The consequences of the Erie’s routing would be historic, as the road’s first chronicler observed in 1900, for its creators’ misjudgment opened the path to Vanderbilt’s success. “The great Vanderbilt system of to-day is centered where the Erie might have been and should have been,” wrote Edward Harold Mott. “If shortsightedness, incompetence, or what you will, had not reigned in Erie management two generations ago . . . there would have been no Vanderbilt kingdom today. . . . Who might now be the king of Erie it is impossible to know; but he would be the greatest railroad monarch of the age.”
Instead, over the course of the decades, the Erie had been “milked dry by parasites and hangers-on . . . And it must be remembered that the leeches which have always fed on the Erie Railway have insisted on their meal in hard as in flush times,” the Nation observed in 1866.
The Erie in 1867 was still being pillaged from the inside, for the treacherous Daniel Drew was one of its directors and its treasurer. Nevertheless, the road presented a competitive challenge to the Central—and a peculiarly unpredictable one, at that. “The road was acting as a guerilla cutting rates very sharply and without system or reason,” wrote W. A. Croffut. “It made rates and broke rates, not in the interest of the public, or of the road, but only of the speculators of the hour.” Vanderbilt was determined to end this behavior by absorbing the Erie into his family circle. He may have assumed that since his old ally Drew was on the Erie’s board, the takeover would be easy. He was wrong.
* * *
* * *
As treasurer and director of the Erie, Drew played the company stock as a “one-stringed Chinese lyre,” in the words of William Worthington Fowler. On this lyre he “played two tunes; when its price was high, he sung ‘who’ll buy my Erye? . . . When it was low, he sung ‘who’ll sell me Erye, who’ll sell me worthless Erye?’” Drew’s relentless manipulation of Erie shares had earned him the title of “Speculative Director,” though who bestowed it on him was never clear. To Charles Francis Adams, he was “at once a good friend of the road and the worst enemy it had as yet known.”
Therefore, when it came to the Erie, the goals of Vanderbilt and Drew, those old allies and rivals, were hopelessly discordant. Vanderbilt was intent on “conducting his roads in the best possible manner,” judged London-based Fraser’s Magazine, while Drew’s aim, as always, “was to put money into his own pocket by the skillful ensnaring of the speculating public.”
In the first act of what would become a seriocomic saga, three parties vied for control of the railroad—Vanderbilt, Drew, and the team of Gould and Fisk, who were associated with a spavined enterprise called the Boston, Hartford & Erie. That railroad had been conceived as an extension to the Erie running from the Hudson east to Boston. On paper, this would allow the Erie to transport coal from Pennsylvania all the way into the New England markets. In reality, the Boston was “more fiction than fact.” Yet its owners had contrived an elaborate transaction in which the Erie would guarantee its bonds, yoking the two crippled enterprises together.
None of the three cliques owned enough of Erie to control the line, but an alliance of any two could outvote the third. At the moment, Drew was in cahoots with the Boston group—or so he believed. But Drew had not reckoned with Vanderbilt’s determination to obtain sole control of the Erie, which required shouldering him out of the way.
* * *
Quiet and retiring in his private life, Jay Gould won a reputation on Wall Street, and untold millions in profits, as a master of financial chicanery and manipulator of railroad securities.
* * *
Vanderbilt had secretly reached his own agreement with the Boston group to oust Drew from the Erie board at its annual meeting on October 8, 1867; afterwards, the Vanderbilt-controlled Erie was to absorb the Boston line and deliver a profit to its owners. Vanderbilt viewed the Boston group as a collection of easily manipulated provincial bumpkins, for Fisk was notable chiefly for his clownishness and Gould, as far as Vanderbilt knew, was an insignificant stock speculator.
Gould and Fisk were a quintessential odd couple in appearance and manner. Gould, according to a description in Harper’s Monthly, was “small, cadaverous, bearded, with sunken, glittering eyes. He hardly ever speaks. While you speak he listens, and looks at you with eyes which freeze and fascinate.” He seemed to accomplish his goals through hints and winks, leaving no written or eyewitness evidence that could be used against him. Not long after the Erie affair, when an unsuccessful effort by Gould and Fisk to corner the gold market would come under government scrutiny, “out of twenty witnesses hardly three [could] testify that he ever spoke with them.”
