The Erie War was a 19th-century conflict between American financiers for control of the Erie Railway Company, which owned and operated the

Erie Railroad The Erie Railroad was a railroad that operated in the northeastern United States, originally connecting New York City — more specifically Jersey City, New Jersey, where Erie's Pavonia Terminal, long demolished, used to stand — with Lake Erie ...

. Built with public funds raised by taxation and on land donated by public officials and private developers, by the middle of the 1850s the railroad was mismanaged and heavily in debt. A cattle drover turned Wall Street banker and broker,

Daniel Drew Daniel Drew (July 29, 1797 – September 18, 1879) was an American businessman, steamship and railroad developer, and financier. Summarizing his life, Henry Clews wrote: "Of all the great operators of Wall Street ... Daniel Drew furnishes th ...

, at first loaned $2 million to the railroad, and then acquired control over it. He amassed a fortune by skillfully manipulating the Erie railroad shares on the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its listed c ...

Cornelius Vanderbilt Cornelius Vanderbilt (May 27, 1794 – January 4, 1877), nicknamed "the Commodore", was an American business magnate who built his wealth in railroads and shipping. After working with his father's business, Vanderbilt worked his way into lead ...

, who set his mind on building a railroad empire, saw multiple business and financial opportunities in railways and decided in 1866 to corner the market on Erie by silently scooping-up the Erie railroad stock. After succeeding, Vanderbilt permitted Drew to stay on the board of directors in his former capacity as treasurer.Myers, Gustavus. ''History of the Great American Fortunes''. Vol.2. Chicago: Kerr, 1910, p. 154-155.

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Between 1866-1868, Daniel Drew conspired with James Fisk and

Jay Gould Jason Gould (; May 27, 1836 – December 2, 1892) was an American railroad magnate and financial speculator who is generally identified as one of the robber barons of the Gilded Age. His sharp and often unscrupulous business practices made hi ...

, whom he brought on the board, to issue spurious Erie Railroad shares, thus " watering down" the stock, of which unsuspecting

bought a large quantity.Browder, Clifford. ''The Money Game in Old New York: Daniel Drew and His Times''. Lexington: University of Kentucky, 1986. Vanderbilt lost more than $7 million in his attempt to gain control over Erie Railway Company, although Gould later returned most of the money under threat of litigation. As a result, Vanderbilt conceded control of the railroad to the trio. They were involved with the corrupt

Tammany Hall Tammany Hall, also known as the Society of St. Tammany, the Sons of St. Tammany, or the Columbian Order, was a New York City political organization founded in 1786 and incorporated on May 12, 1789 as the Tammany Society. It became the main loc ...

political party machine, and made

Boss Tweed William Magear Tweed (April 3, 1823 – April 12, 1878), often erroneously referred to as William "Marcy" Tweed (see below), and widely known as "Boss" Tweed, was an American politician most notable for being the political boss of Tammany ...

a director of the Erie Railroad. Tweed (who later died in prison for embezzlement and fraud), in return, arranged favorable state legislation in Albany for them, legalizing the newly issued shares. Vanderbilt & Fisk

Gustavus Myers Gustavus Myers (1872–1942) was an American journalist and historian who published a series of highly critical and influential studies on the social costs of wealth accumulation. His name has been associated with the muckraking era of US litera ...

, an American historian and

muckraker The muckrakers were reform-minded journalists, writers, and photographers in the Progressive Era in the United States (1890s–1920s) who claimed to expose corruption and wrongdoing in established institutions, often through sensationalist publ ...

, wrote in his survey of railroad fortunes in the U.S. Fisk and Gould betrayed Drew, again manipulating the Erie Railroad stock price and causing him to lose $1.5 million. The

Panic of 1873 The Panic of 1873 was a financial crisis that triggered an economic depression in Europe and North America that lasted from 1873 to 1877 or 1879 in France and in Britain. In Britain, the Panic started two decades of stagnation known as the "Lon ...

cost him still more,Smith, Matthew Hale. ''Bulls and Bears of New York, With the Crisis of 1873, and the Cause''. Hartford: J.B. Burr, 1875. and by 1876, Drew filed for

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...

, with debts exceeding a million dollars and no viable assets. He died in 1879, dependent on his son for support. After Fisk was murdered in 1872, Gould eventually gained the advantage in the conflict, but he had to relinquish control in 1872-73, following his loss of $1 million worth of Erie Railroad stock to the British confidence man

Lord Gordon-Gordon Lord Gordon-Gordon ( 1840 – August 1, 1874), also known as Lord Gordon Gordon, Lord Glencairn, and The Hon. Mr. Herbert Hamilton, was a British impostor responsible for a major swindle in 19th century United States. He swindled a million dol ...

. Public opinion was also hostile to Gould because of his involvement in the 1869 Black Friday stock market crash. In 1878, after all financial swindles and due to continuing mismanagement, the Erie Railway Company declared bankruptcy and was reconstituted as the '' New York, Lake Erie and Western Railway Company''.

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See also

References

Further reading