Great Fortunes from Railroads

to be accepted as a gauge of capacity none would suspect that Gould contained the elements of one of the boldest and ablest financial marauders that the system in force had

ack whiskers; his eyes were dark, vulpine and acutely piercing; hi

CATION OF THE

land then valued at from $400,000 to $500,000, [Footnote: Report on the New York and Erie Railroad Company, New York State Assembly Document, No. 50, 1842. See also, Investigation of the Railroads of the State of New York, 1879, I: 100.] but now worth tens of millions of dollars. In addition, an extraordinary series of special privileges and franchises was given to it. This process was manifolded in every State through which the railroad passed. The cost of construction and equipment came al

pass without restriction into the possession of a small clique of exploiters and speculators. Not only were the people cheated out of funds raised by public taxation and advanced to build the road-a common occurrence in the case of most railroads-but this very mone

TOR, DREW,

attention was given to efficient management that shocking catastrophies resulted at frequent intervals. A time came, however, when the old locomotives, cars and rails were in suc

exacted the usual required security. By 1855 he had advanced nearly two million dollars-five hundred thousand in money, the remainder in endorsements. The Erie directors could not pay up, and the control of the railroad passed into his hands. As ignorant of railroad management as he was

t and service, and how he could put through the same stock-watering operations that he did in his other transactions. Tens of millions of dollars would be his, if he could only secure control. Moreover, the Erie was likely at an

* *

STS DREW, THE

uin an old, self-made man like himself. The appeal struck home. Had the implorer been anyone else, Vanderbilt would have scoffed. But, at heart, he had a fondness for the old illiterate drover whose career in so many respects resembled his own.

portly, tawdry, pompous voluptuary. In early life Fisk had been a peddler in Vermont, and afterwards had managed an itinerant circus. Then he had become a Wall street broker. Keen and suspicious as old Vanderbilt was, and innately distrustful of both of them, he nevertheless, for some inexplicable reason, allowed Drew to install

* *

ND FISK BETRA

uy as much Erie stock as he could, both as a surer guarantee of control, and to put his own price upon it, Vanderbilt conti

s apparently "caught short" in the Stock Exchange, and seemed ruined. But at the critical moment he had appeared in Wall street with fifty-eight thousand shares of stock, the existence of which no one had suspected. These shares had been converted from bonds containing an obscure

ned over to themselves as security for pretended advances of moneys. These bonds were secretly converted into shares of stock, and then distributed among brokerage houses of which the three were members

oncealed tool of corporate interests and of the plundering Tweed political "ring"; for his many crimes on the bench he was subsequently impeached. [Footnote: At his death $1,000,000 in bonds and cash were found among his effects.] Barnard promptly issu

sibly to carry them to a deposit place on Pine street. They innocently disclaimed any knowledge of who the thief was; as for the messenger boy, he "did not know." These one hundred thousand shares of stock Drew, Gould and Fisk instantly threw upon the stock market. No one else had th

PARTNERS FLEE

first paroxysm of frenzied swearing, he hit upon a plan of action. The very next morning warrants were sworn out for the arrest of Drew, Fisk and Gould. A hint quickly reached them; they thereupon fled to Jersey City out of Barnard's jurisdiction, taking their cargo of loot

over their having outwitted a man whose own specialty was fraud, they knew that their position was perilous. Barnard's order had declared their sales of stock to be fraudulent, and hence outlawed; and, moreover, if they dared venture back to New York, they were certain, as matters stood, of instant arrest with the threatened alternative of either disgorging or of a criminal t

led a sufficient number of judges; why should not they buy up the Legislature, as he had often done? The strategic plan was suggested of getting the New York Legislature to pass an act legalizing their fraudulent stock issues. Had not Vanderbilt and o

HE LEGISLATURE

ction. No time was lost by him. "He assiduously cultivated," says Adams, "a thorough understanding between himself and the Legislature." In the face of sinister charges of corruption, the bill legalizing the fraudulent stock issues was passed. Ineffectually d

w York State Senate on April 10, 1868. This committee did not have to investigate to learn the basic facts; it already knew them.

