What went to New York did not stay in New York; like tourists from Topeka, those greenback reserves toured Wall Street and then went home again. In the fall, the harvest and shipping of foodstuffs to the seacoast-known as "the moving of the crops"-required a countermovement of currency to the countryside to accommodate the accompanying flurry of transactions. Country banks drew down their accounts in reserve cities; those banks drew down accounts in New York; and New York banks called in their loans to brokers. Stock trading slowed; prices tended to stall or fall. For this reason, Wall Street panics almost always occurred late in the year.
Economists call this problem "currency inelasticity," because the fixed quant.i.ty of high-powered money made it difficult to ease these seasonal fluctuations. Starting in the twentieth century, the Federal Reserve Bank would fine-tune the money supply on a daily basis, but in the nineteenth century there was no agency charged with such close supervision of the financial system. In fact, Treasury Secretary Hugh McCulloch determinedly made things worse. Believing that greenbacks were inflationary and literally an abomination-a violation of G.o.d"s plan to make gold and silver the only money-he gradually withdrew greenbacks from circulation to enable the Treasury to redeem them in gold on demand. While orthodox policy by 1867 standards, it created deflationary pressure that was felt most strongly on Wall Street.
A man as cunning as Drew could see the vulnerabilities of this system, and he did not hesitate to deliberately manipulate it for personal gain. In early l868, the New York Evening Post New York Evening Post estimated the banks that belonged to the city"s clearinghouse (including all the important ones) possessed a total greenback reserve of only $12 million, just 5 percent of their deposits and circulating notes. It was disturbingly easy for a few wealthy individuals to siphon much of that $12 million out of the system and cripple its ability to provide credit. This was done through a maneuver known as the "lockup." A man (better yet, a group of men) with a large amount on deposit would draw certified checks against this sum. The bank was now obliged to keep those funds out of use until the checks were presented for payment. Then the perpetrator would take the checks to other banks and use them as collateral for loans, which he would take in the form of actual greenbacks; these he would lock up in a safe. Now he had removed from circulation far more money than was in his original account-and it was high-powered money. Banks, short of greenbacks, would call in loans to brokers, who would curtail trading on margin on Wall Street, causing stock prices to fall. A self-reinforcing credit crunch could ensue, as falling share values caused further reductions in loans against stock. The lock-up was a sawed-off shotgun of a financial weapon-devastating, imprecise, and likely to injure innocent bystanders. estimated the banks that belonged to the city"s clearinghouse (including all the important ones) possessed a total greenback reserve of only $12 million, just 5 percent of their deposits and circulating notes. It was disturbingly easy for a few wealthy individuals to siphon much of that $12 million out of the system and cripple its ability to provide credit. This was done through a maneuver known as the "lockup." A man (better yet, a group of men) with a large amount on deposit would draw certified checks against this sum. The bank was now obliged to keep those funds out of use until the checks were presented for payment. Then the perpetrator would take the checks to other banks and use them as collateral for loans, which he would take in the form of actual greenbacks; these he would lock up in a safe. Now he had removed from circulation far more money than was in his original account-and it was high-powered money. Banks, short of greenbacks, would call in loans to brokers, who would curtail trading on margin on Wall Street, causing stock prices to fall. A self-reinforcing credit crunch could ensue, as falling share values caused further reductions in loans against stock. The lock-up was a sawed-off shotgun of a financial weapon-devastating, imprecise, and likely to injure innocent bystanders.39 Vanderbilt accused Drew of carrying out a lock-up during his bear campaign of 1866, when he laid Erie low with his secret 58,000 shares. The chance that he might do it again posed a grave threat to Vanderbilt"s campaign to conquer the Central.40 The Commodore could afford to buy Central stock for cash, but he needed the support of a wide array of friends and allies who bought on margin and needed an easy money market to finance their purchases. More than that, Vanderbilt needed the perception that his rise to power was good for stockholders. If Drew sent the market tumbling, it would weaken the Commodore"s reputation, one of his most valuable a.s.sets. And Vanderbilt faced one more worry: it was autumn. The moving of the crops was under way, and money was already tight. He had to forestall Drew"s bear operations. The Commodore could afford to buy Central stock for cash, but he needed the support of a wide array of friends and allies who bought on margin and needed an easy money market to finance their purchases. More than that, Vanderbilt needed the perception that his rise to power was good for stockholders. If Drew sent the market tumbling, it would weaken the Commodore"s reputation, one of his most valuable a.s.sets. And Vanderbilt faced one more worry: it was autumn. The moving of the crops was under way, and money was already tight. He had to forestall Drew"s bear operations.
The explanation satisfied Gould, who went his silent way after the exchange of bond for proxy. With Vanderbilt"s votes in hand, the Eldridge party looked certain to win the annual election on October 8, 1867. Drew knew he was beaten. On October 6, he called on Vanderbilt at home to beg for mercy. What Drew said is unknown, but the tight-lipped former cattle drover must have been at his most eloquent that night. Perhaps he cited their decades of friendship, the millions they had made together. Perhaps he reminded Vanderbilt of their bull campaign in Erie in 1854. They could do it again; and a rising market would help Vanderbilt conclude his operations in the Central.41 Whatever he said, it worked. Whatever he said, it worked.
