BULL STREET – The art of the Con

Daniel Drew Vs the Commodore

The middle 1800s was a time when the country was expanding exponentially and there was substantial money to potentially be made in its stock markets. However, the people in these days had never quite learned the Marquis of Queensberry rules and most of the financial dealings were of the no-holds-barred variety. However, the was one opportunity. Americans wanted to get somewhere and they didn’t want to take stagecoaches or ride in endless wagon trains through dangerous territory. They need trains and sadly they didn’t exist yet. This was a problem.

The United States Government believed that the only way it could stake a legitimate claim to our own West was by settling it with its own people. However, the best way to accomplish that sooner rather than later was to lay railroad tracks from one end of the country to the other. However, there wasn’t enough money around in those times for either the government or private industry in conjunction with the stock exchange to do the job. However, someone in the government came out with a great idea, which was to offer incentives of land along the railroad right-of-way to the transportation companies. It was literally a no lose situation for them. As the railroads expanded westward, people would begin settling down along the way on land belonging to the railroad.

These people would pay good money for the land and establish hotels, restaurants and shops along the way. The money that the railroads made by selling the land given them by the government paid back their investment in laying track and in the meantime, the rest stops provided by the homesteaders would feed and house weary travelers. This could indeed by a self-fulfilling prophecy. However, in spite of the wonderful deal the government was offering, there were only a few that were wily enough to play in this high stakes game. One was a self-made man by the name of Daniel Drew who among other possessions owned a then very valuable property called the Erie Railroad.

Another was a man named Cornelius Vanderbilt. Vanderbilt did not particular like trains at all; he was a sailor and owned probably what was the finest fleet in the world for the times. Drew was basically, a bible-touting cad who attempted to fleece literally ever person he came across while reading them the psalms or something of the kind. Vanderbilt however, who eventually became known as the Commodore, tried to give his steamship customers value for their dollar. Moreover, Vanderbilt had accumulated so much money that more by happenstance than for any other reason also owned a railroad or two, but it was not in his blood.

Drew also had a couple of wealthy friends who were fundamentally known as Robber Barons for the ability to squeeze everything they touched for a little more and did it in a way that left your blood turning cold. Drew really like the style of these guys.

Moreover, Drew had found out early on that he could manipulate Erie stock up or down and make profits in either direction by rigging the market. While that would have been illegal currently, for that time, there was nothing particularly wrong with it and Drew for a time was considered smart, but not a criminal. However, if you sold more than you owned, you could well get into a pickle because the buyer could force the stock higher and higher and eventually your collateral would become worthless. Drew did not particularly care about that one way or the other, because in his mind, no one could out think him or outspend him in order to drive prices the way he wanted them to go.

Unbeknownst to Drew though, Vanderbilt had taken a cotton to owning the Erie and started buying their stock. Drew seeing the price rise, thought it was a market anomaly and began selling everything he owned and quite a bit more[105]. Before Drew knew what had happened, Vanderbilt had already backed him into a financially difficult position; Drew called in his partners in crime.  These were the infamous people that were known as the Robber Barons. Fisk and Gould.

Drew to the two conspirators what Vanderbilt had done to him and asked if they could help. Fisk went to a friendly judge in upstate New York carrying a satchel full of greenbacks and had the jurist rule that Drew could do whatever he wanted with the Erie. Thus, encouraged, the Robber Barons determined that the Erie Railroad Company would not say anything more about the matter and started printing more and more shares, which would in turn flood the market and drive Erie stock down. Vanderbilt, not having a clue that anyone would do anything that dishonest was caught totally by surprise. He bought shares until he thought he owned them all and yet, they were still offered for sale in substantial quantity.

He had no recourse but to call his own attorney and have him begin an investigation into what was going on. His attorney soon made Vanderbilt aware of the upstate ruling and he became furious. Vanderbilt did Drew one better and had a judge that was in his own pocket rule that the Erie was bankrupt, that an aide to Vanderbilt was to be administrator and that Drew, Fisk and Gould had indeed broken the law and as of now they had become wanted men. The three getting wind of the ruling and the fact that the sheriff’s deputies were on their way to incarcerate them, they grabbed the first boat across the river into New Jersey.

The Robber Barons rented rooms at the Taylor Hotel and sent word to their henchmen that they were needed post haste. It wasn’t too much later that numerous evil looking armed men arrived at the hotel, now named Fort Taylor because of the expected shootout that everyone expected immanently. In addition, Fisk requisitioned several cannons and ammunition from a nearby armaments store, purchased four lifeboats and then bought himself an admiral’s uniform and began inspecting his troops. All the while, Fisk was giving a running account of what he was doing to newspapermen that were covering the event for the press. This had become more like a Roman Holiday than a war.

The battle for control of the Erie was so named the “Erie War” by reporters on the scene and that is the way things stood for three months. For the most part everyone involved was now getting bored including the participants, Drew, Fisk and Gould didn’t really like New Jersey all that much but for them to step back onto New York soil under the circumstances would have been fatal to say the least. While there was no question that the police and the legislature in New Jersey had been bought and paid for by the Robber Barons; everyone also knew that Vanderbilt had been able to achieve a similar position in New York. However, the price was high and it took a lot of money took keep the status quo intact.

The reality of the situation was that Vanderbilt got intensely bored with the state of affairs and wanted to get back down to business while Fisk, Gould and Drew were strutting around New Jersey like a trio of peacocks with no where to go and nothing to do. Drew was sent a letter by Vanderbilt, which said, “I’m sick of the whole damned business. Come and see me.” Drew not believing that his co-connivers had seen the note, left the hotel in the middle of the night to meet Vanderbilt. However, the other Robber Barons were well aware that Drew always dealt from the bottom of the deck and they were on to him. They got to New York even before Drew did and eventually they all negotiated a deal, in which Vanderbilt got back most of the money they had stolen and Drew, Fisk and Gould got to keep the now decrepit Erie Railroad.

We won’t go into all the laws these folks broke but the bystanders were having a great old time betting on who the eventual winner was going to be. No one had blushed when the judges, the police and legislators were bought and paid for, they only cheered louder for their own side indicating that at a certain level of business, everything was ok. The fact that Drew counterfeited his own stock was considered a brilliant strategy at the time, not the work of a thief. Well the old moral her applies as always, Boys will be boys.

Back