When Gould entered Wall street Erie was one of the most active stocks on the list of the Stock Exchange. It was natural that he should drift into its speculation, and his connection with the Cleveland and Pittsburg led him naturally into Erie. His old acquaintances were surprised to hear one day that he had become a director and a controlling spirit of this great road. This was in 1867.
But now let us quote a little plain language from Charles Francis Adams in order to get into the atmosphere of Erie at this time:
“Yet freebooters are not extinct,” he wrote. “They have only transferred their operations to the land, and have conducted them in more or less accordance with the forms of law, until at last so great a proficiency have they attained that the commerce of the world is more equally but far more heavily taxed in their behalf than would ever have entered into their wildest hopes, while outside the law they simply make all comers stand and deliver. * * * Gambling is a business now, where formerly it was a disreputable excitement. Cheating at cards was always disgraceful. Transactions of a similar character under the euphemistic names of ‘operating,’ ‘cornering’ and the like are not so regarded. * * * No better illustration of the fantastic disguises which the worst and most familiar evils of history assume as they meet us in the actual movement of our own day could be afforded than was seen in the events attending what are known as the Erie wars of the year 1868.”
In these wars Gould was an active spirit; and if Mr. Adams had written in 1873 instead of 1869 he would have made his language still stronger.
Before his entrance into Erie Gould had become acquainted with James Fisk, Jr., and the former, with that unerring judgment of men which was always one of the elements of his success, soon perceived in Fisk the qualities which supplied his own deficiencies. Fisk was the son of a Vermont peddler and followed the calling himself for some time, and in it learned the great art of driving a hard and shrewd bargain. Wholly uneducated, his natural ability in the line of making money was very great. Gould was timid and shrank from publicity. Fisk was bold and loved notoriety. Gould had many refinements of mind and was of a domestic nature. Fisk was coarse, sensual and fond of display. He became the colonel of a militia regiment, and with great delight used to put on his uniform and ride in front of his command. He used to create a sensation by riding in a carriage with six horses in questionable female company. He considered it one of the choisest prerogatives of his position of vice-president and comptroller of Erie to direct the theater that adjoined the railway offices in the Grand Opera House. While Gould did not have the inclination or courage to do these things he did not hesitate to use Fisk in every available way and to hide his own personality behind that of his partner. In those days Fisk seemed to play the more prominent part, and Gould, in public estimation, was a secondary character. When anything was done it was Fisk that bore the brunt of popular criticism and indignation. Yet the facts as they are now known show that Gould’s was the master mind; Fisk was simply his right arm. “With Gould to plan and Fisk to act,” said Gen. Francis Barlow, in 1872, “they were a strong team.”
At the time Gould and Fisk entered into Erie, Daniel Drew was the master of that great trunk line. Drew was one of the most extraordinary characters in Wall street history. Both pious and unscrupulous, he founded a theological seminary and wrecked a railroad with equal fervor. He was a director and treasurer of Erie, and used these positions simply for speculative purposes. He was known in his day as “the great speculative director.” His biggest piece of “financiering” was to get himself apparently cornered in Erie stock, and then to appear in the street with a block of stock which had been converted from bonds issued with an obscure provision entitling the holders to convert them into stock. Gould later on repeated this trick with success, both in Erie and Jersey Central.
Soon after Gould and Fisk entered Erie, Drew became engaged in his celebrated contest with Commodore Vanderbilt, and in this contest he had their able assistance. The first and great Vanderbilt was cast in a larger mould than Drew. The latter was simply a speculator. Vanderbilt was a creator of property. He was the first of the line of railroad kings. Laying the foundations of his great wealth in the steamboat and steamship business, he soon drifted into railroad operations, clearly seeing that in the development in the great inland commerce of America there were larger and quicker profits to be obtained than in the export trade.