Vanderbilt dispatched Richard Sch.e.l.l to fetch Eldridge and Gould and bring them to his house that evening. The Commodore explained that he had changed his mind-he wanted Drew to remain. "Some rather plain talk ensued," Gould dryly recalled. Finally they all settled on a deal. On October 8, Eldridge, Gould, and Work went onto the new Erie board along with a little-known broker named James Fisk Jr.; Drew was not elected. But one of the new directors promptly resigned, and the board named Drew to his place. Friendship had triumphed, with the help of a little trade.42 For Vanderbilt, everything seemed to work exactly as Drew promised in the days that followed. "These manipulators of Erie talk of putting the stock much higher," the New York Herald New York Herald commented skeptically. The paper found Central"s rising price to be still more remarkable-"ridiculous," to use the exact quote. "It is said that a certain would-be railway monopolist aspires to control it, and that he and his friends hold a large amount of the stock; but it is against the public interests that any one person should const.i.tute himself a railway king." Drew led a pool to drive up the price of Erie, managing money contributed by Work, Richard Sch.e.l.l, Banker, and Steward. With the market rising, the Commodore duly conquered the New York Central in December. He little realized what treachery was in store for him. commented skeptically. The paper found Central"s rising price to be still more remarkable-"ridiculous," to use the exact quote. "It is said that a certain would-be railway monopolist aspires to control it, and that he and his friends hold a large amount of the stock; but it is against the public interests that any one person should const.i.tute himself a railway king." Drew led a pool to drive up the price of Erie, managing money contributed by Work, Richard Sch.e.l.l, Banker, and Steward. With the market rising, the Commodore duly conquered the New York Central in December. He little realized what treachery was in store for him.43 With Drew seemingly well in hand, Vanderbilt focused on reforming the management of the Central. "If I take possession of a railroad today," he explained a year later, "I send my men over it to examine it in every particular and all over. They report to me its condition, and then it is my business to see that it is kept up, equal in every respect to what it is then." This was a precise description of what he did upon taking command of the Central. On February 1, 1868, he dispatched Banker on an inspection tour with orders to examine the machine shops, ticket offices, and books kept by every office-"in fact look to every department of the company"s property along its whole line." He wanted to save every shilling. As he told the treasurer, "Mr. Worcester, do everything just as you would do it if it was your own business. Vary from this only so far as the peculiar demands incidental to a corporation demand."44 Vanderbilt"s reforms ranged from the petty to the profound. As on his other lines, he attacked the "monstrous" practice of handing out enormous quant.i.ties of free pa.s.ses, restricting to himself and his vice president, Torrance, the privilege of granting them. He fired underperforming staff and eliminated patronage positions (including one held by Erastus Corning Jr.), in what one man called a "wholesale slaughter." He had William better coordinate traffic and running arrangements of the Harlem and the Hudson River. He halted the practice of using the company"s money to buy stock in connecting lines. He also revoked an agreement, made when Keep and Fargo had run the board, to pay American Express $50,000 a year-a rather remarkable contract, since ordinarily express companies paid rent to railroads, not the other way around. He also fought to recover a grain elevator in Buffalo that Keep had leased to Fargo.45 Vanderbilt"s most famous reform was the most superficial: he forbade bra.s.s ornamentation on all locomotives, to save the time spent polishing them. This one step attracted lengthy comment in newspapers and railroad journals. Clearly it sent a powerful signal that economy would be Vanderbilt"s defining principle.46 These changes aroused bitter complaints. Impervious to them all, Vanderbilt continued to squeeze savings out of the Central. But he was never vindictive. Instead, he sought peace with the railroad"s strategic partners. After all of the struggles over the previous four years, he wanted peace. According to John M. Davidson, Vanderbilt declared that "he did not wish to persecute, but rather, to forget, and heal old sores."47 AS 1868 BEGAN, VANDERBILT CONTINUED to partic.i.p.ate in the bull campaign in the Erie, though it was the Central that really mattered to him. The brokers most closely identified with him were "the most steady buyers of NY Ctrl-they are buying for the Commodore"s friends, who are all steadfast believers in the stock, even at these prices, for a long pull," one Wall Street denizen wrote on January 7. "Vanderbilt advises his to partic.i.p.ate in the bull campaign in the Erie, though it was the Central that really mattered to him. The brokers most closely identified with him were "the most steady buyers of NY Ctrl-they are buying for the Commodore"s friends, who are all steadfast believers in the stock, even at these prices, for a long pull," one Wall Street denizen wrote on January 7. "Vanderbilt advises his horse companions horse companions to buy Central," Davidson wrote to Corning on January 14. "Told the noted driver [Dan] Mace yesterday to buy 500 shares, that he would make $25,000 in a short time." Erie tagged along, ascending to 76, its highest price since the previous summer. to buy Central," Davidson wrote to Corning on January 14. "Told the noted driver [Dan] Mace yesterday to buy 500 shares, that he would make $25,000 in a short time." Erie tagged along, ascending to 76, its highest price since the previous summer.48 Then, on January 22, it began to show "hesitation," according to the Then, on January 22, it began to show "hesitation," according to the New York Herald New York Herald. Something was amiss. Erie began to fall. Drew unexpectedly declared the pool operation complete and divided the profits.
Sch.e.l.l believed that Drew had cheated them. "There has been quite a quarrel going on for several days between Mr. Drew & Richd Sch.e.l.l," one financier wrote. Even as Drew had bought for the pool, for his own account he had "sold all his stock of Erie in the market, and gone largely short-in amount of nine millions of dollars.... Sch.e.l.l blows in a fearful manner-public & & private private-puffed up with his good fortune lately. He says that Erie will sell at par par before next May, & threatens Mr. Drew with all kinds of prosecution & exposure." Sch.e.l.l informed Gould that the legal complaint against Drew-shelved as part of the peace accord-would be filed at last, unless Drew took 5,500 shares of Erie off his hands at 75 or (perhaps intending to expose the famously pious Drew as a hypocrite) paid $20,000 to the poor of New York. Drew declined. before next May, & threatens Mr. Drew with all kinds of prosecution & exposure." Sch.e.l.l informed Gould that the legal complaint against Drew-shelved as part of the peace accord-would be filed at last, unless Drew took 5,500 shares of Erie off his hands at 75 or (perhaps intending to expose the famously pious Drew as a hypocrite) paid $20,000 to the poor of New York. Drew declined.49 Vanderbilt"s involvement in this pool is far from certain. The Commodore later claimed to have been a reluctant partic.i.p.ant in the Erie campaign, and one insider reported, "Vanderbilt refuses to have any interest in Erie." After all, it was one thing to prevent Drew from ruining the money market; it was quite another to commit money into his hands. "There was a lot of people in the street that called themselves my friends, came up to me and pressed me very hard to go in with them," Vanderbilt later explained. "d.a.m.n your pools!" he said he replied. "It is altogether out of my line." Work and Richard Sch.e.l.l were in fact much more than Vanderbilt"s puppets in this drama. They had pushed him to help them, not the other way around. Finally the Commodore had relented. "I had some loose money," he said. "If you want me to help you along with your Erie I will help you along," he recalled saying to them. "And they got me engaged in it, and I bought a pretty large amount of Erie."50 But then Drew cheated, and whether he cheated Vanderbilt directly or his friends mattered little to the outraged Commodore. More than that, Vanderbilt"s strategic concerns may have motivated him to move against his treacherous old friend. The new Erie board negotiated to lay a third rail on the Michigan Southern"s track, to allow the Erie"s broad-gauge rolling stock to pa.s.s over its standard-gauge line to Chicago; and Michigan Southern already discriminated against the Central in favor of the Erie. It seems that honor and economics both impelled Vanderbilt to proceed with the long-threatened lawsuit.51 On February 15, Work filed the complaint against Drew and his fellow Erie directors in New York"s Supreme Court. (Despite the name, the Supreme Court was a trial, not appellate, court.) As mentioned earlier, it asked the court to halt Drew"s trading in Erie stock and force the return of his secret 58,000 shares (which he had used to cheat the pool). On February 15, Work filed the complaint against Drew and his fellow Erie directors in New York"s Supreme Court. (Despite the name, the Supreme Court was a trial, not appellate, court.) As mentioned earlier, it asked the court to halt Drew"s trading in Erie stock and force the return of his secret 58,000 shares (which he had used to cheat the pool).52 Rapallo, as Work"s attorney, filed the motion with the least respected, least honest, most notorious jurist in New York, Judge George G. Barnard. "Barnard," historian Allan Nevins wrote, "was an insolent, overbearing man of handsome face and figure who had for a time hypocritically posed as a reformer." He was not. Nor was he very, or even minimally, learned. "The court-room of Judge Barnard has been a place of amus.e.m.e.nt, where lawyers and others go to hear something "good,"" the New York Tribune New York Tribune later wrote. "Every day his indecent sarcasms and vulgar jests keep his court-room crowded with laughing spectators." An ally of William Tweed, he had a reputation for being, as one newspaper wrote, "a most merchantable judge." later wrote. "Every day his indecent sarcasms and vulgar jests keep his court-room crowded with laughing spectators." An ally of William Tweed, he had a reputation for being, as one newspaper wrote, "a most merchantable judge."53 Barnard issued an injunction against Drew that barred him from the stock market. Two days later, Rapallo appeared before him again, acting in the name of New York"s attorney general, to ask that Drew be removed from the Erie board. Barnard delivered a temporary order to that effect.54 With Drew thoroughly enjoined, Vanderbilt charged into the Erie china shop, determined to corner his old friend and punish him for his treachery. He gave orders to his brokers to buy all the Erie they could get. With Drew thoroughly enjoined, Vanderbilt charged into the Erie china shop, determined to corner his old friend and punish him for his treachery. He gave orders to his brokers to buy all the Erie they could get.
