The Erie War (1868): Vanderbilt, Gould, Drew & Fisk

Last revised: September 4, 2026

The Erie War was not a shooting war. It was a fight for the Erie Railway in 1867–68, waged with convertible bonds, printing presses, rival judges, a ferry to Jersey City, and a satchel in Albany. Cornelius Vanderbilt already controlled the New York Central. He tried to buy Erie as well. Daniel Drew, Jay Gould, and James Fisk, Jr. drowned him in new shares, then had the New York legislature legalize the paper. The settlement was announced July 2, 1868. Gould became Erie’s president that October. He lasted until 1872.

Erie Railway broad gauge double track timetable advertisement adopted May 11 1868 New York Chambers Street Jersey City

Erie Railway advertisement and abstract of the timetable adopted May 11, 1868—broad-gauge (the ad spells it “Guage”) double track, Chambers Street at the North River, Jersey City, 460 miles, four expresses daily. From the June 1868 Travelers’ Official Railway Guide of the United States and Canada. American-Rails.com collection.

On this page: At a glance · The railroad · Why Vanderbilt wanted it · Convertible bonds · Jersey City · Albany · July 1868 settlement · Gould’s Erie, 1868–72 · Drew squeezed out · What it meant · Related reading · Sources

At a glance

Item	Detail
What it was	A contest for control of the Erie Railway, not a labor strike and not the 1869 gold corner
When	Vanderbilt’s buying campaign 1867–early 1868; flight to Jersey City March 1868; settlement announced July 2, 1868. Gould elected president October 1868; ousted 1872
Vanderbilt’s side	Cornelius Vanderbilt (New York Central); allies in the market including Frank Work and Richard Schell
Erie side	Daniel Drew (treasurer), Jay Gould, James Fisk, Jr.; later William M. Tweed on the board. President during the fight: John S. Eldridge (Boston, Hartford & Erie interest), as the June 1868 Official Guide still listed him
The weapon	Convertible bonds turned into common stock—“watering” the shares Vanderbilt was trying to corner
The theater	Wall Street; Tammany-connected Judge George G. Barnard and rival injunctions; Taylor’s Hotel, Jersey City; the New York legislature at Albany
Who kept the railroad	Gould and Fisk. Vanderbilt was paid out of the Erie treasury and given two board seats. Drew was supposed to retire as treasurer
Classic account	Charles Francis Adams, Jr., Chapters of Erie (1871)

The railroad they were fighting over

The New York & Erie had opened in 1851 from Piermont on the Hudson to Dunkirk on Lake Erie—six-foot gauge, the longest railroad in the country when it was finished, and built that way partly to keep standard-gauge neighbors from interchanging. It failed in 1859 and came out on June 25, 1861, as the Erie Railway. By the late 1860s it was still the other New York–Great Lakes line besides Vanderbilt’s Central: poorer, more crooked in both the engineering and the bookkeeping senses, and run for years as Drew’s private bear market.

Erie Railway New York to Dunkirk timetable May 11 1868 John S Eldridge president Jersey City mile 1

New York to Dunkirk, timetable adopted May 11, 1868. Masthead: John S. Eldridge, president—the Boston, Hartford & Erie man still in the chair that spring. New York is Chambers Street; Jersey City is mile 1, by steam ferry. Same June 1868 Official Guide. American-Rails.com collection.

Drew had been Erie's treasurer and a director. He was already famous for selling stock he did not quite own and for the cattle-watering story that gave American finance the phrase watered stock. Gould and Fisk came onto the Erie board with him. Fisk was the showman; Gould did the paper. Full lives of all four men sit on their biography leaves. The fight below is what they did to one railroad in one year.

Why Vanderbilt bought

By 1867 Vanderbilt held the Harlem, the Hudson River Railroad, and the New York Central. He was stitching a Water Level Route toward Chicago. Erie sat parallel to that empire and could cut rates whenever it pleased. Buying it was the straightforward solution: one owner, two roads, no war of tariffs. He began taking Erie in the open market, the same way he had taken other properties—pay the price, get the votes, put in a board.

