Emergence of the Railroads

Grant’s presidency also saw a flurry of railroad construction throughout the United States, meaning big business for railroaders both North and South. American industrial production was booming (mostly in the North), and the demand for railroad lines to transport manufactured goods throughout the country had rapidly increased. During the Civil War, the U.S. government had granted subsidies to large railroad companies like the Union Pacific Railroad and the Central Pacific Railroad to lay rail tracks throughout the North and West. In 1869, these northern and western railroad systems were finally united when Union Pacific and Central Pacific lines were joined at Promontory, Utah, forming a transcontinental rail link.

The Crédit Mobilier Scandal

This booming railroad industry quickly attracted corporate corruption. In the 1860s, corrupt Union Pacific Railroad executives had created a dummy railroad construction company called Crédit Mobilier. The executives contracted themselves out as tracklayers for the phony company and earned huge profits, bribing several Congressmen and even Grant’s vice president, Schuyler Colfax, to keep quiet about Crédit Mobilier’s unlawful profiteering. In 1872, the scandal was exposed, and Colfax resigned. Again, though Grant had not been knowingly involved in the scandal, he suffered a major blow to his political reputation.

The Whiskey Ring Scandal

Two years later, in 1874, Grant was hit by yet another scandal when several federal employees whom he had appointed embezzled millions of dollars of excise tax revenue. The president vowed to hunt down and punish all those involved in the Whiskey Ring but was forced to eat his words when he discovered that his own personal secretary was involved in the ring. Although Grant ended up pardoning his secretary, the Whiskey Ring left yet another stain on his presidency.

The Liberal Republican Party

Fed up with scandals in the Grant administration, a significant number of Republicans broke ranks with the radicals and moderates in Congress before the 1872 presidential elections, forming a breakaway party called the Liberal Republican Party. These congressmen wanted to put an end to governmental corruption, restore the Union, and downsize the federal government.

The Liberal Republicans were largely businessmen, professionals, reformers, and intellectuals who disliked big government and preferred a laissez-faire economic policy. Some historians argue that the Liberal Republicans opposed democracy; indeed, they did not support universal manhood suffrage or the enfranchisement of blacks. They also believed that the widespread corruption and graft in American big business and politics were the result of too much democracy and governmental interference.

The Election of 1872

The Liberal Republicans nominated New York Tribune editor Horace Greeley as their candidate for president. The Democratic Party also nominated Greeley as their candidate, because he opposed the army’s presence in the South and wanted to end Reconstruction. Radical and moderate Republicans once again nominated Ulysses S. Grant, despite all the scandals during his term. Grant won the election, 286 electoral votes to Greeley’s 66, and took the popular vote by a margin of more than 700,000.

Popular pages: Reconstruction (1865–1877)