In 1867-8 was the famous Erie Railroad scandal which for months occupied the attention of the public of the entire country. It presented a series of dramatic incidents, and the merest possible outline of its history is sufficient to enlighten the reader as to the rotten conditions then prevailing in New York State politics. William M. Tweed was the political boss of New York City and was aiming to control the Legislature. The judges of the New York Supreme Court had been elected by manhood suffrage and one of them named Barnard was one of his creatures. Jay Gould, a financial adventurer of New York City, who died worth fifty millions of dollars, was then at the beginning of his career; one of his associates was a still more picturesque adventurer named Fisk. The Vanderbilts, then and now a very wealthy family of New York City, desiring to get control of the management of the Erie Railroad Company started to purchase in the open market enough shares of its stock for that purpose. To defeat this project one Drew, then in control of the Erie Railroad Company, issued 58,000 new shares of Erie stock. It was charged that this issue was illegal and that Drew kept printing the shares as fast as the Vanderbilts could buy them. Jay Gould was reported to have pocketed several millions by the transaction. Thereupon, the Vanderbilts took legal proceedings to annul this 58,000 shares. Drew, Fisk, Gould and others escaped during a fog in rowboats from New York City across the Hudson River to New Jersey and began a suit for conspiracy against the Vanderbilts and Judge Barnard of the Supreme Court. An attempt to kidnap them and bring them back to New York was made and failed. Gould obtained a handsome residence in New Jersey, and the Drew clique and he began an effort to acquire a corrupt control of the New Jersey Legislature for the purpose of getting their acts legalized, and also had a bill introduced into the New York Legislature with that object. Doubtless it was hoped to set the two legislatures of New York and New Jersey underbidding each other for the Drew-Gould money. The New York legislators were only getting $300 a year salary at that time, and were eager for a share of the money which was expected to be distributed in payment for this legislation. All ordinary business of the New York legislature was comparatively neglected, while groups gathered about the hallways and the cloak room of the Capitol in Albany talking in undertones. A fair rate for members’ votes was mentioned as between $2,000 and $3,000 each. The Erie people, however, at first offered only $1,000 a vote, $500 down and $500 when the bill became a law. Boss Tweed advised the members to stand firm and they would get more from the Vanderbilts. The matter got before the Railroad Committee of the Assembly. The Committee was reported to be divided. Suddenly a rumor started that Vanderbilt and Drew were compromising. This created a panic among the Albany legislators. Some of them it was said began to offer to take $500. Soon the Assembly Railroad Committee reported unanimously against the bill; the report was agreed to and the bill was supposed to be killed. A member of the Assembly named Glenn then stated openly that he had been approached and offered a bribe of $500 to vote for the Erie Bill and asked for a committee of investigation. The committee was appointed and reported that they had examined the books of the railroad company and found that no money had been used to influence the legislature. Glenn resigned his seat. Finally the bill actually passed the Legislature. This was followed by vehement charges of corruption in the public press and elsewhere. It was stated that one senator had obtained $15,000 from one side, and then $20,000 from the other side; and still not satisfied, wanted $1,000 more for his son who acted as his private secretary. Another committee of investigation was appointed which subsequently reported that they could find no proof of wrong doing. Vanderbilt and Drew now compromised matters and Tweed joined the Drew, Gould and Fisk combination and was made a director of the Erie Company as part of a scheme to obtain the votes of the counties through which the Erie Railroad ran for Hoffman, who was Tweed’s man, as Governor. Tweed was to manage the courts in the interests of the Erie. Then began an effort by the Erie to get control of the Albany & Susquehanna Railroad and thereupon ensued another fight in the courts, Judge Barnard, who was Tweed’s judge, issuing orders on one side in New York and Judge Peckham making counteracting orders in Albany. Gould and Fisk secured the Grand Opera House at Eighth Avenue and Twenty-third Street, New York City, for the main offices of the Erie Railway Company, where they also established their personal headquarters. Miss Josie Mansfield, a well-known friend of Fisk’s, took an adjoining house, where it was alleged Judge Barnard held court and issued injunctions and orders of various kinds. The Susquehanna Railroad people found it impossible to get service upon either Gould or Fisk of court orders issued on their behalf, because no one who was not known to be friendly could get into the Opera House where the clique in power were well guarded. The President of the Albany & Susquehanna Company thereupon sent his own son to New York to serve papers. They never were served and the body of the young man was found a corpse in the Hudson River soon afterwards.
The Erie Railroad scandal was connected with the Wall Street conspiracy to corner the gold market as it was called, in which Fisk and Gould were also interested. Gold coin was then selling at a premium everywhere in the United States; the price fluctuated from hour to hour; a New York Brokers Exchange, called the Gold Room, was entirely devoted to this speculation; a daring attempt was made by Gould, Fisk and others to monopolize the gold supply and advance the price enormously. The mystery as to what, if any, high politicians were concerned in this plot was never solved. Says Henry Adams: “The Congressional Committee took a quantity of evidence which it dared not probe and refused to analyze. Although the fault lies somewhere on the administration and can lie nowhere else, the trail always faded and died out at the point where any member of the administration became visible.... The worst scandals of the Eighteenth Century were relatively harmless by the side of this, which smirched executive, judiciary, banks, corporate systems, professions and people, all the great active forces of society, in one dirty cesspool of vulgar corruption.” (Education of Henry Adams, p. 271.)
On March 18, 1875, Governor Tilden, in a special message to the New York State Legislature, stated that for five years ending Sept. 30, 1874, millions had been wasted on the canals by unnecessary repairs and corrupt contracts. Upon ten fraudulent contracts New York State had paid more than one and one-half million dollars while the proposals at contract price called for less than half a million. The exact figures are:
| Paid by the State | $1,560,769.84 |
| Amount of Contracts | 424,735.90 |
A commission to investigate was created. Indictments were found against the son of a state senator, a member of the board of canal appraisers, an ex-canal commissioner, two ex-superintendents of canals, and one division engineer. (See Political History of New York, Alexander, p. 324.)
From 1867 to 1872 were in progress the Union Pacific Railroad irregularities commonly known as the Credit Mobilier frauds in which a number of prominent United States Congressmen were implicated.
The Freedmen’s Bureau (Federal) irregularities covered 1871 and 1872, and after investigation large sums remained unaccounted for.
From 1872 to 1874 were exposed the Internal Revenue Moiety frauds, involving millions and implicating Secretary Richardson of the United States Treasury and many other Treasury and Internal Revenue officials.
In 1874 were investigated and exposed the District of Columbia government scandals involving “Boss” Shepherd and others connected with the Washington City administration.
The noted whiskey ring frauds were perpetrated from 1869 to 1874 and were exposed about the latter date. In those frauds a number of important United States government officials were implicated and the Treasury was defrauded out of over two millions thereby.