That only works if the number of shares is fixed. Drew, Gould, and Fisk made sure it was not.

How they printed their way out of a corner

New York law allowed a railroad to issue bonds convertible into stock. Convert the bonds, and you have created new common shares. In early 1868 the Erie board authorized millions in convertible bonds, sold them (Drew’s broker was handy), and converted them as fast as Vanderbilt could buy. Charles Francis Adams later described the company as if it had become a factory whose product was certificates. The public had thought Erie common was on the order of $45 million. Gould, once president, would announce $60 million outstanding, with more convertibles behind it. William Z. Ripley later put the 1864–1872 rise in Erie common at about $24 million to $78 million, against a much smaller gain in mileage and earnings.

Vanderbilt’s corner broke because the supply of stock would not stay still. Every time he thought he had a majority, another block appeared. Injunctions flew. Judge Barnard, a Tammany man, was Vanderbilt’s court; other judges were Erie's. For a few weeks New York had two legal systems, both claiming the railroad.

Taylor’s Hotel, Jersey City

On March 10, 1868, with Vanderbilt still buying and the courts closing in, the Erie officers cleaned out the New York bank balances, packed the convertible-bond proceeds, the stock books, and the printing plates, and took the ferry to New Jersey. They camped at Taylor’s Hotel by the Jersey City ferry slip—journalists called it Fort Taylor. New Jersey was outside Barnard’s reach. From there they could keep issuing paper and wait for Albany.

They were not hiding from a criminal indictment so much as from a New York judge who could seize the company. The cash on the table was real. Contemporary accounts put millions of greenbacks in that hotel, including proceeds of the convertible issue. Vanderbilt could corner a stock on the New York board. He could not serve process across the Hudson on a printing press.

The legislature legalizes the water

Gould went to Albany. The bill that mattered would legalize the extra stock. Vanderbilt’s lobby spent money to kill it; Gould spent more to pass it. Gustavus Myers and Adams both treat the session as an auction. The bill went through. Boss Tweed of Tammany later took an Erie directorship. That is the political half of the war: not a speech about free markets, a purchased statute that turned watered shares into lawful ones.

Once the stock was legal, Vanderbilt’s injunctions were worth less. He could keep buying a company that could keep manufacturing itself. The fight moved from the tape to a settlement.

July 2, 1868

Drew and Eldridge opened talks with Vanderbilt while Gould and Fisk were still in Jersey City. The Erie directors returned to New York in late April. The formal announcement of terms came on July 2, 1868. Details vary by memoir, but the shape is consistent across Adams, Edward Harold Mott’s Erie history, and T. J. Stiles’s Vanderbilt biography:

Vanderbilt was taken off 50,000 shares at 70—cash and Boston, Hartford & Erie bonds (the same BH&E whose wreckage became the New York & New England)
He received about $1 million for a call on his remaining 50,000 shares at 70, so that stock would not dump on the market
Frank Work and Richard Schell were paid on the order of $429,000 for their losses
Drew was to pay about $540,000 into the Erie treasury and leave the treasurer’s office; he kept the profits of his own trading
Boston (Eldridge) interests swapped a pile of weak BH&E bonds for Erie paper
Pending suits were dropped; Vanderbilt got two seats on the Erie board

The money came out of the Erie treasury, not out of Gould’s pocket. Contemporary tallies put the drain near $9 million. That is why the old line on this page—Vanderbilt sold “at a significant loss” while Gould “paid off the debt with Erie funds”—had the second half right and the first half too simple. T. J. Stiles still calls the Erie War the most serious defeat of Vanderbilt’s railroad career. He did not get the company. He did get paid to go away, in the company’s own cash and paper. Gould and Fisk kept the railroad. Eldridge left the presidency.