The gregarious Fisk, by contrast, went by the nickname “Jubilee Jim.” He was “a large burly man, with a bull-dog face and heavy mustache,” the owner of an opera house staffed with “a bevy of ballet dancers” and of “the showiest [carriage] team in New York.”
* * *
Never one to shun the limelight, Jim Fisk enjoyed parading about in fantastical military regalia and styled himself “Admiral” Fisk during what became known as the siege of Fort Taylor in 1868.
* * *
Gould was the personally unassuming but brilliant strategist behind their joint schemes, Fisk the ostentatious front man who was not above resorting to physical force on those occasions when possession—whether of stock certificates or corporate ledgers—was nine-tenths of the law. Gould was an abstemious paterfamilias known to break off business meetings to return home to his wife and children for the evening; Fisk an enthusiastic reveler who spoke his mind to the press in the most colorful (and quotable) terms. Through all their joint escapades in corporate theft, bribery, and the mulcting of innocent shareholders, Gould, it was said, at least had the good taste to keep out of the public eye. Not Fisk: He reveled in noisy vulgarity, draped his stout figure in “fancy suits and low-cut vests that allowed the cherry-sized diamond in his short bosom to blind the onlooker,” and kept his mistress, the raven-haired, improbably buxom Josie Mansfield, permanently near at hand.
Vanderbilt underestimated them both. Together, Gould and Fisk would put their enduring stamp on an era.
* * *
THE ERIE ANNUAL meeting went as Vanderbilt planned, electing his nominees to the board, including Gould and Fisk. Drew was evicted from his positions as director and treasurer. Yet only two days later came a stunning about-face: One of Vanderbilt’s nominees resigned and his place was taken by—Daniel Drew.
What happened? On the Sunday two days before the election, Drew had visited the Commodore at his Manhattan home on Washington Place. There he staged a fit of weeping and sniveling about the “beggary staring him in the face” if he were forced out of the Erie. It was perhaps the greatest performance of his life, with the most at stake. He promised to behave himself ever after and to execute all his conniving solely in Vanderbilt’s interest. The Commodore gave in, his feelings softened again for the reprobate groveling before him—and quite possibly reckoning that it was safer to have Drew on the inside of the tent than outside it. Vanderbilt summoned Gould and Fisk to the house that night to inform them of the change in plans, and though they were shocked, they gave their assent. They were now on the Erie board, and that was the important thing.
It would not be long before Vanderbilt realized that Daniel Drew was even more dangerous inside than outside the Erie tent. As the Commodore launched the next phase of his plan to acquire total control of the Erie and absorb it into his empire, he discovered that some mysterious force was working against him. Rather than rubber-stamping his proposal for consolidating the Erie with the New York Central, Hudson, and Harlem, the full Erie board now demanded further negotiation. Meanwhile, his brokers, instructed to corner Erie by purchasing every share on the market, were confronted with a seemingly inexhaustible supply.
The culprit was Drew, who had made a separate peace with Gould and Fisk. In 1866, during one of the Erie’s recurrent financial crises, Drew had loaned the road $3.5 million, secured by twent
y-eight thousand shares of unissued stock and $3 million in bonds convertible at his whim into another thirty thousand shares. This hoard enabled Drew to expand or contract the float of Erie shares with the ease of a child inflating and deflating a toy balloon. He was currently in the inflating vein.
* * *
The battles among railroad barons such as Vanderbilt and the flamboyant Jim Fisk were irresistible grist for nineteenth-century illustrators such as Currier & Ives, who issued this commentary on the Erie Railroad war in 1870.