Contemporaries and historians alike have concluded that the Commodore had "marked the Erie for his own," as Charles F. Adams Jr. famously wrote, in pursuit of "absolute control over the railroad system." Biographer Wheaton J. Lane claimed that Vanderbilt aimed at "ending compet.i.tion between [the New York Central] and the Erie," by buying up the latter line.55 Wasn"t his course toward monopoly obvious, as he moved from Harlem to Hudson River to New York Central? The Erie was the closest and most troublesome of the trunk lines; it seemed a natural target. Wasn"t his course toward monopoly obvious, as he moved from Harlem to Hudson River to New York Central? The Erie was the closest and most troublesome of the trunk lines; it seemed a natural target.
The Commodore himself thought otherwise. "I never had any intention of taking possession of or having anything to do with the Erie road-I mean in the management of it," he later told a committee of the state a.s.sembly. "I never had the slightest desire; d.a.m.n it! Never had time to. It is too big a thing!"56 Vanderbilt"s words demand attention, for, flawed as he was, he was never a liar. And there is good reason to believe him. For one thing, he never launched a war of aggression in all his years as a railroad leader; always he practiced diplomacy first, fighting only as a last resort. For another, Vanderbilt was still mired in the process of taking over the Central, one of the largest and most important railroads in the United States; getting a grip on its levers of power proved to be a time-consuming task. Even a partial list of his work in February alone is imposing. On the 1st, he dispatched Banker on the inspection tour mentioned above; on the 6th, he wrote to President Andrew Johnson, complaining about the customs collector at the Niagara Suspension Bridge; on the 21st, he presided over a conference of the trunk lines to coordinate rates. All the while he fought resistance to his reforms by staff at all levels. "All the a.s.sistant Supt. are doing their best to break the road down... because none of them like Mr. Torrance or the Commodore," one official wrote. "The way the road is now managed is most ridiculous in the extreme.... It is perfect confusion from one end to the other."57 Soon afterward, a strike broke out in the Albany machine shops because Torrance had reduced the men"s hours and wages, then restored the hours but not the wages. Vanderbilt himself had to intervene to settle it. Soon afterward, a strike broke out in the Albany machine shops because Torrance had reduced the men"s hours and wages, then restored the hours but not the wages. Vanderbilt himself had to intervene to settle it.58 Seizing the Erie, in the midst of this enormous internal struggle, would have been too big a thing indeed. The surprising truth is that Vanderbilt fought one of the greatest business conflicts in American history purely out of a desire for revenge. Seizing the Erie, in the midst of this enormous internal struggle, would have been too big a thing indeed. The surprising truth is that Vanderbilt fought one of the greatest business conflicts in American history purely out of a desire for revenge.
Drew"s fellow Erie directors, unfortunately, could not see into the Commodore"s heart. Their eyes were fixed instead on the stock certificates piling up in his safe, which made them fear that they would lose control of their railroad. Gould, Fisk, and Eldridge had come into the Erie in order to drive out Drew, but Vanderbilt"s vengeance ironically forced them to rally around him and make his cause their own.
To defeat the attempted corner, they engaged in a stock-watering operation of unprecedented size and speed. In essence, they would drown Vanderbilt in new shares, created under cover of the law that permitted the conversion of bonds into stock. First, they approved an issue of $5 million in convertible bonds and sold them to Drew"s broker. They also entrusted the "speculative director" with ten thousand new shares converted from the securities of a recently leased railroad, the Buffalo, Bradford & Erie. Then they established a fund of $500,000 in cash to pay for legal expenses-or what have you. On March 5, Erie attorney David Dudley Field approached a close friend of Barnard"s and offered him $5,000 to convince the judge to modify his injunction; the friend declined, so Field placed the cash elsewhere. With these preparations made, Drew sold Erie short to Vanderbilt in ma.s.sive quant.i.ties. He also took elaborate steps to have front men deliver the new shares in order to hide his hand from the courts.59 The trap was set. The trap was set.
