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. 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, 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, Manhattan, Financial District of Lower Manhattan in New York City. It is the List of stock exchanges, largest stock excha ...

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 and 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 founded the Gould family, Gould business dynasty. He is generally identified as one of the Robber baron (industrialist), robber bar ...

, 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 an American political organization founded in 1786 and incorporated on May 12, 1789, as the Tammany Society. It became the main local ...

political party machine, and made

Boss Tweed William Magear "Boss" Tweed (April 3, 1823 – April 12, 1878) was an American politician most notable for being the political boss of Tammany Hall, the Democratic Party's political machine that played a major role in the politics of 19t ...

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. Gustavus Myers, 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 "L ...

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 deb ...

, with debts exceeding a million dollars and no viable assets. He died in 1879, dependent on his son for support. In September 1869, Fisk and Gould with an accomplice engaged in major manipulation of the gold market, triggering the Black Friday panic of 1869. 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. 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