The Union Pacific Railroad had the authority to contract work out to independent companies to help in the building of the railroad. In 1864, Congress passed legislation that allowed the Federal Government to pay funds directly to the Credit Mobilier Company, which was supposedly chosen by the Union Pacific as a contractor. But Credit Mobilier was not independent—it was created solely (and secretly) for the purpose of funneling funds from Congress. And it just so happens that many of the owners of the Union Pacific also had stock in the Credit Mobilier Company.

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