Oakes Ames
Oakes Ames was a prominent American businessman and politician in the 19th century, known for his role in the shovel manufacturing industry and his involvement with the Union Pacific Railroad. Born into a family of manufacturers, he took over his father's shovel factory and capitalized on the booming demand during westward expansion and the California gold rush. As a staunch advocate for anti-slavery efforts, Ames was also elected to Congress as a Republican, where he served for a decade and was active in committees related to railroad development.
Ames became embroiled in the Crédit Mobilier scandal, which revolved around inflated profits from construction contracts for the Union Pacific Railroad. His involvement included selling shares of Crédit Mobilier stock to politicians, which led to allegations of bribery and corruption. Though Congress ultimately chose not to expel him, his reputation suffered significantly, and he died shortly after the scandal came to light. The lasting impact of the Crédit Mobilier affair tarnished public trust in both politicians and businessmen, cementing Ames's legacy as a symbol of post-Civil War corruption in American history. Despite his contributions and influence, his name is often overshadowed by the scandal that defined his later life.
Oakes Ames
Manufacturer
- Born: January 10, 1804
- Birthplace: Easton, Massachusetts
- Died: May 18, 1873
- Place of death: North Easton, Massachusetts
American capitalist and railroad promoter
Cause of notoriety: Ames was accused of bribing congressmen by offering them stock in the Union Pacific construction company at prices below true value
Active: 1865-1872
Locale: Washington, D.C.
Early Life
The son of Oliver Ames, a manufacturer, Oakes Ames (ohks aymz) attended district schools and spent a few months at a local academy before apprenticing, at age sixteen, at the family shovel factory. His father retired in 1844, turning over the business to Oakes and his younger brother, Oliver, Jr. The firm flourished, meeting growing demand for quality shovels created by westward expansion, the California gold rush, and the rise of railroads. By 1855 Oakes Ames began investing profits in Western land and railroads.
A strong Free Soil advocate, Ames contributed substantial sums to sustain the Emigrant Aid Society’s active support of antislavery groups in Kansas. In 1862 he won election to Congress as a Republican and served ten years. Ames rarely spoke on the floor of the House but was active in committees, especially the Committee on the Pacific Railroad.
Crédit Mobilier
In 1865 Thomas Durant, chief promoter of the Union Pacific Railroad, convinced the Ames brothers to invest in his company. In August, Oakes Ames bought a major stake in the Crédit Mobilier construction company Durant established to actually build the Union Pacific. Durant followed a practice common in mid-nineteenth century railroad building, in which directors and other major investors in the road formed a separate corporation to construct the line. Inflating costs guaranteed insiders a profit on their investment, regardless of whether the railroad itself ever produced dividends for other stockholders. Ames helped Durant sell $2,500,000 in stock for the Crédit Mobilier, which would finance the building and be repaid by Union Pacific stock and bonds, including government bonds Congress authorized to subsidize constructing a transcontinental railroad through unprofitable uninhabited territory.
The Ames brothers soon entered into a struggle for control with Durant. Although unable to eliminate Durant from the enterprise, the Ames group made Oliver acting president of the Union Pacific in 1867, and Oakes effectively took over Crédit Mobilier.
After Congress resumed session in November, 1867, amid rumors that a major distribution of bonds and stock would soon occur, Ames sold 160 shares of Crédit Mobilier to nine representatives and two senators at par value of $100. Ames explained in letters, later published to his intense discomfort, that he wanted to engage the interests of congressmen on behalf of the Union Pacific and thus increase the railroad’s influence. Ames permitted some congressmen to pay for their stock out of future dividends. In December, 1867, and January, 1868, Crédit Mobilier distributed bonds and stock salable for more than $99 for each $100 par share. Four more allotments quickly followed in 1868, making it an immediately profitable investment.
Political Disgrace
On September 4, 1872, in the midst of the presidential campaign, the New York Sun published Ames’s letters along with allegations grossly exaggerating the amount of money involved. Ames was now central to the biggest political scandal of the century; among the recipients of his largesse were current vice president Schuyler Colfax and vice president-elect Henry Wilson.
In December, Congress appointed investigative committees that heard much contradictory evidence. A February committee report asserted that Ames tried to bribe congressmen by offering them Crédit Mobilier stock much below true value and had lied to the committee about his motives. The committee recommended that Ames be expelled from Congress, along with James Brooks of New York, the lone Democrat involved. However, the eleven implicated Republicans were absolved of accepting bribes and merely criticized for bad judgment in accepting stock. On February 28, 1873, the House rejected expulsion, instead voting to censure Ames and Brooks formally for their conduct.
Ames had not sought reelection; when the session ended on March 4 he went home, where he was welcomed by a brass band and a testimonial dinner. Ames refused to concede that he had done anything unethical, but the scandal destroyed his reputation for impeccable honesty, an outcome he and his descendants bitterly resented. On May 5, Ames suffered a paralytic stroke and died three days later.
Impact
The major impact of Oakes Ames’s Crédit Mobilier scandal was on public opinion. Except for Ames and Brooks, no official suffered any consequence. No politician lost an election because of his Crédit Mobilier connection. Indeed, Representative James A. Garfield of Ohio, recipient of ten shares he expected to pay for out of future distributions, was elected president in 1880.
The sensational newspaper coverage and congressional hearings on the scandal validated cynical beliefs that all politicians were corrupt and all businessmen criminally greedy. Crédit Mobilier became the symbol of post-Civil War corruption, and every later reform movement could cite the scandal to justify its program. When the Union Pacific went bankrupt in 1893, long-defunct Crédit Mobilier was blamed, despite the fact that most nineteenth century railroads became bankrupt.
Grossly exaggerated estimates of Crédit Mobilier profits have become embedded in the historical record. Americana and Encarta encyclopedia articles assert that congressmen received $33 million in bribes from the company, ignoring a careful 1960 study by an outstanding economic historian who estimated total Crédit Mobilier profit on railroad building at between $13 million and $15.5 million (still a handsome return on a $2.5 million investment in five years). Although few people remember Oakes Ames, his scandal became a permanent part of American historical mythology.
Bibliography
Ambrose, Stephen E. Nothing Like It in the World: The Men Who Built the Transcontinental Railroad, 1863-1869. New York: Simon & Schuster, 2000. An anecdotal narrative of creating the transcontinental railroad, praising engineers, workers, and financiers involved.
Ames, Charles Edgar. Pioneering the Union Pacific: A Reappraisal of the Builders of the Railroad. New York: Appleton-Century-Crofts, 1969. The author, a direct descendant of Oakes Ames, uses an extended examination of Union Pacific financing to defend his ancestor against all accusations.
Bain, David Haward. Empire Express: Building the First Transcontinental Railroad. New York: Viking, 1999. A detailed history with extensive information on insider infighting that led to exposure of Oakes Ames’s stock distributions to congressmen.
Fogel, Robert William. The Union Pacific Railroad: A Case in Premature Enterprise. Baltimore: The Johns Hopkins University Press, 1960. A future Nobel Prize winner in economics dispels myths concerning the financing of the Union Pacific.