The Wall Street War to Control the Erie Railroad

In the years following the Civil War, Wall Street was largely unregulated. Crafty manipulators could influence the rise and fall of particular stocks, and fortunes were made and lost, and sometimes companies destroyed, by shady practices.

The battle for control of the Erie Railroad, which involved some of the richest men in America in a peculiar and utterly unethical battle, captivated the public in 1869.

Commodore Vanderbilt Battled Jim Fisk and Jay Gould

Illustration of Cornelius Vanderbilt and Jim Fisk competing for control of railroads.
Library of Congress/Public Domain

The Erie Railroad War was a bitter and prolonged financial battle for control of a railroad line waged in the late 1860s. The competition between robber barons underscored corruption on Wall Street while it captivated the public, which followed the peculiar twists and turns portrayed in newspaper accounts.

The primary characters were Cornelius Vanderbilt, the venerable transportation magnate known as “The Commodore,” and Jay Gould and Jim Fisk, upstart Wall Street traders becoming famous for shamelessly unethical tactics.

Vanderbilt, the richest man in America, sought control of the Erie Railroad, which he planned to add to his vast holdings. The Erie had opened in 1851 to great fanfare. It crossed New York State, essentially becoming a rolling equivalent to the Erie Canal, and was thought to be, like the canal, a symbol of America’s growth and expansion.

The problem was that it wasn’t always very profitable. Yet Vanderbilt believed that by adding the Erie to his network of other railroads, which included the New York Central, he could control much of the nation’s railroad network.

The Fight for the Erie Railroad

Engraved portrait of financier Jay Gould
Hulton Archive/Getty Images

The Erie was controlled by Daniel Drew, an eccentric character who had made his first fortune as a cattle drover, walking herds of beef cattle from upstate New York to Manhattan in the early 19th century.

Drew's reputation was for shady behavior in business, and he was a major participant in many Wall Street manipulations of the 1850s and 1860s. Despite that, he was also known to be deeply religious, often lapsing into prayer and using some of his fortune to fund a seminary in New Jersey (the present-day Drew University).

Vanderbilt had known Drew for decades. At times they were enemies, at times they were allies in various Wall Street skirmishes. And for reasons no one else could understand, Commodore Vanderbilt had an abiding respect for Drew.

The two men began working together in late 1867 so that Vanderbilt could buy up the majority of shares in the Erie Railroad. But Drew and his allies, Jay Gould and Jim Fisk, began plotting against Vanderbilt.

Using a quirk in the law, Drew, Gould, and Fisk began issuing additional shares of Erie stock. Vanderbilt kept buying the "watered" shares. The Commodore was outraged but kept trying to buy up the Erie stock as he believed his own economic might could outgun Drew and his cronies.

A New York State judge eventually stepped into the farce and issued citations for the board of the Erie Railroad, which included Gould, Fisk, and Drew, to appear in court. In March 1868 the men fled across the Hudson River to New Jersey and barricaded themselves in a hotel, protected by hired thugs.

Newspaper Coverage Fueled the Fight

Select historical newspapers dating as early as 1738 can be accessed through an online subscription to Irish Newspaper Archives.
Getty / Hachephotography

The newspapers, of course, covered every twist and turn in the bizarre story. Though the controversy was rooted in fairly complicated Wall Street maneuvers, the public understood that the richest man in America, Commodore Vanderbilt, was involved. And the three men opposing him presented an odd cast of characters.

While exiled in New Jersey, Daniel Drew was said to be sitting silently, often lost in prayer. Jay Gould, who always seemed morose anyway, also remained quiet. But Jim Fisk, an eccentric character who would become known as “Jubilee Jim,” paraded about, giving outrageous quotes to newspaper reporters.

"The Commdore" Brokered a Deal

Portrait of Cornelius Vanderbilt
Library of Congress

Eventually, the drama moved to Albany, where Jay Gould apparently paid off New York State legislators, including the infamous Boss Tweed. And then Commodore Vanderbilt finally called a meeting.

The end of the Erie Railroad War has always been fairly mysterious. Vanderbilt and Drew worked out a deal and Drew convinced Gould and Fisk to go along. In a twist, the younger men pushed Drew aside and took over control of the railroad. But Vanderbilt exacted some revenge by having the Erie Railroad buy back the watered stock he had purchased.

In the end, Gould and Fisk wound up running the Erie Railroad, and essentially looting it. Their former partner Drew was pushed into semi-retirement. And Cornelius Vanderbilt, though he didn’t get the Erie, remained the richest man in America.

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McNamara, Robert. "The Wall Street War to Control the Erie Railroad." ThoughtCo, Aug. 26, 2020, McNamara, Robert. (2020, August 26). The Wall Street War to Control the Erie Railroad. Retrieved from McNamara, Robert. "The Wall Street War to Control the Erie Railroad." ThoughtCo. (accessed March 24, 2023).