itigation, and that it was clear "that large sums of money did come from the treasury of the Erie Railroad Company, which were expended for some purpose in Albany, for which no vouchers seem to have been file

ill"; and it was further brought out that $100,000 had been given to the lobbyists Luther Caldwell and Russell F. Hicks, to influence legislation and also to shape public opinion through the press. Caldwell, it appeared, received liberal sums from both Vanderbilt and Gould. [Footnote: Report of the Select Committee of the New York Senate, appointed April 10, 1868, in Relation to Members Receiving Money from Railway Companies. Senate Document No. 52, 1869:3-12, and 137, 140-146. ] A subsequent investigation committee appointed, in 1873, to inquire into other charges, reported that in one year of 1868 the Erie rail

e faces of our legislatures, and in all our politics t

for the sums that he thus corruptly spent in fighting Drew, Gould and Fisk.

rious civil suits in New York against them; moreover they were adjudged in contempt of court. Parleying now began. With the severest threa

es at any time within four months. Although this settlement left Vanderbilt out of pocket to the extent of almost two million dollars, he consented to abandon his suits. The three now left their lair in Jersey City and transferred the Erie offices to the Grand Opera House, at Eighth avenue

FISK THROW

or he was depressed, to rush off to his bed, hide himself under the coverlets and seek solace in sighs and self-compassion, or in prayer-for with all his unscrupulousness he had an orthodox religious streak. When Drew realized that he had been plundered and betrayed, as he had so often acted

vening hand. This was a new obstacle, but it was coolly met. Gould and Fisk brought in gangs of armed thugs to prevent these

he board of directors should be retired in any year. By this means, although the majority of stockholders might be opposed to the Gould-Fisk mana

of the State. It was thus only necessary for Gould and Fisk to own the Attorney-General entirely (which they took pains, of course, to do) in order to close the courts to the defrauded stockholders. On a trumped-up suit, and by an order of one of the Tweed judges, a receiver wa

ORRUPT POLITICS

frauds were made uncommonly easy by having Tweed machine as an auxiliary; in turn, Tweed, up to 1871, controlled the New York City and State dominant political machine, including the Legislature and many of the judges. To insure Tweed's connivance, th

and Fisk, and so throughly did this judge prostitute his office at their behest that once, late at night, at Fisk's order, he sportively held court in the apartment of Josie Mansfield, Fisk's mistress. [Footnote: The occasion grew out of an attempt of Gould and Fisk in 1869 to get control of the Albany and Sesquehanna Railroad. Two parties contested-The Gould and the "Ramsey," headed by J. Pierpont Morgan. Each claime

sion was favorable to the "Ramsey" party. See the chapters on J. Pierpont Morgan in Vol. III of this work.] When the English stockholders sent over a large number of shares to be voted in for a ne

with the Tweed "ring" that Gould was able to p

oard, and the State Legislature, Tammany Hall and the Erie 'ring' were fused together and have contrived to serve each other faithfully." [Footnote: "A Life of James Fisk, Jr.," New York, 1871.] Gould admitted before a New York State Assembly investigating committee in 1873 that, in th

uld be as impossible to specify the numerous instances "as it would be to recall the number of freight cars sent over the Erie Railroad from day to day." His corrupt operations, he indifferently testified, extended into four different States. "In a Republican district I was a Republican; in a Democratic district, a Democrat; in a doubtful district I was doubtful; but I was always for Erie

