The Erie War Pt. 1 - The Battle For A Railroad That Required No Bullets

Cornelius Vanderbilt once tried to buy a railroad.

He didn’t ask for a meeting with the board to negotiate a price. He began buying it out from under them.

1868. The Commodore, fresh off of consolidating control of the New York Central, moved to take the Erie Railway, buying shares as fast as brokers could sell them.

Standing in his way was Daniel Drew, the Erie's treasurer, and the original master of "watered stock" (a term he coined, quite literally: he'd been a cattle drover who salted his herds and let them drink before the weigh-in to inflate their weight).

Beside Drew: two younger men, the notorious Jay Gould and James Fisk.

Vanderbilt bought. And bought. And bought some more. And the shares would keep coming — because in a smoky back room somewhere, the Erie ring was running a printing press, converting bonds into fresh stock and pouring it into the market, specifically to devalue Vanderbilt’s share in the company.

Vanderbilt caught on to the scheme and began spending millions on the devalued stock anyway, believing he could financially outgun his newfound adversaries. His ownership stake barely moved.

When Vanderbilt's judges issued injunctions and arrest warrants, the Erie ring gathered the company's cash, reportedly millions in greenbacks, stuffed into bags, and fled across the Hudson River to Jersey City, out of New York's jurisdiction. Fearing retaliation, or worse, from Vanderbilt, they fortified a hotel with armed guards and even cannon lookouts against kidnappers. The press nicknamed it Fort Taylor.

A railroad's entire treasury, hauled away on a moment’s notice, and garrisoned in a hotel across the river.

And the war was just getting started — because the next battlefield wasn't the courts.

It was the New York State Legislature. And the Legislature, as with everything else standing in the way of the robber barons, was for sale.

Part 2 next week: the bidding war for Albany.

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