THE COMMODORE HAD NO CORONATION as railroad king-but New York"s aristocrats acknowledged early on that he had founded a dynasty. On February 18, William"s eldest girl, Louisa, married Elliott F. Shephard at the Episcopalian Church of the Incarnation, on Madison Avenue and Thirty-fifth Street. The chapel was jammed "by the fashionable denizens of Murray Hill, Fifth Avenue, and Madison Avenue," one newspaper reported. "The streets in the vicinity were lined with carriages for a quarter of a mile." Afterward the reception was held at William"s new house on Fifth Avenue. "For four hours the elite of the town flowed in and out, and it was altogether a splendid affair. The new home of Mr. Vanderbilt is the most elegant in its interior of any house in town." New York"s ballrooms would not be barred to William"s princeling children. as railroad king-but New York"s aristocrats acknowledged early on that he had founded a dynasty. On February 18, William"s eldest girl, Louisa, married Elliott F. Shephard at the Episcopalian Church of the Incarnation, on Madison Avenue and Thirty-fifth Street. The chapel was jammed "by the fashionable denizens of Murray Hill, Fifth Avenue, and Madison Avenue," one newspaper reported. "The streets in the vicinity were lined with carriages for a quarter of a mile." Afterward the reception was held at William"s new house on Fifth Avenue. "For four hours the elite of the town flowed in and out, and it was altogether a splendid affair. The new home of Mr. Vanderbilt is the most elegant in its interior of any house in town." New York"s ballrooms would not be barred to William"s princeling children.60 Sadly, no one would confuse Ellen Vanderbilt with a princess. The respectable daughter of a prosperous New England merchant, she had married the son of one of the wealthiest men in the world, only to be thrown into poverty and disgrace. Yet she stood loyally by Corneil. Only Greeley shared her faith in her husband-in part because of his affection for her. "I but interest myself in the Commodore"s good will to his son and namesake, but I know he cannot in any case leave you dest.i.tute, for he knows how n.o.bly you have deserved his highest appreciation," he wrote her on March 8. "Even should he leave your husband nothing, he will leave a good income to you, and in that faith I rest content.... I know that he [the Commodore] has been sorely tried, and I can only hope that he will live to realize and put faith in his son"s devotion."61 Ellen needed more than sympathy. The couple had emerged out of Corneil"s bankruptcy penniless. In order to "commence housekeeping once more," she told Greeley, she needed money, though "I am really ashamed" to ask for more.62 Within the walls of 10 Washington Place, the fate of Corneil and Ellen remained a matter of dispute between Cornelius and Sophia. The Commodore simply didn"t trust his son. He demanded that Corneil swear that he never again would borrow money; even then, he refused to help. "Father Vanderbilt is waiting to see us started, & in course of the summer he will be vastly more liberal than at present," Ellen wrote. "But he says we must get started first, & it certainly is strange he does not consider our extra wants & make some appreciation requisite. But he does not." The Commodore kept a close watch on his son"s financial doings, as Ellen complained to Greeley. "I feel that you are in fact the only person on whom we can rely to keep our affairs from the world, & this is just the reason we ask you, as others would at present undoubtedly a.s.sist us, but father Vanderbilt would probably hear of it a day or two afterwards."
"Mother Vanderbilt," on the other hand, "aids us all in her power. She sent me last week a large quant.i.ty of linen, & other things, & says she shall continue to a.s.sist us as far as she is able. I think she has no patience with the Commodore for what she calls "his stubborn inconsistency"!"63 The divide between the two parents over their troubled son had continued-though, tellingly, it was no operatic feud. Sophia did not rage at her husband, just lost "patience." The divide between the two parents over their troubled son had continued-though, tellingly, it was no operatic feud. Sophia did not rage at her husband, just lost "patience."
If tension was muted between Mother and Father Vanderbilt, it was still tension. Sophia aided the bankrupt couple secretly, lest she arouse her husband"s wrath. One did not defy his will lightly; already his power and forcefulness had become proverbial in American culture. On February 17, for example, a religious periodical sought to express the glory of Jesus Christ by equating the Son of G.o.d with Vanderbilt-"and none can get a pa.s.s on his railroad without respect and loyalty for the Bible." In the New York Times New York Times that same day, Albert DeGroot proposed a fund to build a life-size statue of the Commodore atop the mighty freight depot currently under construction in St. John"s Park. "The public spirit, energy, and indomitable nerve of the great steamboat and railway king merits some such recognition," he wrote. Vanderbilt"s admirers began to contribute as his detractors muttered that yes, he certainly had nerve. that same day, Albert DeGroot proposed a fund to build a life-size statue of the Commodore atop the mighty freight depot currently under construction in St. John"s Park. "The public spirit, energy, and indomitable nerve of the great steamboat and railway king merits some such recognition," he wrote. Vanderbilt"s admirers began to contribute as his detractors muttered that yes, he certainly had nerve.64 A FEW MORE STEPS, and the steel jaws would snap shut. With the secret new stock certificates rolling off the presses, the Erie directors prepared for war with Vanderbilt by withdrawing from the trunk line compact, which freed them to slash rates in compet.i.tion with the Central. Drew secured a delay of his hearing before Barnard, and hurriedly distributed the fresh shares to his front men. On March 5, in the final piece of preparation, the Erie lawyers appeared in remote Broome County, New York, before Judge Ransom Balcom, who agreed to suspend Work from the Erie board and to bar him-and the New York State attorney general-from pursuing their lawsuits. The attorneys took advantage of a quirk in New York"s judicial structure that gave every one of the thirty-three Supreme Court judges jurisdiction over the entire state, a flaw that fed rampant corruption in the legal system. "The New York community is not apparently unaccustomed to seeing one justice of its Supreme Court enjoining another," the American Law Review American Law Review commented, "on the ground that his respected a.s.sociate has entered into a conspiracy to use his judicial power in a stock-jobbing operation." commented, "on the ground that his respected a.s.sociate has entered into a conspiracy to use his judicial power in a stock-jobbing operation."65 A bewildering blizzard of lawsuits and injunctions began to snow paper across the desks of judges and lawyers across the state, giving Drew the legal cover to deliver giant blocks of new shares into Vanderbilt"s hands. The courts and markets erupted in chaos: the price of Erie staggered, Richard Sch.e.l.l and the Erie lawyers obtained fresh injunctions, the New York Stock Exchange declared the new shares invalid, and the New York State Senate created a committee to investigate the imbroglio.
On March 10, with losses mounting, Vanderbilt suffered perhaps the most dangerous blow of all: Drew and the Erie board conducted a lockup. "The Erie Company is understood to have drawn nearly the whole of the balance from its bankers in this city... including some of the proceeds of the recent sale of ten millions of convertible bonds," the New York Herald New York Herald reported. The reported. The Times Times estimated that $5 million or $6 million in cash-formerly Vanderbilt"s-had been withdrawn from the financial system (the Erie directors claimed $8 million), which forced bankers to call in loans, driving up interest rates and shaking down stock prices across the board. estimated that $5 million or $6 million in cash-formerly Vanderbilt"s-had been withdrawn from the financial system (the Erie directors claimed $8 million), which forced bankers to call in loans, driving up interest rates and shaking down stock prices across the board.
But Vanderbilt continued to buy, grimly determined to corner Drew. According to rumor, his entire fortune teetered on the brink as he fought to put up margins on millions of dollars" worth of questionable Erie stock (questionable, because the Erie board had not secured the approval of the shareholders to issue convertible bonds, as required by law). Supposedly he pressured banks to lend to him on the threat of selling off his Central stock and causing a general panic. If only half of the gossip was half true, he was in a desperate spot.66 The farcical Judge Barnard decided that the farce must end. Despite the injunctions against his injunctions, he issued contempt citations for the entire Erie board. David Dudley Field, the railroad"s esteemed chief attorney, advised that the distinguished directors go on the lam. "Antic.i.p.ating a sudden visit by the officers of the law, a regular stampede took place Thursday morning [March 12] among the officials," the New York Herald New York Herald reported, "each one lugging off an account book, desk, drawer, or as much of the red tape doc.u.ments as could be grasped in the hurry of the moment." Carrying millions in greenbacks, bonds, and stocks, the officers of one of the largest corporations in the United States scampered aboard the ferry to Jersey City, where they crowded into Taylor"s Hotel, a brick building with yellow doors hard by the ferry dock. "The proprietor was called for; a brief conference ensued, and the company pa.s.sed to an upper room of the hotel, strict orders being given as to the admission of visitors." reported, "each one lugging off an account book, desk, drawer, or as much of the red tape doc.u.ments as could be grasped in the hurry of the moment." Carrying millions in greenbacks, bonds, and stocks, the officers of one of the largest corporations in the United States scampered aboard the ferry to Jersey City, where they crowded into Taylor"s Hotel, a brick building with yellow doors hard by the ferry dock. "The proprietor was called for; a brief conference ensued, and the company pa.s.sed to an upper room of the hotel, strict orders being given as to the admission of visitors."67 Gould and Fisk remained behind. On the evening of March 15, the officers tracked them to Delmonico"s, where they were enjoying a luxurious meal. They dashed into the street, boarded a carriage, and rattled to the Ca.n.a.l Street dock. They secured an open boat and, with two hired hands, rowed into a dense fog that had settled on the Hudson. As they meandered the wide river, bellowing into the darkness, they heard a paddlewheeler bearing down on them. They clutched at the guardrails as their boat was swamped, and were hauled aboard. Soon after they joined their colleagues at Taylor"s Hotel.