RADING CL

solely by bribing and trickery that Gould was able to consummate his frauds. Such assertions are altogether incorrect. To do what he did required

r the growing concentration of wealth; and as its interests were reflected by a large number of orga

the middle and working classes in seeking to prevent Vanderbilt from getting a monopoly of many railroads. He played adroitly upon the fears, the envy and the powerful mainsprings of the self int

trading class excused his corruption and frauds on the ground that he seemed to be the only man who proved that he could prevent Vanderbilt from

etitors. Thus, A. T. Stewart, one of the noted millionaire manufacturers and merchants of the day, instead of owing his success to his great ability, as has been set forth, really derived it, to a great extent, from the secret preferential freight rates that he had on the Vanderbilt railroads

half of what he himself received for milk. These taxes, of course, eventually fell upon the consumer, but the manufacturer and the farmer realized that if the extortions were less, their sales and profits would be greater. They were in a r

ds, and paying dividends out of proceeds. So long as the profits of these small stockholders were slightly better than they had been getting before, they were complacently satisfied to let Gould continue his frauds. This acquiescence in theft ha

holders might assent, the large English stockholders, some of whom had invidious schemes

ECTORS BRIB

istributed among them, and they carried out their part of the bargain by resigning. [Footnote: Assembly Document No. 98, 1873: xii and xiii. The English stockholders took no chances on this occasion. The committee reported that not until the directors had resigned did they "receive their price." ] The Assembly Investigating Committee of 1873 referred carelessly to the English stockholders as being "

r or labor union leader had been sent to jail (and has been since), for "contempt of court," but the courts evidently have been willing enough to stomach all of the contempt profusely shown for them by the puissant rich. The propertyless owned nothing, not to speak of a judge, but the capitalists owned whole strings of judges, and those whom they di

LATURE BR

foot this bill out of their own pockets? By no means. They arranged the reimbursements by voting this sum to themselves out of the Erie Railroad treasury; [Footnote: Assembl

systematically bribed; and it is clear that they contributed jointly a pool of money both to buy laws and to prevent the passage of objectionable acts. "It appears conclusive," reported the Assembly Investigating Committee of 1873, "that a large amount- reported by one witness at $100,000-was appropriated for legislative purposes by the railroad in

ERIE THEFTS W

on of his Erie frauds, seem to have reached more than twelve m

ations of his thefts were made. After a minute examination of the Erie railroad's books, Augustus Stein, an expert accountant, testified before the "Hepburn Committee" (the New York Assembly Investigating Commit

say that it amounted to-that is, what we discovered-amounted to about twelve or thirte

aid, nor a new engine put in use, nor a new station built. These twelve millions or more were what he and his immediate accomplices had stolen outright from the Erie Railroad treasury. Considerable sums were, of course, paid corruptly to politicians, but Gould got them al

of the Chicago and Northwestern Railroad; to put it more plainly, he bought up the outstanding available supply of shares, and then ran the price up from 75 to 250. Smith was one of a number of Wall Street men badly mulcted in this operation, as Gould intended. Seeking revenge, Smith gave over the firm's books, which were in his possessio

DINARY "RE

his craft and audacity. He planned to make his very restitution the basis for taking in many more millions by speculation; he knew that wh

emingly worth $6,000,000. But after the stockholders had withdrawn their suits, they found that they had been tricked again. The property that Gould had turned over to them did not have a market value of more than $200,000. [Footnote: Railroad Investigation, etc. 1879, iii: 2503. One of the very rare instances in which any of Gould's victims was able to compel him to disgorge, was that described in the following anecdote, which

e of the stock, and hearing stories to the effect that the dividends were to be passed, the man wrote to Gould asking if the investment was still go

change, and finally the rumors became fact, and the Directors passed the dividend. The man

unced the passing of the dividend, and told Gould that he had been deliberately and grossly deceiv

him and said: 'My dear Mr.--' calling him by name, 'you are laboring under a most serious misapprehension. Your money is not lost. If you will go down to my bank tomorrow morning, you will

spent a sleepless night, torn by doubts and fears. When the bank opened for business he was the first man in

way to save his life and his name was to pay the man the sum he had lost plus a profit, in the manner he

TAGE OF THE

using these stolen millions to corner the gold supply. In this "Black Friday" conspiracy (for so it was styled) he fradulently reaped anothe