Vanderbilt had obtained control of the Harlem and Hudson River roads; he now aimed at the ownership of Erie. Space will not permit the telling of the story of this famous contest. It can be found in detail in Mr. Adams’ interesting chapter. It is a story of extraordinary stock operations, of millions lost and won; of securities issued by the bushel and with little or no regard for law or equity; of large and intricate litigation; of judges bought, legislators bribed, of directors defying injunctions and fleeing to another state to escape arrest. Vanderbilt, having been defeated in other efforts to get his fingers on the Erie road, resolved, if possible, to buy a controlling interest, and his brokers were set at work on this difficult job. Drew resolved to let Vanderbilt have as much stock as he wanted, but entered into a bargain with Gould and Fisk by which the railroad king should be defeated by issuing and marketing an unlimited number of new securities. So Drew sold and Vanderbilt bought. The latter, having in remembrance Drew’s famous convertible stock trick, resorted to the courts to prevent him from issuing any more stock. Injunctions were issued enjoining Drew and all the directors of the road from issuing any stock. Counter-injunctions were obtained by the Drew-Gould party. One judge would issue an order commanding certain things to be done which another judge simultaneously commanded should not be done. Judges in New York, Brooklyn, Albany and Binghamton issued contradictory injunctions. Such a legal pandemonium has never been seen before or since. The courts ran riot and law became another name for plunder. In this scene—the blackest in the history of American jurisprudence—the notorious Judge Barnard loomed up conspicuously, and a little later Judge Cardoza, shrewd, learned, crafty and venal—the modern Lord Bacon—appeared on the scene. At first Barnard was Vanderbilt’s judge. Later, when Vanderbilt had no further use for him, he became Gould’s judge. His other master was Tweed.
In the meantime, regardless of injunctions, Drew and his aides calmly proceeded to carry out their carefully matured plans to issue new stock. It was agreed that fifty thousand shares of new stock should be delivered to the Wall street firms of which Gould and Fisk were members. Without going into the details of the intrigue, it is sufficient to say that it was, at least for the time being, successful. When the fifty thousand shares were thrown on the market the price of Erie fell from eighty-three to seventy-one. Vanderbilt found that he had bought at high figures a lot of Erie stock, but that he was no nearer control than ever. Drew raked in about seven million dollars of Vanderbilt’s money, and Gould and Fisk shared in the profits. Then orders were issued to arrest the Drew directors for contempt of court. Receiving intelligence of this, they hastily packed up their papers and securities, and thrusting them into their pockets and valises, they beat a hasty retreat to Jersey City. Over six million dollars in securities were carried in one coach. Among this precious company, of course, were Gould and Fisk. In Jersey they were safe from the operation of New York law. They calmly proceeded to have the Erie incorporated as a New Jersey institution, at the same time laboring to get the New York legislature to pass a bill to legalize the issue of fifty thousand shares of stock, a transaction which some one at that time likened to an attempt “to legalize counterfeit money.” It was not conscientious scruples which caused the legislature to hesitate to pass this bill; it was simply a question of cash. Vanderbilt was still in the fight to protect his interests, and it was a question of who had the biggest purse. Meanwhile, Peter B. Sweeny—the brains of the Tweed ring—had been made, temporarily, receiver of the road, and though he never actually did anything in that position, Judge Barnard ordered that he be paid one hundred and fifty thousand dollars for his services. Poor Erie had to foot the bill.
The Erie people needed a first-class representative at Albany to watch their interests before the legislature. Gould was selected as the fittest man to act in the capacity of a lobbyist. First giving out that he was going to Ohio, Gould quietly slipped up to Albany, with five hundred thousand dollars of Erie cash in his pocket. Here in a day or two he was arrested, but released on five hundred dollars bail to appear in a New York court on Saturday. He appeared on that day, but his attorneys secured a postponement, and he was allowed to return to Albany in charge of an undersheriff. Arriving in Albany Mr. Gould was conveniently taken sick, and unable to return to New York to attend the court proceedings, though he drove to the capitol in a snowstorm. The officer reported him to the court as a “runaway,” but the matter was afterward settled, and, in the language of Mr. Adams, he “assiduously cultivated a thorough understanding between himself and the legislature.” In this he was materially aided by the cash with which his pockets were so liberally filled. Corruption ran high. One senator was recorded to have accepted seventy-five thousand dollars from one side and one hundred thousand dollars from the other. One man was paid five thousand dollars by Gould “just,” as Mr. Gould remarked, “to smooth him over.” The corruption at this session was investigated by a legislative committee in 1869. Gould was a witness, but he endeavored to conceal the facts as much as possible. In the famous Erie investigation of 1873, however, Mr. Gould testified as follows: