Narrator: IN 1868, AMERICA'S FIRST TITAN...
WE CAN'T STOP NOW. WE GOT TO KEEP BUYING.
Narrator: ...CORNELIUS VANDERBILT
AND MAVERICK STOCKBROKER DANIEL DREW...
THE ERIE'S UP.
Narrator: ...WAGE WAR ON WALL STREET...
Gordon: IT WAS WALL STREET'S WILD WEST DAYS.
IT WAS SHOOTOUT AT THE O.K. CORRAL.
Narrator: ...BATTLING FOR CONTROL
OF ONE OF AMERICA'S MOST POWERFUL RAILROADS.
HE WANTS THE ERIE, WE'LL GIVE HIM THE ERIE.
Narrator: IT'S AN ENORMOUS FINANCIAL SCANDAL...
TO THE STREETS!
...THAT ROCKS AMERICAN CAPITALISM TO ITS CORE,
AND THE EFFECTS ARE STILL BEING FELT TODAY.
BUY IT ALL!
Narrator: THESE ARE THE EPIC STORIES
OF MEN STRUGGLING FOR SUPREMACY, BUILDING EMPIRES,
AND CHANGING THE COURSE OF AMERICAN HISTORY FOREVER.
-- Captions by VITAC -- www.vitac.com
CAPTIONS PAID FOR BY DISCOVERY COMMUNICATIONS
¶¶
[ CRICKETS CHIRPING ]
RUN, MAN!
[ WHISTLE BLOWS ]
IT'S ONE OF THE MOST INFAMOUS CON JOBS IN AMERICAN HISTORY...
[ GRUNTS ]
DRIVER, TAKE US TO THE DOCKS.
ALL SPEED, DON'T SPARE THE HORSES.
...THE END GAME OF AN INTENSE STRUGGLE
BETWEEN AMERICA'S RICHEST MAN, CORNELIUS VANDERBILT...
WE SUNK THE COMMODORE.
...AND A GANG OF CRAFTY WALL STREET TRADERS.
[ LAUGHS ]
IT'S A RUTHLESS STING,
WHICH NETS OVER $100 MILLION IN TODAY'S MONEY
AND CONTROL OVER ONE OF AMERICA'S LARGEST RAILROADS.
BETTER GET THIS TO THE COMMODORE.
NO ONE HAD REALLY DONE ANYTHING QUITE ON THIS SCALE BEFORE.
Narrator: SO JUST HOW DID VANDERBILT
BECOME THE TARGET OF A GANG OF STOCK TRADERS?
[ TRAIN WHISTLES BLOW ]
IN POST-CIVIL-WAR AMERICA,
CORNELIUS VANDERBILT IS THE DOMINANT BUSINESSMAN OF HIS DAY.
HE WAS AS FAMOUS AS ANYBODY IN NEW YORK CITY.
HE WAS AS FAMOUS AS ANYBODY IN THE COUNTRY.
HE WAS KNOWN TO BE PROBABLY THE RICHEST MAN IN THE COUNTRY
AT THE TIME.
VANDERBILT WAS A MAN WHO WAS VERY FULL OF HIMSELF.
HE WAS SOMEONE WHO INSISTED ON HAVING HIS OWN WAY.
Gordon: VERY RECOGNIZABLE.
HE COULDN'T WALK DOWN THE STREET
WITHOUT PEOPLE SAYING, "HELLO, COMMODORE."
Narrator: BY HIS MID-60s,
VANDERBILT STANDS AT THE HELM OF A MASSIVE SHIPPING EMPIRE.
Gordon: VANDERBILT STARTED OUT IN BUSINESS WITH SAILBOATS.
AND THEN IN THE 1820s,
HE REALIZED THAT STEAM WAS THE COMING THING.
AND BY THE 1850s,
HE WAS THE LARGEST STEAMBOAT OWNER IN THE COUNTRY.
Narrator: THIS IS HOW HE GETS HIS NICKNAME, THE COMMODORE.
ONE OF VANDERBILT'S LONG-TERM COMPETITORS
IS A MAN NAMED DANIEL DREW.
Gordon: DANIEL DREW WAS ALSO A SHIPOWNER.
HE WAS VERY RELIGIOUS.
HE ENDOWED A SEMINARY.
HE BUILT CHURCHES.
HE EVEN PREACHED THE GOSPEL NOW AND THEN.
