AMES, OAKES

Oakes Ames (1804–1873) was a U.S. manufacturer and five-term member of the United States House of Representatives. He was the principal financier of the Union Pacific Railroad, the eastern half of the first transcontinental railroad. Unfortunately, in his zeal to complete this railroad project, Ames made several errors in judgment. His questionable business practices eventually led to his censure by Congress.

Oakes Ames was the eldest son of Oliver Ames, Sr. and Susannah Angier, born on January 10, 1804, in Easton, Massachusetts. His father was a socially prominent manufacturer who owned a well-known shovel factory. Ames attended local schools until he was sixteen and then spent some months at the Dighton Academy.

Ames had an early interest in business. As a teenager he and his younger brother, Oliver, Jr. (1807–1877), began working for their father as general laborers. They started at the bottom of the company and worked long hours at a variety of tasks. Both boys worked their way up to management positions. When their father retired in 1844, Oakes and Oliver, Jr. reorganized the company under the name Oliver Ames and Sons and served as co-presidents.

The Ames brothers rapidly expanded the already successful business. The California gold rush, the settlement on the Western frontier, and the growth of the railroad industry all fueled demand for their products. In addition, the company was awarded several government contracts to supply equipment during the American Civil War (1861–1865). By 1865 Oliver Ames and Sons was worth over $8 million.

A successful businessman, Oakes Ames became involved in politics as a member of the Republican Party when he was in his fifties. He served as a close business advisor to the governor of Massachusetts. In 1862, at age of fifty-eight, Ames ran successfully for the Massachusetts second district seat in the United States House of Representatives. He was reelected four times and served in Congress until his death. As a Congressman Ames served on committees related to manufacturing and railroads.

The Ames brothers shared an interest in railroads and, in 1865, extended that interest to business ventures. Oliver Ames and Sons built the four-mile long Easton Branch Railroad. It began at a shovel works in Stoughton, Massachusetts, and continued to a connection with a line bound to Boston. Railroad-related business pursuits continued. In 1865, the brothers became interested in the Union Pacific Railroad, the eastern half of the first transcontinental railroad under construction. They joined a company called the Crédit Mobilier, the construction company and investment project for the railroad.

The Crédit Mobilier was organized by T.C. Durant, vice president of the Union Pacific to solve the rail-road's financial difficulties and to complete the building of the railroad. It was a complex and corrupt scheme in which a small group of financiers contracted with themselves or their associates to construct the railroad, charging exorbitant prices for their services. Durant and his cronies pocketed huge profits for construction that was often faulty.

Dissention within the ranks of the Crédit Mobilier led to a reorganization of the company and its railroad interests. Oakes Ames stepped into the leadership of the Crédit Mobilier and his brother Oliver became president of Union Pacific Railroad. Oakes Ames won contracts to construct the Union Pacific railroad line. He then reassigned the contracts to trustees who served as stockholders of the Crédit Mobilier. The Union Pacific gave cash to the Crédit Mobilier to construct the railroad. The Crédit Mobilier instead used much of the money to buy stocks and bonds in Union Pacific at face value. These were later sold in the open market at a large profit for the investors, who all served the Crédit Mobilier company.

Thus, while the Union Pacific railroad line was slowly being built, the Crédit Mobilier investors were getting rich. This labyrinthine way of doing business garnered large profits for the investors. It was a cutthroat way of doing business, but was not uncommon at the time. The practices, however, did draw the attention of the United States Congress. As a Congressman, Oaks Ames was expected to support free market activities. In reality, his business practices appeared more like that of a monopoly. When Congress started to raise questions about this practice Ames sold Union Pacific stock to other members of Congress, also at face value. When this was revealed he was then accused of buying political support for his business interests.

In 1872 two Congressional committees were formed to investigate whether or not the government had been defrauded by the Crédit Mobilier. Certain members of Congress wanted Ames expelled for illegal business practices. Ames defended himself by claiming his motives were purely patriotic because the railroad was important for the development of the country. He also argued that he had not become wealthy from the business dealings because the railroad was $6 million in debt at the time of its completion. Many members of Congress and the public agreed that while Ames had compromised legal principles he was not consciously corrupt. However, his desire to complete the Union Pacific project had clouded his ethical judgment. In the end Ames was not expelled from Congress, but he was censured.

After the Crédit Mobilier scandal, Ames returned to his hometown, depressed and in poor health. He suffered a stroke and died a few days later, on May 8, 1873. The memorial hall in North Easton was dedicated to him in 1881, and in 1883 the Union Pacific erected a monument in his name in Sherman Summit, Wyoming.

AMES, OAKES

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