Erie War

The Erie War was a 19th-century conflict between American financiers for control of the Erie Railway Company, which owned and operated the Erie Railroad. Built with public funds raised by taxation and on land donated by public officials and private developers, by the middle of the 1850s the railroad was mismanaged and heavily in debt. A cattle drover turned Wall Street banker and broker Daniel Drew at first loaned $2 million to the railroad, and then acquired control over it. He amassed fortune by skilfully manipulating the Erie railroad shares on the . Cornelius Vanderbilt, who set his mind on building a railroad empire, saw multiple business and financial opportunities in railways and decided in 1866 to corner the market on Erie by silently scooping the Erie railroad stock. After succeeding, Vanderbilt permitted Drew to stay on the board of directors in his former capacity as a treasurer.

Between 1866-1868, Daniel Drew conspired with James Fisk and Jay Gould, whom he brought on the board, to issue spurious Erie Railroad shares, thus "" the stock, of which unsuspecting Cornelius Vanderbilt bought a large quantity. Vanderbilt lost more than $7 million in his attempt to gain control over Erie Railway Company, although Gould, under threat of litigation later returned most of the money. As a result, Vanderbilt conceded control of the railroad to the trio. They were involved with the corrupt Tammany Hall political party machine, and made Boss Tweed a director of the Erie Railroad. Tweed (who later died in prison for embezzlement and fraud), in return arranged favorable state legislation in Albany for them, legalizing the newly issued shares.

Gustavus Myers, an American historian and muckraker, wrote in his survey of railroad fortunes in the U.S.,

The year 1868 proved a particularly busy one for Vanderbilt. He was engaged in a desperately devious struggle with Gould. In vain did his agents and lobbyists pour out stacks of money to buy legislative votes enough to defeat the bill legalizing Gould's fraudulent issue of stock. Members of the Legislature impassively took money from both parties. Gould personally appeared at Albany with a satchel containing $500,000 in greenbacks which were rapidly distributed. One Senator, as was disclosed by an investigating committee, accepted $75,000 from Vanderbilt and then $100,000 from Gould, kept both sums, — and voted with the dominant Gould forces.

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