BUT SOMEHOW HE WAS ABLE TO COMPARTMENTALIZE
HIS BUSINESS AFFAIRS AND HIS RELIGIOUS AFFAIRS.
SO HE WOULD GO DOWN TO WALL STREET,
AND IF HE COULD CHEAT YOU, HE WOULD CHEAT YOU.
Narrator: DANIEL DREW GREW UP IN THE CIRCUS.
HE LEARNED THESE SORT OF CIRCUS TACTICS OF MISDIRECTION
AND GETTING PEOPLE'S ATTENTION
AND PERSUADING THEM TO DO SOMETHING THEY SHOULDN'T DO.
HEADS OR TAILS.
HEADS, SIR.
Gordon: DANIEL DREW WAS VERY SLY.
OH.
YOU LOSE.
NOBODY WOULD TRUST HIM
AS FAR AS THEY COULD THROW AN ANVIL IN A SWAMP.
Narrator: IN THE MID-1800s,
AMERICA'S MOST POWERFUL COMPANIES, RAILROADS,
ARE BEING TRADED ON THE EMERGING
AND LARGELY UNREGULATED STOCK MARKET.
ONE OF THE LARGEST OF THEM ALL IS THE ERIE RAILROAD.
BUT THE ERIE IS IN TROUBLE.
Gordon: THIS REMARKABLE RAILROAD
WENT THROUGH BANKRUPTCY SIX OR SEVEN TIMES.
Narrator: IN 1854,
DANIEL DREW IS ELECTED TREASURER OF THE FAILING ERIE.
Nelson: WHEN DREW BECAME TREASURER OF THE ERIE,
THERE WAS A SERIOUS CASH PROBLEM.
THERE WAS NO ONE TO TURN TO EXCEPT CORNELIUS VANDERBILT.
Narrator: DREW KNOWS VANDERBILT FROM THEIR EARLIER DAYS
AS COMPETITORS IN THE SHIPPING INDUSTRY,
AND HE KNOWS VANDERBILT HAS THE KIND OF CASH NEEDED
TO KEEP THE ERIE AFLOAT.
SO, WHAT'S IT GONNA COST ME?
I HAVE $200,000.
WE NEED ANOTHER $400,000.
HM.
JUST LIKE INVESTING IN ANY NEW INDUSTRY OR TECHNOLOGY,
INVESTING IN RAILROADS BACK IN THE 1800s WAS VERY RISKY
BECAUSE THE BROKERS COULD VERY EASILY GIVE ANY INFORMATION
TO ANY INVESTOR AND SAY, "THIS IS GONNA BE A GREAT DEAL."
VERY WELL.
BUT I WANT A MORTGAGE ON ALL THE ROLLING STOCK.
Narrator: VANDERBILT UNDERSTANDS THE RISKS.
STILL, HE AGREES TO BAIL THE ERIE OUT
WITH ONE CONDITION --
HE WILL BE PAID BACK QUICKLY,
OR HE WILL TAKE POSSESSION OF THE ERIE'S TRAINS.
WITH THE RAILROAD SAFE FROM BANKRUPTCY,
DANIEL DREW TAKES FULL ADVANTAGE OF THE ERIE
ON THE NEW YORK STOCK EXCHANGE.
DANIEL DREW WAS A SPECTACULAR STOCK MANIPULATOR.
Gordon: HE USED THE INSIDE INFORMATION
AND MANIPULATED THE ERIE SECURITIES
SO THAT HE COULD PUSH THE PRICE UP,
OR HE COULD PUSH THE PRICE DOWN.
Narrator: DREW SPREADS NEGATIVE RUMORS TO PUSH THE STOCK PRICE DOWN,
BUYING SHARES FOR HIMSELF AT A LOW PRICE.
AND THEN HE WOULD DRIVE THE STOCK PRICE UP AGAIN
AND SELL HIS SHARES AT A PROFIT.
A LICENSE TO STEAL.
AND OF COURSE, THAT'S EXACTLY WHAT HE DID.
[ INDISTINCT SHOUTING ]
Narrator: THE ERIE EARNS A NICKNAME --
THE SCARLET WOMAN OF WALL STREET.
Gordon: THE ERIE RAILWAY, OR RATHER, ITS DIRECTORS,
ESPECIALLY DANIEL DREW, BEHAVED LIKE A WOMAN OF LOW REPUTE.
