CHAPTER VII.
GOULD’S VICTORY AND FINAL DEFEAT IN ERIE.
During these years of Erie conflicts, Gould not only fought his enemies most bitterly, but hardly appreciated the usual feelings of men to be true to their friends. Gould and Fisk now had practical control of Erie. They saw the October election coming, and they were nervous. But the crops were good and Erie’s traffic brought in good returns. Englishmen had become strangely fascinated with the stock, and had bought over 100,000 shares. On August 19th the stock had dropped to 44, and then to the astonishment of Wall street, the transfer books were closed, preparatory to the annual election on October 13th. The election went off well for Mr. Gould and his friends. Peter B. Sweeny and William M. Tweed were among the new directors. Then, it is said Mr. Gould began a system of locking up money. This culminated on October 27th, when members of the New York Stock Exchange waited on Mr. Gould, who had obtained large loans on Erie. Mr. Gould told the committee that $10,000,000 of convertible bonds had been issued, half of which had been converted into stock and the rest would be. This was a new issue. The money, he said, had been used to purchase the $5,000,000 of Boston, Hartford and Erie. The committee was not satisfied. It wanted to know if more stock would be issued. Gould replied: “In certain contingencies,” meaning for his loans. The Secretary of the Exchange afterward said that the stock of the corporation had been increased from $34,265,300 on July 1, 1868, to $57,766,300 on October 24th, or by 235,000 shares within four months. These new issues forced Erie to 35. There was over $12,000,000 in greenbacks locked up and all values were depressed. The situation was so serious that Secretary McCulloch of the treasury, a contractionist, was compelled to announce that if necessary $50,000,000 additional currency would be forthcoming for the relief of the community.
Their next achievement, after securing entire possession, was to corner their old associate Daniel Drew. The latter, after a short retirement from the street, returned to speculation and naturally drifted into Erie, but this time from the outside. He was caught just as many times he had caught others. And Gould repeated, only in a more aggravated way, his trick of issuing new stock and flooding Wall street with it. This new stock was issued by Gould and Fisk without even going through the form of consultation with the other directors. Mr. Adams calls this “the most extraordinary feat of financial legerdemain which history has yet recorded.” Drew found that even he, old and experienced in all the tricks of his trade, was no match for Gould. He appealed to the courts for relief, but Mr. Gould fought him in the same way. Realizing that he had no other avenue of escape, Drew actually called on Gould and Fisk one night and appealed piteously to be permitted to get out without loss, though his companions in loss might be squeezed to Gould’s heart’s content. Gould and Fisk bowed their aged associate out without satisfaction and smiled as they closed the door on the old man.
That was on a Sunday. Next day, in the name of August Belmont, Justice Sutherland was asked to enjoin the issue of any more new Erie stock and to appoint a receiver. Drew signed the affidavits, but, to his chagrin, Gould was ahead of him by two hours. On the petition of one McIntosh, a man in Gould’s employ, Justice Barnard restrained all suits and appointed Gould the receiver of the railroad. Erie stock fell only to 48.
Justice Barnard allowed Mr. Gould to buy and cancel 200,000 shares of Erie. This was intended to crush Daniel Drew, who had to have 70,000 shares to deliver in a few days. Gould’s purchases rushed the stock to 62, and then it turned out that thousands of shopkeepers and barbers, tailors, and all sorts of people, had a share or ten shares of Erie and wanted to realize on them. Gould could not meet the rush of shares these people had to sell. He and Fisk fought like tigers, but they could not stand the drain, and Drew settled his contracts at 57, losing $1,500,000. Then Erie fell to 42. The Open Board of Brokers refused to deal in Erie unless the stock was registered at a reputable banker’s. Erie was knocked off the list and Gould organized a new Board of his own, where trading in Erie went on as before.
Gould at this time actually posed as an anti-monopolist before the public. All his extraordinary acts as president of the Erie were defended on the ground that he was endeavoring to protect the system against consolidation or affiliation with other trunk lines, and there were some honorable persons who really put faith in this statement. “Gould,” said Mr. Adams, “posed as a public benefactor, with unspeakable effrontery.”
There was more fighting in the courts over Erie. Justice Sutherland vacated Barnard’s order making Gould receiver, and Noah Davis was made receiver. Barnard stayed Sutherland, and Sutherland granted a motion to show cause why Barnard’s stay should not be vacated. Gould and Fisk sued August Belmont for $1,000,000 damages, and Frank Work and Richard Schell for $429,250, paid to them at the time of the settlement with Vanderbilt. Gould and Fisk even went to the United States District Court, and on a petition of one of Gould’s clerks, Henry D. Whelpley, a stockholder, Judge Blatchford appointed Gould receiver, and directed the Erie company to place $8,000,000 in his hands to protect the rights of the plaintiff, Whelpley, who protested that he had been injured by certain issues of stock.
The marvelous business acumen displayed by the manipulators of these properties was aided by the blind zeal of certain foreign investors for American securities then as prevalent as now. The wonderful financial operations of the Drew and Gould regimes in Erie could not have been possible but for the extraordinary fascination which the stock possessed for English capitalists. While Americans looked with more than suspicion on the Erie securities, England was possessed of an irresistible craze to get as many of them as possible. English capitalists would not take the United States bond even when selling below par, but they bought with avidity every share of Erie they could get hold of. At last, however, the eyes of the English stockholders were opened to the true condition of affairs, and under the lead of James McHenry they organized to get the control of the property. At this time Gen. Daniel E. Sickles, one of the heroes of Gettysburg, was Minister to Spain. He was engaged to lead the anti-Gould forces against the Erie strongholds. He did his work well, and it is said was paid a very big fee for his labors. He obtained a leave of absence from Madrid and returned home to conduct the operations in person on the ground. This was the last of the Erie wars.
It should be recorded at this time, however, that the famous partnership of Gould and Fisk had been dissolved by death. Fisk, late in 1871, had been shot by Edward F. Stokes, and after a few days had died from the wound. He and Stokes had at one time been friends but had quarreled over business matters and about a woman—the beautiful, but notorious Josie Mansfield—and the quarrel led to the murder. It will surprise no one who has read this history thus far that in the course of the Erie litigations a Supreme Court judge once held court and issued orders from Josie Mansfield’s apartments. Stokes was tried three times. Once the jury disagreed. Once he was convicted of murder in the first degree and sentenced to be hanged by Judge Noah Davis. This verdict being overruled by the Court of Appeals, he was tried again and convicted of manslaughter in the third degree. After serving a few years in Auburn prison Mr. Stokes returned to New York, where he soon became a prosperous business man, intimate for a long time with John A. Mackay, the California millionaire, and president of a telegraph system competing with Gould’s Western Union.
Before his death the belief is that Gould and Fisk had substantially parted company. The New York World of that day gives an account of an interview between Gould and Fisk, in which the former asked Fisk for his resignation as vice-president and comptroller of Erie. Fisk is represented as saying to a friend who was about to leave for Europe: “I would like you to do me a favor. If you find in Europe a mean man who can do a meaner thing to his best friend or tell a bigger lie than Jay Gould, I want you to telegraph me at once.” After Fisk’s death, however, Gould acted handsomely by his widow. Whatever else may be said of Fisk, he was certainly a more popular man than Gould, and after the former’s death Gould did not long remain at the head of Erie. “The feeling against Gould,” said Gen. Barlow, at the time of the anti-Gould revolution, “grew in great part since Fisk’s death. Fisk was always popular with the people of the road and in the office. Had he been alive we should have had more trouble, or perhaps the move would never have been made.”