The desperate flight to New Jersey left the public agog. What had been merely a private (if outlandish) fight over a disreputable stock became a symbol of all that seemed wrong in post-Civil War America: public corruption, grasping monopolists, outsize corporations, and an utter disregard for morality As Charles F. Adams Jr. would write, "The American people cannot afford to glance at this thing in the columns of the daily press, and then dismiss it from memory. It involves too many questions; it touches too nearly the national life."68 Harper"s Weekly Harper"s Weekly wrote: wrote: The wealth and importance of the contesting roads; the prominence of the two men who control them and who direct this war; the singularity, not to say the illegality, of the judicial proceedings in the case; the amount of money involved in the quarrel; the numbers of brokers, bankers, and speculators engaged, pecuniarily, in it; the vigor and boldness of the effort to take possession of the Erie road; the not less bold maneuvre of a change of base to New Jersey soil-in short, all the circ.u.mstances of the rivalry make it one of the "stories of the street."69 Who was worse? Vanderbilt, who seemed to seek a monopoly of New York"s railroads, or Drew and company, who defied both the law and business ethics with their stock watering and flight? Few saw any reason to choose between two sides of the same evil.
Crowds formed around the brick walls of "Fort Taylor," as the newspapers dubbed the hotel, amid rumors of a planned a.s.sault by hoodlums hired by Vanderbilt. A reporter for the New York Herald New York Herald went in and found ten men seated for dinner in a special room-Drew, Eldridge, Gould, Fisk, and other directors and brokers. "Everyone appeared in good humor, and each seemed to relish a good joke which had just been told about Mr. Fisk, who was represented in one of the papers as armed to the teeth," the reporter wrote. "A good burlesque, on my soul; very good indeed, ha, ha," responded Fisk, who was described as "a gentleman with luxuriant tufts of hair and Dundreary mustache who sat at a corner of the table draining a gla.s.s." went in and found ten men seated for dinner in a special room-Drew, Eldridge, Gould, Fisk, and other directors and brokers. "Everyone appeared in good humor, and each seemed to relish a good joke which had just been told about Mr. Fisk, who was represented in one of the papers as armed to the teeth," the reporter wrote. "A good burlesque, on my soul; very good indeed, ha, ha," responded Fisk, who was described as "a gentleman with luxuriant tufts of hair and Dundreary mustache who sat at a corner of the table draining a gla.s.s."70 Fisk emerged as the public face of exiled Erie. Part clown, part generalissimo-"with shining b.u.t.tons and studs and rings, and an immense shirt bosom, and a porcine carca.s.s," as William Lloyd Garrison later described him-he was a gifted and often hilarious orator who declaimed freely to any reporter in his vicinity.71 A former peddler and the son of a peddler, he once had rattled down the back roads of New England atop a wagon full of trinkets. He had joined a merchant house in Boston, helped Drew find a buyer for the Stonington steamboats, and made his way onto Wall Street, where he started a disreputable brokerage house, Fisk & Belden, with partner William Belden. A former peddler and the son of a peddler, he once had rattled down the back roads of New England atop a wagon full of trinkets. He had joined a merchant house in Boston, helped Drew find a buyer for the Stonington steamboats, and made his way onto Wall Street, where he started a disreputable brokerage house, Fisk & Belden, with partner William Belden.
But Fisk was also shrewd. He seized on the image of Vanderbilt as a monarchical monopolist to win sympathy for their conjuring of stock and run from justice. He attributed to the Commodore alone the decade-old effort by the trunk lines to coordinate rates, and claimed that the result had diverted shipments of foodstuffs to Philadelphia and Baltimore instead of New York. "This struggle, then," he p.r.o.nounced, "was in the interest of the poorer cla.s.ses especially. Vanderbilt opposes the laying of the broad gauge track* [sic] on the Erie Railroad, which would secure such an abundance of provisions in the New York market from the West as to considerably reduce the current prices." When asked how long the directors would remain in New Jersey, he grandly declared, "We must throw personal comforts in the balance. Six weeks, six months, or six years are all equal to us in this sense. Just see and judge for yourself." It was bravado, yes, but he knew the importance of impressing the enemy with a sense of their determination. By contrast, Vanderbilt remained out of sight, turning away reporters. [sic] on the Erie Railroad, which would secure such an abundance of provisions in the New York market from the West as to considerably reduce the current prices." When asked how long the directors would remain in New Jersey, he grandly declared, "We must throw personal comforts in the balance. Six weeks, six months, or six years are all equal to us in this sense. Just see and judge for yourself." It was bravado, yes, but he knew the importance of impressing the enemy with a sense of their determination. By contrast, Vanderbilt remained out of sight, turning away reporters.72 The legal comedy continued. Barnard appointed Vanderbilt"s son-in-law-and Barnard"s good friend-George A. Osgood as receiver for the proceeds of the enjoined stock. Then Osgood was enjoined by an Erie-friendly judge. At one point Osgood sprinted up his stoop and darted inside to avoid the service of papers, which were hurled at him and bounced off the door. New Jersey pa.s.sed a law to make the Erie a corporation of the Garden State, offering the fugitives a home across the Hudson.