I MEAN, THEY BEHAVED LIKE A PROSTITUTE
AND BROKE THE HEARTS OF SO MANY INVESTORS.
IT WAS BADLY RUN. IT WAS BADLY MAINTAINED.
THEY NEVER HAD ANY MONEY BECAUSE THE MONEY WAS BEING USED
FOR THE PURPOSES OF THE BOARD OF DIRECTORS
RATHER THAN FOR THE PURPOSES OF THE STOCKHOLDERS.
¶¶
Narrator: EVEN THOUGH THE ERIE IS BADLY RUN
AND SEEMS LIKE A VOLATILE AND RISKY INVESTMENT,
VANDERBILT SEES RAIL AS THE FUTURE.
Ackerman: HE RECOGNIZED THE POTENTIAL OF THE IRON LOAD.
AND HE ESSENTIALLY SOLD OFF HIS STEAMBOATS
AND PUT HIS MONEY, WHICH WAS CONSIDERABLE, INTO RAILROADS.
[ TRAIN WHISTLE BLOWS ]
Narrator: VANDERBILT'S TIMING
TO INVEST IN RAIL COULDN'T BE BETTER.
Nelson: AT THE BEGINNING OF THE 1860s,
THE MISSISSIPPI RIVER IS THE KEY CONDUIT FOR AMERICANS.
ONCE THE CIVIL WAR STARTS, THE MISSISSIPPI RIVER IS CLOSED.
AND SO RAILROADS BECOME THE KEY SOURCE
BY WHICH GOODS ARE GONNA FLOW
FROM THE MIDWEST OUT TO THE ATLANTIC OCEAN.
Narrator: BY THE END OF THE WAR,
VANDERBILT OWNS A CONTROLLING INTEREST
IN A GROWING RAIL EMPIRE.
BUT HE WANTS ACCESS TO THE NEW FRONTIER,
AND HE SEES THE ERIE RAILROAD AS THE KEY TO GETTING HIM THERE.
Nelson: YOU HAVE A RAILROAD THAT GOES TO DEEPWATER ON THE EAST
AND ALL THE WAY TO CHICAGO IN THE WEST.
THE ERIE TURNS OUT TO BE THE PERFECT THOROUGHFARE
FOR THE UNITED STATES.
Narrator: VANDERBILT SETS HIS SIGHTS ON OWNERSHIP OF THE ERIE.
Gordon: THE ERIE RAILWAY HAD SUCH ECONOMIC POTENTIAL,
IT SHOULD HAVE BEEN
AN ENORMOUSLY SUCCESSFUL ENTERPRISE.
Narrator: VANDERBILT COMES UP WITH A PLAN
THAT WILL MAKE ALL THE RAILROADS MONEY.
IT'S A LONG SHOT, BUT WORTH TAKING.
HE MEETS WITH HIS TRUSTED ADVISER, FRANK WORK,
A BOARD MEMBER OF THE ERIE, AND PROPOSES A RAIL CARTEL --
AN AGREEMENT BETWEEN THE COMPETING RAILROADS
TO CONTROL PRICES.
SOME OF THE TRAFFIC WILL GO ALONG THE CENTRAL,
SOME OF THE TRAFFIC WILL GO ALONG THE ERIE,
SOME OF THE TRAFFIC WILL GO ALONG THE PENN,
AND THEY WILL DIVIDE THE PROFITS AMONG THE THREE OF THEM.
Narrator: WITH WORK ON BOARD,
THEY ALSO PITCH THE IDEA TO DREW.
THE ERIE SHOULD MAKE MONEY.
ARE YOU PROPOSING AN EVEN SPLIT
BETWEEN ALL THREE RAILROADS?
MAKES SENSE TO ME. DANIEL?
Narrator: VANDERBILT BELIEVES WORK AND DREW
WILL SECURE THE VOTE WITH THE ERIE BOARD.
Gordon: WORK AND DANIEL DREW WERE MEMBERS OF THE BOARD.
THEY EACH HAD ONE VOTE.
AGREED.
WE HAVE A DEAL.
Narrator: BEFORE THE VOTE ON THE CARTEL PLAN,
DREW BRINGS ON TWO NEW BOARD MEMBERS --
JAY GOULD AND JIM FISK.
