up to
regulate RR rates
Problem: Supreme Court
rules states can’t regulate
railroads crossing state lines
(interstate commerce)
Railroads companies fall apart…
Railroads suffer from…
Mismanagement
Corruption
Overbuilding
Six major companies go bankrupt
Bringing on the Depression of 1893
…and railroads are re-invented
• Several big investment firms
take over the bankrupt railroads
• J.P. Morgan and Company
• Eventually seven companies hold
two thirds of American railroads
Question time!
• How did the Grangers, who were largely
poor farmers, do battle with the giant RR
companies?
George M. Pullman’s
Model Town
Pullman sets up a
factory to build sleepers
and other railroad cars
He created a model
town for his workers
Town of Pullman provided…
Apartments
And expected…
Doctor’s offices
Sport’s fields
Shops
Rent
No alcohol
No loitering
Letters from the citizens of Pullman
“One fine morning a number of men...will
knock at your door and tell you that they have
come to whitewash your house. They will not
bother you with questions...but they just go in
and do it...all charges for repairs....will be
DEDUCTED FROM YOUR WAGES next
pay day. You would have liked to wait another
week...because you wanted to buy a pair of
shoes for your boy. The company can't care
about that!”
“Pullman was all very well as an employer, but to live
and breathe and have one's being in Pullman was a bit
too much. Residents paid rent to the Pullman Company,
they bought gas of the Pullman Company, they walked
on streets owned in fee simple by the Pullman Company,
they paid water-tax to the Pullman Company...They sent
their children to Pullman's school, attended Pullman's
church, looked at but dared not enter Pullman's hotel
with its private bar, for that was the limit. Pullman did
not sell them their grog [liquor]...The lives of the
working men were bounded on all sides by the Pullman
Company; Pullman was the horizon in every direction.”
Markets Expand
Industry grows
Railroad Expansion
Employs and
endangers many
immigrants
Unites country
in time and
space
Increase in immigration
and migration to the west