For all the laughter these events produced, the real battle now shifted to Albany. Vanderbilt"s attorneys argued that Erie"s convertible bonds were illegal, because the Erie"s directors had not secured the required approval of two-thirds of the stockholders. A state senate committee began to consider a bill to legalize the enormous increase in stock, in the name of preventing a monopoly under Vanderbilt.73 Senator Abner C. Mattoon belonged to that committee. He had heard rumors that each side would spend up to a million dollars in the notoriously corrupt legislature to secure or kill the Erie bill. In the interests of justice-justice to himself-he visited Drew in New Jersey. Knowing the Erie directors" concern for the poor, Mattoon began to muse aloud about what little income legislators received. "We cannot go there and live upon what we get," he reflected sadly. Drew recalled, "The inference I drew was that he would take money if it was offered to him." Soon afterward Mattoon visited the other Erie directors in Taylor"s Hotel. He told them that Vanderbilt"s allies and attorneys were lobbying vigorously; soon Mattoon"s committee would approve a report condemning one side or the other, most likely Erie. Mattoon, ever helpful, urged the exiled directors to send one of their number to Albany-preferably well funded.74 The a.s.signment fell to Jay Gould. If Fisk was the ideal spokesman at the besieged Fort Taylor, the discreet and cunning Gould made the perfect bribe-giver. "On March 30," writes biographer Maury Klein, "he left Jersey City with a suitcase full of greenbacks and a ready reserve of checkbooks. For three days he wooed legislators with a liberal supply of food, drink, and greenbacks." Now that Gould was in New York State, he was prey to Barnard"s contempt citation. But his hearing was delayed, and Gould convinced the court officer who arrested him to serve as his bodyguard. "You may go with me," he said. "I will still be in your custody"75 The allegations of corruption remain impossible to verify in detail. A committee of the state senate later found solid evidence that a great deal of money had been paid in bribes by the Erie board-but it could not pin down who received received the bribes. This is not surprising. Corruption had plagued government for decades, and a well-developed system had emerged to mask the dispersal of graft. Lobbyists who specialized in corruption were known as "strikers;" they acted as self-serving middlemen in transactions between legislators and wealthy men and corporations. the bribes. This is not surprising. Corruption had plagued government for decades, and a well-developed system had emerged to mask the dispersal of graft. Lobbyists who specialized in corruption were known as "strikers;" they acted as self-serving middlemen in transactions between legislators and wealthy men and corporations.
And yet, not all of what happened in Albany can be blamed on graft. Both sides of the dispute made serious arguments. The t.i.tanic watering of Erie stock struck many as illegal, not to mention immoral; and Vanderbilt"s seeming attempt at monopolizing New York"s trunk lines appalled others. William Ca.s.sidy a Democratic newspaper editor, found himself confused as to the correct line to take in his editorials. "I have denounced the illegality of the overissue & the attempt to whitewash it; I will stand by that portion; but perhaps tis unwise to go further," he wrote to Samuel J. Tilden. "Our political capital is as important to us, as Vanderbilt"s money to him." For honest legislators, the conundrum proved just as vexing. There is no way of knowing who voted out of conscience or calculation.76 Except, perhaps, for Senator Mattoon. On April 1, he gave the decisive vote in committee for a report that denounced the Erie board, declared Drew"s conduct to be "disgraceful," and found that Eldridge, Gould, and Fisk were in collusion with him "in these corrupt proceedings." Gould later said that Mattoon"s vote "astounded" him. He should have known better; to all appearances, it was a negotiating tactic. On April 18, after Gould had changed Mattoon"s mind with crisp, green arguments, he reversed himself and voted with the senate majority in favor of the Erie bill. Vanderbilt"s lobbyists abruptly withdrew from Albany. On April 20, the a.s.sembly pa.s.sed the bill-which it had previously defeated-by 101 to 5, and the governor soon signed it. More than a legalization of the fresh Erie stock, the new law forbade any director of Vanderbilt"s railroads from becoming a director of Erie. The Commodore had lost.77 Or had he? Vanderbilt appears to have pulled his forces back from the front line in Albany because he had begun to outflank the enemy in Manhattan. On April 6, Ca.s.sidy reported, "Last Sunday Drew was at Vanderbilt"s house; & yesterday the interview may have been renewed." Drew was able to visit his old friend because of a provision of New York law that gave a Sunday reprieve from arrest in civil cases. Drew later admitted, "I called on the Commodore two or three times. He always told me that I acted very foolish in going to Jersey City; I ought to have never left my home in the City." Drew sadly agreed with him. As Gould later observed, "He had got sick of New Jersey." Drew and Vanderbilt began to talk about a compromise.78 Drew conducted these talks without the knowledge of Eldridge, Gould, or Fisk, though they suspected that he was up to something. On Sunday, April 19, Drew offered to return Vanderbilt"s money in return for the shares, saying something about wanting to take over the Erie himself. Fisk found out about the plan and immediately attached Drew"s personal funds, which put a stop to the subterfuge. So Drew turned to Eldridge and convinced him to settle with the Commodore to end their exile. Soon the equally Jersey-weary Eldridge joined Drew on his secret visits to Vanderbilt.79 For the public, the Erie War ended suddenly and mysteriously. Even before the end of April, the Erie directors fearlessly returned to New York. Barnard spared them arrest, and the New York attorney general agreed to vacate the motion to suspend Drew from the board. But these doves of peace proved just as mysterious to two key Erie directors, Gould and Fisk. In Jersey City the pair had forged a tight friendship, emerging as the most cunning and resilient opponents of Vanderbilt on the board. Recognizing this, Drew and Eldridge kept them in the dark as they negotiated terms.80 Frustrated, the two young men took a carriage early one June morning to 10 Washington Place and banged on the door. The servant showed them into the reception room, notified the Commodore, then sent them upstairs to the second-floor parlor. "Presently Mr. Vanderbilt sent for me to come into a little back room," Fisk testified. Gould waited in the parlor as Fisk went in. It seems that the flamboyant former peddler had made an impression on the Commodore-or perhaps Vanderbilt wished to see him separately as a negotiating tactic. Fisk found him sitting on his bed, putting on his shoes. "I remember those shoes on account of the buckles," Fisk later testified. "You see there were four buckles on that shoe, and I know it pa.s.sed through my mind that if such men wore that kind of shoes I must get me a pair."81 Vanderbilt looked Fisk over sharply. "I had a very bad opinion of Mr. Fisk since I first knew him," he said later. "I thought he was a reckless man, and would do anything he undertook to accomplish a purpose."82 But he was accustomed to dealing with enemies, even reckless ones. According to Fisk, Vanderbilt said that "several of the directors were trying to trade with him, and he would like to know who was the best man to trade with." Fisk proudly replied that Vanderbilt should trade with him, "if the trade was a good one." The Commodore ruefully said that he might be right. "Old man Drew was no better than a batter pudding, Eldridge was completely demoralized, and there was no head or tail to our concern," Fisk reported him saying. Fisk agreed. But he was accustomed to dealing with enemies, even reckless ones. According to Fisk, Vanderbilt said that "several of the directors were trying to trade with him, and he would like to know who was the best man to trade with." Fisk proudly replied that Vanderbilt should trade with him, "if the trade was a good one." The Commodore ruefully said that he might be right. "Old man Drew was no better than a batter pudding, Eldridge was completely demoralized, and there was no head or tail to our concern," Fisk reported him saying. Fisk agreed.