Nelson: DREW NEEDS A COUPLE OF WHAT,
IN THE STOCK MARKET, WERE CALLED "DUMMIES."
THEY LOOKED LIKE REAL PEOPLE,
BUT THEY ACTUALLY DID EVERYTHING THAT YOU SAID.
GENTLEMEN, LET'S COME TO ORDER.
Narrator: DREW PRESENTS VANDERBILT'S CARTEL PLAN.
THE PROPOSAL IS TO CONSOLIDATE THE ERIE
WITH THE CENTRAL AND THE PENN,
WITH AN EVEN SPLIT OF THE PROFITS.
ALL THOSE IN FAVOR, SAY "AYE."
-AYE. -[ LAUGHS ]
Gordon: DREW NEEDED VOTES ON THE BOARD,
AND SO HE WANTED TO GET GUYS WHO WOULD GO ALONG WITH HIM.
ALL THOSE AGAINST... SAY "NAY."
Gordon: DREW WAS LIKE A SCORPION.
HE COULDN'T HELP STING. IT WAS IN HIS NATURE.
All: NAY.
DREW DOUBLE-CROSSES VANDERBILT, AS HE ALWAYS DOES.
[ GLASS BANGS ON TABLE ]
Narrator: WITHOUT A CARTEL DEAL,
DREW WILL CONTROL THE ERIE, RAIL RATES, AND THE WEST.
THE NAYS HAVE IT.
-TO THE NAYS. -TO THE NAYS.
CHEERS.
AND HE AND HIS BOARD BOTH RECOGNIZE THIS
AS A BIG CASH COW THAT THEY DID NOT WANT TO GIVE UP.
Vanderbilt: THAT DAMN DREW!
IT BECAME CLEAR TO VANDERBILT THAT DREW COULD NOT BE TRUSTED.
BUY EVERY LAST BIT OF ERIE STOCK YOU CAN GET YOUR HANDS ON.
VANDERBILT DECIDED THAT HE WAS GONNA USE
HIS MOST POWERFUL WEAPON, HIS ENORMOUS WEALTH,
AND BUY CONTROL OF THE ERIE RAILWAY
SO THAT HE COULD THROW DREW OFF THE BOARD
AND RUN IT HIMSELF IN AN HONEST MANNER.
Narrator: VANDERBILT AND DREW
ARE IN A DESPERATE STRUGGLE FOR CONTROL,
WHERE THE WINNER TAKES ALL.
BUY IT ALL!
[ TRAIN BELL RINGING ]
Narrator: IN POST-CIVIL-WAR AMERICA,
RAILROADS DEFINE THE TIMES.
THEY BECOME HOT INVESTMENTS ON WALL STREET.
I'VE GOT 20 SHARES OF ERIE.
Narrator: MILLIONS ARE MADE AND FORTUNES ARE LOST.
Nelson: RAILROAD CORPORATIONS REQUIRED A STOCK MARKET,
THEY REQUIRED A BOND MARKET, AN INSANE AMOUNT OF MONEY.
Narrator: IN 1968, TWO RAIL GIANTS,
CORNELIUS VANDERBILT AND DANIEL DREW,
ARE ON A COLLISION COURSE
FOR CONTROL ONE OF AMERICA'S MAIN RAIL LINES --
THE ERIE RAILROAD.
UNLIKE VANDERBILT, DREW IS NOT A MAN OF HIS WORD.
THAT DAMN DREW!
Ackerman: WHEN VANDERBILT HEARS THAT THE ERIE RAILROAD BOARD
HAS TURNED DOWN FLATLY HIS PROPOSAL TO WORK TOGETHER,
HE IS ANGRY, VERY ANGRY.
VANDERBILT-LEVEL ANGRY.
BUY EVERY LAST BIT OF ERIE STOCK YOU CAN GET YOUR HANDS ON.
WHAT VANDERBILT ATTEMPTED TO DO WAS ESSENTIALLY
WHAT TODAY WE WOULD CALL A HOSTILE TAKEOVER, ONE COMPANY OF ANOTHER.
THERE'S CLOSE TO 250,000 SHARES OUT THERE.
IF ONE PERSON OWNS THE MAJORITY OF THE SHARES OF A COMPANY,
THEY HAVE A CONTROLLING INTEREST OVER THAT COMPANY...
I RECKON IT MIGHT TAKE $10 MILLION.
