Robber+Barons-snow

Building Railroads was very expensive and often cost more money than investors could pay on their own. So, the government offered land grants to the railroad companies. Then the railroads would sell the land to settlers or other companies to raise money. This system was effective; several railroads received enough land and money to cover the cost of building. Some investors found that they could make more money by getting land grants than by operating a railroad. To get more land grants, investors started bribing congressmen. Jay Gould was the most notoriously corrupt railroad owner.

__The Crédit Mobilier Scandal__ Because of Credit Mobilier, a construction company, corruption in the railroad industry became public. Credit Mobilier was set up by some stockholders of the Union Pacific Railroad. Credit Mobilier seriously overcharged Union Pacific and added mile to their railroad. Because the same investors controlled both companies, Union Pacific paid the overpriced bills without any questions. When the Union Pacific railroad was done, the investors had made millions, but the railroad itself was nearly bankrupt. To convince the Congress to give them more land grants, an investor, Oakes Ames, sold members of the Congress shares in the Union Pacific for almost nothing. An angry associate of Ames sent a letter to a newspaper to rat out the congressmen who were involved. This didn’t have any affect though. Neither criminal nor civil charges were filed against any congressmen involved.

__ The Great Northern Railroad __ While others became wealthy by corrupted means, James J. Hill did not. Hill built and operated the Great Northern Railroad (Wisconsin to Washington) without any land grants or financial assistance. He carefully mapped out his railroad so it would pass by established towns. Hill offered low fares to settlers who homesteaded on his route and later, sold homesteads to immigrants. Then, he figured out which American products were in demand in China, so the he could earn money shipping goods both directions; unlike the other railroads at the time that would send products east and come back empty. The Great Northern railroad was the most successful railroad and the only one not forced into bankruptcy.