Vanderbilt wanted to unload his 100,000 Erie shares, and demanded compensation for his losses. Eldridge had made a peace proposal that he had accepted, he said; according to Fisk, Vanderbilt argued that Gould and Fisk should "take hold of it. If we would advocate the settlement and pay his losses we should be landed in the haven where we were all desirious of being, where there was peace and harmony." Fisk said their talk grew momentarily heated.
He said I must take the position of things as I found it. He would keep his bloodhounds on us and pursue us until we took his stock off his hands; he would be d--d if he would keep it. I told him I would be d--d if we would take it off his hands, and that we would sell him stock as long as he would stand up and take it. Upon this he mellowed down and said that we must get together and arrange this matter. I told him that we would not submit to a robbery of the road.... Well, he said, these suits would not be withdrawn until he was settled with.83 Soon after this interview, Gould and Fisk confronted Eldridge, who told them it was all over. "He was tired and worn out and had been driven away from home and wanted to get out of his troubles," Fisk recalled. "At last he had got the Commodore to settle on a price, and Sch.e.l.l and Work had fixed on their price, and if we would come in tomorrow we should be free and clear of all suits."
The two young men went to see Vanderbilt at his home one more time. The Commodore looked them over with respect. According to Gould, he told them that "Drew had no backbone, and if we had not come in he would have had it all his own way.... When we rose to come away he said to us, "Boys, you are young, and if you carry out this settlement there will be peace and harmony between the two roads."" Carry it out they did, but peace and harmony would prove elusive.84 The grand settlement was complex, and many of its details would elude contemporaries and historians alike. Of Vanderbilt"s 100,000 Erie shares, he sold fifty thousand back at 80, for a total of $4 million. Except he did not actually sell it to the railroad. It was important to Vanderbilt that he technically sold the stock to Drew. As he said to Drew when they made the deal, "I must have an understanding about the matter. I will not sell the Erie Railroad anything; I will have nothing to do with it." Drew replied that he was buying the stock for himself. "I said that," Vanderbilt later explained, "because I had made up my mind the Erie Railroad had got under so many difficulties that I would have nothing to do with them."
If Vanderbilt did not sell his stock to the Erie, the Erie certainly bought it. After Drew made the original agreement, Eldridge arranged for the Erie to take the fifty thousand shares at 70, paying $3.5 million that went into Vanderbilt"s hands (Drew himself paid the Commodore the remaining $500,000). The Erie also paid Vanderbilt $1 million for a sixty-day call on his remaining fifty thousand shares at 70 (that is, the Erie purchased the right to buy from Vanderbilt that quant.i.ty of stock at that price within two months). In addition to compensating Vanderbilt for his losses, this was a payment to keep the stock off the market, to give the company time to stabilize its finances. The Erie also compensated Frank Work and Richard Sch.e.l.l for their losses with a payment of $429,000, and paid Rapallo for his legal work with 250 Erie shares at 70. And, among other acts, the Erie also bought $5 million of Boston, Hartford & Erie bonds at 80 (accomplishing Eldridge"s mission), released Drew from any claims, and settled his long-standing loan to the company. In July, Drew resigned as director and treasurer. In August, Vanderbilt carried out the final part of the agreement, buying $1,250,000 in Boston, Hartford & Erie bonds at 80. Eldridge resigned the presidency, leaving the Erie to Gould and Fisk.85 The Erie War proved to be the most serious defeat of Vanderbilt"s railroad career. His corner had been thwarted, his attempt at revenge had failed, and his losses had been heavy-perhaps as much as $1 million, though they remain impossible to calculate. But it was not the defeat that the public imagined. Observers in Wall Street and the press saw him as a voracious monopolist, so they a.s.sumed that he had wanted the Erie itself, something he explicitly denied. Indeed, what is most striking is not the failure of his corner, but how he rallied on the brink of disaster and forced his enemies to restore much of what he had lost. Unfortunately, he could never recover his lost prestige. More serious than the hundreds of thousands that slipped from his fingers was the humiliation he had suffered at the hands of the upstart Fisk and Gould.
But even his costliest battles served as a reminder of his vindictiveness and his power. On May 19, R. G. Dun & Co. estimated his wealth at $50 million. He was "peculiar & eccentric in [character]," the agency reported, "a strong friend, a mostly bitter enemy." Drew, his oldest friend of all, would have agreed.86 ON MARCH 30, AS THE ERIE WAR approached its height, the United States Senate convened as a court of impeachment for President Andrew Johnson. Most of the charges revolved around his violation of the Tenure of Office Act, a const.i.tutionally questionable law that limited his ability to fire executive-branch officials without congressional approval. He had deliberately flouted the law by sacking Secretary of War Edwin Stanton, Commodore Vanderbilt"s old friend. approached its height, the United States Senate convened as a court of impeachment for President Andrew Johnson. Most of the charges revolved around his violation of the Tenure of Office Act, a const.i.tutionally questionable law that limited his ability to fire executive-branch officials without congressional approval. He had deliberately flouted the law by sacking Secretary of War Edwin Stanton, Commodore Vanderbilt"s old friend.