...AND THAT'S WHAT VANDERBILT WAS TRYING TO DO
WITH THE ERIE RAILROAD.
-HUH. -DON'T WORRY, FRANK.
I AIN'T DOING THIS WITHOUT SOME INSURANCE.
MM.
Narrator: BY THE 1860s, NEW YORK CITY
IS THE NATION'S CENTER OF INDUSTRY, COMMERCE, AND FINANCE.
Nelson: NEW YORK CITY'S STOCK MARKET WORLD
WAS CONSIDERED A DARK WORLD.
Gordon: BASICALLY THERE WERE NO RULES ON WALL STREET.
Brokamp: BACK THEN, THEY HAD A LOT MORE INSIDE INFORMATION,
A LOT MORE OPPORTUNITY TO MANIPULATE THE PRICES OF THINGS.
[ INDISTINCT SHOUTING ]
Narrator: AS TREASURER OF THE ERIE,
DANIEL DREW CAN MANIPULATE THE VALUE OF ERIE'S STOCK.
AS TREASURER, HE COULD ISSUE BONDS
AND ISSUE CONVERTIBLE BONDS SO HE COULD TURN THEM INTO STOCK.
THAT GAVE HIM THE ABILITY TO RAISE AND LOWER
THE FLOATING SUPPLY OF ERIE'S STOCK
BY 20% ANY TIME HE WANTED TO.
AND THE ERIE'S UP.
IT WAS WALL STREET'S WILD WEST DAYS.
WHO'S BUYING?
[ INDISTINCT SHOUTING ]
WHO'S SELLING?
IT WAS SHOOTOUT AT THE O.K. CORRAL.
[ INDISTINCT SHOUTING ]
Narrator: DREW KNOWS VANDERBILT WILL TRY TO BUY UP THE ERIE.
BUYING ERIE. WHO'S SELLING? WHO'S SELLING?
Narrator: HE ENLISTS HIS TWO PROTéGéS,
JIM FISK AND JAY GOULD, AS PART OF HIS PLAN.
TELL YOUR BROKERS WE'RE ABOUT TO MAKE A PLAY
FOR ERIE...QUIETLY.
IT'S A CLASSIC DREW PLAY -- INSIDER TRADING.
TODAY, INSIDER TRADING IS ILLEGAL.
BACK THEN, IT WASN'T.
UNETHICAL, VERY UNPOPULAR, YES.
BUT BACK THEN, THERE WERE NO LAWS AGAINST IT.
Gordon: VANDERBILT CERTAINLY KNEW
THAT DREW HAD THE CAPACITY TO MANIPULATE THE STOCK OF THE ERIE
AND TO MANIPULATE HOW MUCH THERE WAS.
AND SO HE HAD TO FIGURE OUT A WAY TO PREVENT THAT.
Narrator: VANDERBILT FEARS DREW WILL PRINT NEW ERIE STOCK,
MAKING IT MORE DIFFICULT FOR HIM TO TAKE CONTROL OF THE RAILROAD.
HE CALLS IN A FAVOR.
NOW WRITE A LETTER TO THE JUDGE.
WE NEED AN INJUNCTION AGAINST DREW.
VANDERBILT KNOWS THAT HE CAN BUY WHATEVER HE WANTS...
WE'RE GONNA BUY US A JUDGE.
...AND WHOEVER HE WANTS, INCLUDING A JUDGE.
THAT OUGHT TO DO IT RIGHT THERE.
TAKE THIS TO JUDGE BARNARD.
Gordon: HE WENT TO JUDGE BARNARD TO ISSUE INJUNCTIONS
TO PREVENT DREW FROM CONVERTING STOCK
OR SELLING STOCK OR BUYING STOCK,
AND BARNARD DID WHAT HE WAS TOLD.
Narrator: THE COURT-ISSUED INJUNCTION
PREVENTS DREW FROM PRINTING NEW ERIE STOCK.
NOW VANDERBILT IS READY FOR HIS TAKEOVER.
¶¶
VANDERBILT'S INJUNCTION IS SERVED,
BUT DANIEL DREW IS A POOR READER,
SO HE TURNS TO HIS PROTéGéS, JAY GOULD AND JIM FISK,
FOR HELP.
WHAT'S THIS SAY?
DREW WAS SLY AND CLEVER.
AND...?