* * *
The Commodore, who formerly had bypassed the legal system because of its snail’s pace, now called upon a pet judge on the New York state court to enjoin the registration of any new shares, thus cutting off Drew’s spigot, while commanding his brokers to keep buying. But Drew, Gould, and Fisk also owned judges, and theirs ordered the Erie to register every share. On a single day in early March 1868, the Erie directors were served with seven injunctions issued by four judges “all enjoining or commanding things wholly inconsistent,” Charles Francis Adams reported. If the board rejected Drew’s shares, it was in violation of one court order; if it accepted them, it was in violation of another. There were so many pending motions and appeals lodged in courthouses across the state that a lawyer for one of the parties, cornered by the press, pleaded that it was “impossible to keep track of the proceedings.”
Vanderbilt kept buying. His fortune was now dependent on the market’s continued confidence in his implacable determination. To falter even for a moment could bring his entire business edifice down in a fatal crash. But his resources were growing thin in the face of the torrent of new shares. The voluble Fisk was said to have confided to friends, “If this printing press don’t break down, I’ll be damned if I don’t give the old hog all he wants of Erie.”
A climax loomed. On March 11, Vanderbilt persuaded his judge to order Drew, Gould, Fisk, and their affiliated board members arrested for contempt of court. The very next morning, “a police officer patrolling his beat in West Street was startled to see a group of well-dressed, respectable-looking men, accompanied by a platoon of clerks, issue from the Erie building in a wild stampede and rush headlong toward the docks. With them they carried bundles of documents tied with red tape, account books, records and bales of money.” Two directors who had not moved quickly enough were swept up by pursuing deputies like wildebeest calves snatched by lions, and clapped in jail. Drew, Gould, Fisk, and their remaining confederates crossed the river and fetched up at Taylor’s Hotel in Jersey City. Guarded by a platoon of Jersey City police officers, the place would become known as Fort Taylor.
Over the next few weeks, skirmishes between Vanderbilt-employed toughs and the Jersey City defenders vied for the public’s attention with the impeachment trial of Andrew Johnson, unfolding simultaneously in the Senate chamber in Washington. The siege of Fort Taylor was the more colorful event. Fisk swanked about in a gilded uniform as commander of the defense force, fashioning himself “Admiral” Jim Fisk and installing three twelve-pound cannons on the Jersey piers to repel invaders. He endowed Fort Taylor with the utmost in creature comforts, including Josie Mansfield, transported across the Hudson in grand style, surrounded by a swarm of avid newspapermen. From the hideaway Gould continued to conduct the Erie’s business inconspicuously. The weak link in their line of defense, he and Fisk knew, was Drew. The old buccaneer fretted in exile, kept prisoner in his hotel room, spending all day and night in seemingly endless prayer. A bodyguard of a half-dozen men was stationed inside the room to forestall any contact from Vanderbilt.
Eventually a Vanderbilt spy masquerading as a traveling salesman managed to penetrate Fort Taylor and bribe a waiter to slip Drew a note:
Drew: I’m sick of the whole damned business. Come and see me.
Van Derbilt.
* * *
In truth, everyone in Fort Taylor was sick of the whole damned business. Gould missed his family and Fisk preferred to do his carousing in his familiar Manhattan haunts rather than the ratty confines of a Jersey City hotel. Exploiting a New York law that held them immune to arrest on the Sabbath, Fisk and Gould crossed the river every Sunday, Fisk to debauch, Gould to bask in family warmth, both taking care to be back at Fort Taylor by sundown. On one occasion Fisk flouted the law by partying on a weeknight at the Manhattan Club, a haunt of the Vanderbilt clique, but he scurried to a waiting tugboat the moment he spotted a Vanderbilt crony signaling for the police.
So it was that, early one Sunday in March, a sepulchral figure skulked its solitary way toward the Jersey City ferry boat landing. It was Daniel Drew, and his destination on this foggy morning was Vanderbilt’s baronial redbrick town house at Washington Place, Manhattan. Normally Drew would have relied confidently on his Sabbath immunity from arrest. But he was afraid of being snared by his partners once they discovered that he had slipped out of Fort Taylor. So he kept to the shadows.