Gould’s Erie, 1868–1872

Jay Gould was elected president in October 1868. Within a week he told the public about another $10 million of convertibles, a third of them already turned into stock. He and Fisk ran Erie from the Grand Opera House on 23rd Street, Fisk’s theatrical headquarters. They put Tweed on the board. They also did some actual railroading: western connections, the long fight over gauge, the Atlantic & Great Western. The Erie page covers that plant. The capitalization did not wait for the plant. Bonded debt and common stock both ballooned. Ripley’s figures for 1864–72 remain the cleanest one-line indictment: mileage up about half, net earnings up about a fifth, common stock more than tripled.

Black Friday, September 24, 1869, was Gould and Fisk trying to corner gold, with a federal gold sale breaking the corner. It wrecked a lot of houses and stained Grant’s administration. It was not a clause in the Erie settlement. Treat it as the next Gould–Fisk operation, not as “the war ended in 1869.”

English shareholders, who had been absorbing Erie securities, finally organized. General Daniel E. Sickles fronted a campaign in 1872. Gould was forced out. A later settlement with the company (December 1872) transferred property back to Erie and gave him a release. Jim Fisk never saw that ending: Edward S. Stokes shot him on January 6, 1872. Gould went west and south and built the Missouri Pacific–Wabash web that the tycoons hub already sketches. Erie went on to more receiverships, standard gauge, and, in 1960, the Lackawanna.

What happened to Drew

The settlement had left Drew his trading profits and pushed him off the inside. Gould and Fisk then turned the tape against him. He shorted Erie; they ran it up with still more paper. The usual figure for his loss on that squeeze is about $1.5 million. The Panic of 1873 hit what he had left. He filed bankruptcy in 1876 and died in 1879, living on his son. The live page’s “Gould and Risk” was a typo for Fisk; the betrayal of Drew is real.

What it meant

Charles Francis Adams, Jr., wrote Chapters of Erie in 1871 while he was making a name on the Massachusetts railroad commission. He treated the war as a demonstration that a great corporation could be looted in public, that New York’s courts could be paired off against each other, and that the legislature would sell a statute. That is the useful lesson. It does not require a sermon about entrepreneurship.

Stock watering did not begin on the Erie, and it did not end there. What was new was the scale and the speed: a corner broken not by selling what you owned but by creating what had not existed the week before, then buying a law to match. Vanderbilt’s method—buy the shares, take the road, run it—met a method that treated the charter as a license to print. The Commodore kept the Central. Gould kept, for four years, a railroad whose treasury had just paid his enemy to leave.

Erie Railroad (the company; gauge, map, Erie Lackawanna)
Railroad tycoons
Cornelius Vanderbilt · Jay Gould · Jim Fisk · Daniel Drew
New York Central (what Vanderbilt kept)
New York & New England (Boston, Hartford & Erie paper in the 1868 settlement)
U.S. railroad history

Sources

Travelers’ Official Railway Guide of the United States and Canada, June 1868: Erie Railway advertisement and New York–Dunkirk tables, timetable adopted May 11, 1868 (John S. Eldridge, president; Jersey City as mile 1)
Charles Francis Adams, Jr., Chapters of Erie and Other Essays (Boston, 1871): the contemporary narrative of convertibles, Jersey City, and Albany
Edward Harold Mott, Between the Ocean and the Lakes: The Story of Erie (1899): July 2, 1868 settlement terms; Gould’s later Erie litigation
T. J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt (2009): Vanderbilt’s 100,000 shares, March 1868 lockup and Taylor’s Hotel, settlement as his most serious railroad defeat
William Z. Ripley, Railroads: Finance and Organization: Erie common and debt, 1864–1872 (stock roughly $24 million to $78 million)
American-Rails.com, Erie Railroad: 1851 opening, 1859 bankruptcy, Erie Railway June 25, 1861; Gould presidency 1868 and ouster 1872
American-Rails.com, tycoons hub and the Vanderbilt, Gould, Fisk, and Drew biography leaves

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