Gordon: GOULD WAS DEEPLY INTELLIGENT,
AS WELL AS SLY AND CLEVER.
IT'S AN INJUNCTION
STOPPING YOU FROM CONVERTING ERIE BONDS INTO STOCKS.
[ LAUGHS ]
YOU HAVE GOT TO HAND IT TO THE COMMODORE.
[ LAUGHS ]
WHEN GOULD READS THE INJUNCTION, HE REALIZES
THAT THIS IS HIS CHANCE TO STEP IN THE SHOES OF DANIEL DREW.
WE'LL BEAT HIM AT HIS OWN GAME.
GOULD BEGAN TO SLOWLY BUT SURELY TAKE CONTROL.
HE WAS A MUCH SMARTER MAN THAN DREW.
WE'LL BUY OUR OWN JUDGE.
BRILLIANT!
TO HELL WITH THE LAW. [ LAUGHS ]
IN NEW YORK IN THE 1860s,
THE JUDICIARY HAD BECOME COMPLETELY CORRUPT.
Narrator: GOULD RECOMMENDS THEY BUY A COUNTER-INJUNCTION
THAT DOES ALLOW THEM TO ISSUE NEW STOCK.
TRUST WE CAN ALL MAKE A LOT OF MONEY.
[ LAUGHS ]
Narrator: EACH SIDE IS NOW ARMED TO DO BATTLE ON WALL STREET.
IN MARCH OF 1868,
VANDERBILT MAKES HIS MOVE TO TAKE OVER THE ERIE.
HE ORDERS HIS BROKERS, FRANK WORK AND JOHN TOBIN,
TO BUY UP SHARES OF ERIE STOCK.
THE ERIE'S UP.
BUYING ERIE. WHO'S SELLING?
Ackerman: VANDERBILT THOUGHT IT WOULD BE RELATIVELY EASY
TO TAKE OVER THE ERIE BECAUSE HE HAD A BIG BANKROLL.
[ INDISTINCT SHOUTING ]
Narrator: PRICES QUICKLY RISE.
Ackerman: VANDERBILT WAS KNOWN TO BE SOMEONE
WHO WOULD BUILD THE MARKET.
Brokamp: A BULL MARKET IS A MARKET
IN WHICH THE PRICES ARE GOING UP.
RIGHT HERE. I'LL TAKE TOP 30.
IT TAKES A LOT OF DEMAND TO DRIVE UP THOSE PRICES.
[ INDISTINCT SHOUTING ]
FOR ONE PERSON TO CREATE A BULL MARKET,
THAT TAKES THE KIND OF MONEY THAT CORNELIUS VANDERBILT HAD.
Work: BUYING 200 HERE. 200.
Narrator: WORDS GETS OUT -- VANDERBILT IS BUYING UP ERIE.
READ ALL ABOUT IT!
UNLESS THE ERIE GANG CAN OUT-MANEUVER VANDERBILT,
HE'LL OWN 51% OF THE COMPANY'S STOCK
AND TAKE CONTROL OF THE RAILROAD.
I'LL TAKE THOSE THREE. I'LL TAKE THOSE 30.
DREW, GOULD, AND FISK WILL DO ANYTHING TO STOP THE COMMODORE.
IT'S THE START OF THE ERIE WAR.
THE BATTLE OVER THE NEXT FEW DAYS
WILL FOREVER CHANGE THE RULES OF WALL STREET.
VANDERBILT IS CONFIDENT
HE CAN WIN THIS WAR AGAINST THE ERIE GANG.
Gordon: CORNELIUS VANDERBILT WAS JUST BORN COMPETITIVE.
HE LOVED TO PLAY THE GAME, WHATEVER THE GAME WAS,
AND HE LOVED TO WIN.
NOW, FIRST THING MONDAY MORNING, GET THE REST.
GET IT ALL.
CORNELIUS, PRICES ARE JUST GONNA CONTINUE TO GO UP.
ONE MINUTE.
VANDERBILT WAS CERTAIN THAT NO ONE COULD DEFEAT VANDERBILT.
THAT'S GOOD.
THAT'S WHAT HE BELIEVED.
WELL, WE CAN'T STOP NOW. WE GOT TO KEEP BUYING.
VANDERBILT THOUGHT THAT HE HAD TIED DOWN DREW,
PREVENTED HIM FROM HIS USUAL SHENANIGANS,
AND THAT HE HAD THE MONEY AND THE POWER TO BUY THE STOCK,
AND THEREFORE, HE WOULD GET CONTROL OF ERIE.