The real issues driving the extraordinary trial were Johnson"s personality and the nature of Reconstruction itself. Devotedly Jacksonian and virulently racist, Johnson wanted to quickly restore all-white governments in the South. Rising violence against freed slaves drove Republicans on Capitol Hill toward a far more expansive and direct federal role in reconstructing the South. Johnson had thwarted them at every step, giving rise to anger at his belligerence and sheer incompetence. Before the end of May, the Senate acquitted Johnson on all counts, after failing to meet the required two-thirds majority for a conviction by one vote. But congressional Reconstruction went forward. The South was divided into military districts and put under the administration of army officers until new, more racially just, state const.i.tutions could be put into effect. In the old Confederacy, black voters, jurors, and officeholders appeared for the first time.87 In all this, Congress ventured into entirely unmapped terrain, not simply with respect to racial justice, but in terms of its own powers. The war and continuing crisis in the South created a ferment on Capitol Hill, opening up new possibilities. What else could the federal government do? What should should it do? The Republicans had been united in fighting the Civil War, and one of the strongest arguments in favor of Radical measures to aid freed slaves was that they had been the only consistently loyal population in the South during the conflict. But in other areas the party remained deeply divided, and sometimes confused. On April 27, in the midst of the impeachment trial, the House of Representatives ordered the Committee on Roads and Ca.n.a.ls to investigate whether Congress had the power to regulate railroads. On June 9, the committee reported that it do? The Republicans had been united in fighting the Civil War, and one of the strongest arguments in favor of Radical measures to aid freed slaves was that they had been the only consistently loyal population in the South during the conflict. But in other areas the party remained deeply divided, and sometimes confused. On April 27, in the midst of the impeachment trial, the House of Representatives ordered the Committee on Roads and Ca.n.a.ls to investigate whether Congress had the power to regulate railroads. On June 9, the committee reported that Gibbons v. Ogden Gibbons v. Ogden had clearly established federal power over interstate commerce, but the committee was not sure exactly what to do with railroads. "The question of the const.i.tutional power of Congress to regulate the rates of fare and charges for freight is one of very great importance and of difficult solution," it hedged. The committee advised no action, though it voiced a serious fear. "The great railroad corporations do possess the power and the will to absorb the lesser competing lines.... These vast consolidated corporations have the power to crush out all compet.i.tion and to fix upon such rates of fare and charges for the transportation of freight as they please to impose." But congressional interference was still too radical even for the Radicals. had clearly established federal power over interstate commerce, but the committee was not sure exactly what to do with railroads. "The question of the const.i.tutional power of Congress to regulate the rates of fare and charges for freight is one of very great importance and of difficult solution," it hedged. The committee advised no action, though it voiced a serious fear. "The great railroad corporations do possess the power and the will to absorb the lesser competing lines.... These vast consolidated corporations have the power to crush out all compet.i.tion and to fix upon such rates of fare and charges for the transportation of freight as they please to impose." But congressional interference was still too radical even for the Radicals.88 "We hope the question will not be allowed to drop into forgetfulness," the Nation Nation responded. "The railroad corporations are already of immense power." In light of the negotiations to end the Erie War, the responded. "The railroad corporations are already of immense power." In light of the negotiations to end the Erie War, the Nation Nation thought that Vanderbilt and Drew might make an alliance "which puts for many important purposes the whole State of New York into their hands. It is plain that we need a different order of things from what we had when the Const.i.tution was adopted, when railroads were unthought of." thought that Vanderbilt and Drew might make an alliance "which puts for many important purposes the whole State of New York into their hands. It is plain that we need a different order of things from what we had when the Const.i.tution was adopted, when railroads were unthought of."89 The Erie War proved to be a catalyst for rising anxieties over the place of the railroad corporation in a democratic society. In economic culture, railroads ran headlong against the deep Jacksonian belief that free compet.i.tion was an essential component of democracy itself-that monopoly threatened free government. Their dual nature as both public works and private businesses presented a paradox: What was more important, to protect shareholders in their property rights, or to prevent a monopoly? Good management and returns on investment, or compet.i.tion? When the Erie War brought this conundrum to a head, even business journals found themselves torn. The Round Table Round Table said, "It is very hard to understand why, if Mr. Vanderbilt does own a majority of the stock of the Erie Railway, he should not be allowed to manage it." On the other side, the said, "It is very hard to understand why, if Mr. Vanderbilt does own a majority of the stock of the Erie Railway, he should not be allowed to manage it." On the other side, the Merchant"s Magazine Merchant"s Magazine wrote, "While allowing that Erie would be sure of a more efficient head under his supervision than under its present and late control, yet it would be a matter of regret" if Vanderbilt added it to his empire. The wrote, "While allowing that Erie would be sure of a more efficient head under his supervision than under its present and late control, yet it would be a matter of regret" if Vanderbilt added it to his empire. The New York Times New York Times awkwardly dodged the monopoly question when defending him: "It may be right that the amalgamation... of the Erie with the Central and other Vanderbilt lines should be prohibited... [but] nothing can justify or even extenuate the conduct of the [Erie] directors in creating ten millions of stock for speculative purposes, or in otherwise abusing their power." awkwardly dodged the monopoly question when defending him: "It may be right that the amalgamation... of the Erie with the Central and other Vanderbilt lines should be prohibited... [but] nothing can justify or even extenuate the conduct of the [Erie] directors in creating ten millions of stock for speculative purposes, or in otherwise abusing their power."90 The Times Times editorial introduces the second current of anxiety surrounding railroads: the corruption of government. The tales of bribery that flowed out of Albany reinforced stereotypes of public officials on the take, acting as if they were retainers of wealthy corporations, not representatives of the people. After Jay Gould took over as president of the Erie, he allied the railroad explicitly with the Tweed ring, naming "Boss" Tweed himself to the board, along with his close a.s.sociate Peter Sweeney. editorial introduces the second current of anxiety surrounding railroads: the corruption of government. The tales of bribery that flowed out of Albany reinforced stereotypes of public officials on the take, acting as if they were retainers of wealthy corporations, not representatives of the people. After Jay Gould took over as president of the Erie, he allied the railroad explicitly with the Tweed ring, naming "Boss" Tweed himself to the board, along with his close a.s.sociate Peter Sweeney.
The culmination of the Erie War, culturally speaking, would come in July 1869, with the publication in the North American Review North American Review of one of the most influential essays in American history: "A Chapter of Erie," by Charles F. Adams Jr. of one of the most influential essays in American history: "A Chapter of Erie," by Charles F. Adams Jr.91 (It would be reprinted in a collection, (It would be reprinted in a collection, Chapters of Chapters of Erie Erie, that included articles by Adams"s brother Henry.) Ironic, incisive, and impressively researched, it combined a detailed account of the Erie War with an exploration of its broader meaning. "Freebooters have only transferred their operations to the land," he wrote. "It is no longer the practice of Governments and Ministries to buy legislators; but individuals and corporations of late not unfrequently have found them commodities for sale in the market. So with judicial venality."
Adams cogently expressed the anxiety that resulted from the combination of the corporation-that abstract ent.i.ty feared since Jackson"s day-with the size and wealth of the railroads. "Already our great corporations are fast emanc.i.p.ating themselves from the state, or rather subjecting the state to their own control," he wrote. It was the Commodore"s mastery of this process that made him such a terrifying figure.
In this dangerous path of centralization Vanderbilt has taken the latest step in advance. He has combined the natural power of the individual with the fact.i.tious power of the corporation. The famous "L"etat, c"est moi" of Louis XIV represents Vanderbilt"s position in regard to his railroads. Unconsciously he has introduced Caesarism into corporate life. He has, however, but pointed out the way which others will tread.... Vanderbilt is but the precursor of a cla.s.s of men who will wield within the state a power created by it, but too great for its control. He is the founder of a dynasty.
Such power-concentrated in one man"s hands through control of corporations-was only possible because of the centrality of the railroads to modern life. "As trade now dominates the world, and the railways dominate trade, his object has been to make himself the virtual master of all by making himself absolute lord of the railways."92 Adams"s words captured a very real dilemma. American inst.i.tutions and values stemmed from a largely rural, agricultural past in which businesses were limited in size and personal in nature. Corporations had arisen as a means of financing large public works without inflating the size and cost of government-yet they were also private property. This uncomfortable meeting of public and private aroused dark memories, particularly when focused on the person of Vanderbilt. "The country is not without experience of the dangers of intrusting so much power to an individual," one man wrote to the Journal of Commerce Journal of Commerce. "Nicholas Biddle and the United States Bank furnish a warning too well remembered by us who pa.s.sed through the fearful ordeal caused b