Drew’s intention was to once again throw himself on the Commodore’s mercy with an abject outburst of weeping and contrition. He hoped to plead as a free man, not a prisoner under lock and key. So he made his way carefully, finally ending up at Vanderbilt’s mansion in full groveling mode. By Drew’s own account, Vanderbilt received him magnanimously, showing his soft spot for the former drover. “Vanderbilt tole me that I acted very foolish in goin’ to Jersey City,” he testified later during one of the marathon investigations of the Erie war, according to Croffut’s dialect-ridden version. “I tole him I didn’t know but what I wus circumstanced in an ockerd [perhaps “unjust”] light.”
Still holed up at Fort Taylor, Fisk and Gould prepared for what they expected to be the decisive battle of the Erie war—waged not in the streets of Jersey City, but in the state capitol in Albany, where they had arranged to introduce a bill that would stymie Vanderbilt by legalizing their Erie securities. They were counting on popular hostility to Vanderbilt as a transport monopolist to win them votes, but they also knew that in the state capitol, money talked loudest. At almost the same moment that Drew was sneaking toward Manhattan, Gould quietly decamped for Albany with a suitcase bulging with cash—as much as a half-million dollars, by Charles Adams’s reckoning. Under the impression that his lawyer had won a temporary reprieve for him from a writ issued by a Vanderbilt judge, he checked in at the capital’s Delavan House hotel on March 30, only to be arrested for contempt and transported to New York. He promptly bailed himself out and returned to Albany, where he began disbursing greenbacks from his valise in exchange for votes.
Or so it can be assumed. “The full and true history of this legislative campaign will never be known,” Adams reported. “If the official reports of investigating committees are to be believed, Mr. Gould at about this time underwent a curious psychological metamorphosis, and suddenly became the veriest simpleton in money matters that ever fell into the hands of happy sharpers.”
Erie company records give only the barest hint of the scale of the bribery, with more than $1 million having been spent from its treasury in 1868 for “extra and legal services,” which a state assembly committee interpreted as sums “to control elections and to influence legislation.” Gould, brought before the committee on April 12, 1873, attributed the spending vaguely to an “India Rubber Account,” but could not recall a single specific transaction.
“I have no details now to refresh my mind,” Gould testified. “When I went over a transaction, and completed it, that was the end of it; and I went at something else; you might as well go back and ask me how many cars of freight were moved on a particular day, and whether the trains were on time or late.”
Vanderbilt, of course, had his own resources and his own agents in Albany. His and Gould’s treasure chests fought each other to a draw, until finally Vanderbilt decided that he would spend not another dollar to purchase a legislator. Gould’s Erie bill passed. But that was not the end of the affair. Gould and Fisk, knowing they could face years of litigation with the Commodore, in late June made their own pilgrimage to 10 Wash
ington Place to negotiate an armistice. Fisk left the most vivid description of the meeting:
Gould wanted to wait until the Commodore should have time to get out of bed, but I rang the bell and when the door was opened I rushed up to his room. The Commodore was sitting on the side of the bed with one shoe off and one shoe on. I remember that shoe from its peculiarity. It had four buckles on it. I had never seen shoes with buckles in that manner before, and I thought, if these sort of men always wear that sort of shoe, I might want a pair.
Vanderbilt crisply informed his visitors that he would keep his “bloodhounds” on their track until they reached a final settlement to his satisfaction. “I told him that he was a robber,” Fisk related. “I said that it was an almighty robbery; that we had sold ourselves to the Devil, and that Gould felt just the same as I did.” But they did settle, repaying Vanderbilt $2.5 million in cash and $1.25 million in bonds for his purchases of the inexhaustible Erie shares, and advancing another $1 million for an option on Vanderbilt’s remaining fifty thousand Erie shares.
Gould and Fisk ended up with undisputed control of the Erie. Drew sniveled at the outcome but got no sympathy from his confederates, who now were intent on visiting upon him bankruptcy and final destruction. As Fisk sneered at Drew: “You should be the last man that should whine over any position in which you may be placed in Erie.”
Iron Empires Page 5