DREW'S UP TO SOMETHING.
PERHAPS.
BUT BETWEEN ALL OF US, WE'LL WIN.
[ LAUGHTER ]
I THINK HE WAS QUITE CONFIDENT THAT THIS WAS GOING TO BE
A RELATIVELY SIMPLE, STRAIGHTFORWARD MATTER
OF BUYING CONTROL OF A COMPANY.
TO ERIE!
-TO ERIE. -ERIE.
Narrator: THE FINAL TAKEOVER IS ONLY DAYS AWAY,
BUT VANDERBILT IS IN FOR A SHOCK.
HE WON'T KNOW WHAT HIT HIM.
[ LAUGHS ]
Narrator: TOWARD THE END OF THE 1860s,
AMERICAN INDUSTRY AND COMMERCE ARE BOOMING.
THE RAILROADS WERE THE BIGGEST OF THE BIG CORPORATIONS.
THEY WERE THE BIG FISH IN THE STOCK EXCHANGE.
[ TRAIN BELL RINGING ]
Narrator: IN 1868,
CORNELIUS VANDERBILT WANTS TO BUY THE ERIE RAILROAD
AND CREATE A RAIL EMPIRE FROM EAST TO WEST.
BUT A TRIO OF ERIE DIRECTORS
WILL STOP AT NOTHING TO PREVENT IT.
OH, IF HE WANTS THE ERIE, WE'LL GIVE HIM THE ERIE.
DANIEL DREW'S PROTéGéS, JIM FISK AND JAY GOULD,
PULL A CLASSIC DREW MOVE TO STOP VANDERBILT.
Ackerman: THEY START TO THINK ABOUT LAYING A TRAP,
AND THEY COME UP WITH A PRETTY GOOD ONE.
Narrator: THEY SPEND A WEEKEND
PRINTING NEW ERIE STOCK CERTIFICATES TO WATER THE STOCK.
WATERING THE STOCK IS A WAY TO INFLATE THE VALUE OF YOUR ASSET,
AND ACTUALLY IT BEGAN WITH DANIEL DREW
'CAUSE HE BEGAN AS A CATTLE DRIVER.
Nelson: HE WOULD TAKE HIS LIVESTOCK, GIVE THEM LOTS OF SALT
RIGHT BEFORE HE WAS GONNA DELIVER THEM.
WHEN THEY LICKED THE SALT,
THEY WOULD DRINK INSANE AMOUNTS OF WATER.
Ackerman: THEN WE WOULD SELL THEM AND WEIGH THEM
WHILE THEY WERE GOOD AND FAT AND HEAVY.
THAT WAS THE BIRTH OF THE CONCEPT OF WATERED STOCK.
Narrator: FISK AND GOULD PRINT OUT 50,000 SHARES OF NEW ERIE STOCK.
WE'RE GONNA MAKE HIM BLEED.
TODAY, THE IDEA OF PRINTING YOUR OWN STOCKS IS UNTHINKABLE...
NOT TO MENTION ILLEGAL.
IMAGINE THE PRESS. THEY'LL FEAST ON HIM.
[ LAUGHS ]
HE WON'T KNOW WHAT HIT HIM.
[ LAUGHS ]
BUYING ERIE. WHO'S SELLING?
Narrator: AT THE START OF TRADING,
VANDERBILT'S BROKERS RUSHED TO BUY
ALL THE REMAINING ERIE STOCK ON OFFER.
GOT 30 SHARES AT $73.
[ INDISTINCT SHOUTING ]
GOULD WATCHES AS HIS BATTLE PLAN UNFOLDS.
LOOKING GOOD, JAY.
THANK YOU, DANIEL.
BUYING ERIE. WHO'S SELLING?
[ SHOUTING CONTINUES ]
$78. $78. BUYING AT $78.
Narrator: AS ERIE'S STOCK PRICES CONTINUE TO RISE,
GOULD BIDES HIS TIME.
THAT WILL DO, GENTLEMEN.
[ BELL RINGS ]
TO THE STREETS!
WITH OFFICIAL TRADING OVER,
GOULD WATCHES THE WAR MOVE TO THE STREETS,
WHERE THE BUYING SPREE CONTINUES.
