The First Tycoon: The Epic Life of Cornelius Vanderbilt (93 page)

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 God with Vanderbilt—“and none can get a pass on his railroad without respect and loyalty for the Bible.” In the
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.
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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 competition 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
commented, “on the ground that his respected associate has entered into a conspiracy to use his judicial power in a stock-jobbing operation.”
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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 Schell 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
reported. The
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.

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.
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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. “Anticipating 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
reported, “each one lugging off an account book, desk, drawer, or as much of the red tape documents 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 passed to an upper room of the hotel, strict orders being given as to the admission of visitors.”
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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 Canal 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.”
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Harper's Weekly
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 circumstances of the rivalry make it one of the “stories of the street.”
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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 assault by hoodlums hired by Vanderbilt. A reporter for the
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 glass.”
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Fisk emerged as the public face of exiled Erie. Part clown, part generalissimo—“with shining buttons and studs and rings, and an immense shirt bosom, and a porcine carcass,” as William Lloyd Garrison later described him—he was a gifted and often hilarious orator who declaimed freely to any reporter in his vicinity.
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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 pronounced, “was in the interest of the poorer classes especially. Vanderbilt opposes the laying of the broad gauge track
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[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.
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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 passed 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.
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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.
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The assignment 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”
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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
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 titanic 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 Cassidy 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.
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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 assembly passed 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.
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