Gordon: IT WAS BEING BOUGHT ON THE CURB.
IT WAS BEING BOUGHT WHEREVER --
IF THEY COULD FIND SOMEBODY IN A RESTAURANT UPTOWN
WHO HAD ERIE FOR SALE, THEY'D BUY IT.
[ INDISTINCT BARGAINING ]
NOW'S THE TIME TO PLAY OUR NEXT MOVE.
NO.
-SOLD. -YOUR 500, AS WELL.
TIMING IS EVERYTHING.
I'VE GOT 25 MORE SHARES.
WE CAN RIDE THIS A LITTLE FURTHER.
Narrator: GOULD HAS FULL COMMAND OF THE BATTLEFIELD.
I'VE GOT 25 MORE SHARES. SELLING 25 SHARES.
Gordon: WALL STREET WAS IN A FRENZY.
IT WAS MADNESS.
Narrator: AS THE PRICE RISES, SO DO THE STAKES.
VANDERBILT KEPT BUYING AND KEPT BUYING.
JAY, LET'S NOT LET THIS GO TOO FAR.
I'VE GOT 20 SHARES OF ERIE.
GOULD HAD 100,000 REASONS WHY VANDERBILT WAS GONNA LOSE THIS.
-TRUST ME. -WHO HAS 10 SHARES?
BY NOON, IT WAS $83 A SHARE.
I'VE GOT 25 MORE SHARES.
Narrator: ERIE'S STOCKS ARE DISAPPEARING FAST.
BY THE AFTERNOON, VANDERBILT BELIEVES
THAT HE HAS GOTTEN ROUGHLY 51% OF THE STOCK.
VANDERBILT NEVER SEES WHAT'S COMING.
AAAH.
HOT ENOUGH FOR YOU?
IT IS.
SELL -- SLOWLY AT FIRST.
I'VE GOT 20 SHARES. 20 SHARES.
100 SHARES OF ERIE STOCK HERE.
THAT'S RIGHT, GENTLEMEN -- 100 SHARES.
WHO'S ON?
Narrator: GOULD BEGINS WATERING THE MARKET.
THIS WAS THE TURNING POINT IN THE ERIE WAR.
IT CHANGED EVERYTHING.
I GOT 500 SHARES OF ERIE.
500 SHARES.
Ackerman: PEOPLE BECAME SUSPICIOUS.
500 SHARES OF ERIE STOCK.
WHERE IS ALL OF THIS ERIE STOCK COMING FROM?
-100 SHARES. -25 SHARES.
I'LL DROP IT DOWN TO 85. 100 SHARES, ANYONE?
Narrator: THE FLOOD OF NEW STOCK SLOWS THE BUYING.
IT'S KNOWN AS A BEAR RAID.
Nelson: THIS IS A CLASSIC BEAR MANEUVER.
WHAT HAPPENED? INVESTORS GOT COLD FEET AND STOPPED BUYING.
100 SHARES OF ERIE STOCK HERE.
WHEN THERE'S A BEAR MARKET,
THERE ARE FEWER PEOPLE WILLING TO BUY SHARES
BECAUSE THEY'VE LOST CONFIDENCE IN THE STOCK MARKET
AND THE ABILITY TO MAKE ANY MONEY BY BUYING STOCKS.
[ INDISTINCT BARGAINING ]
Narrator: GOULD IS BECOMING THE NEW WIZARD OF WALL STREET.
Gordon: HE REALLY UNDERSTOOD
THE ECONOMIC FORCES GOING ON HERE VERY WELL.
Ackerman: NO ONE HAD REALLY DONE ANYTHING QUITE ON THIS SCALE BEFORE.
IT WAS THE FIRST BIG FINANCIAL TAKEOVER IN AMERICAN HISTORY.
SIR, I WILL TAKE YOUR 500, AS WELL.
Narrator: BY 3:00 P.M., THE STOCK IS IN FREE FALL.
THE PRICE STANDS AT $71 A SHARE, DOWN FROM A HIGH OF $83.
Ackerman: AT THIS POINT,
THE ONLY PEOPLE WHO REALLY KNOW HOW MUCH STOCK THERE IS
ARE JAY GOULD AND JIM FISK AND DANIEL DREW.
175 SHARES.
Narrator: THIS SPELLS DISASTER FOR VANDERBILT AND HIS AGENTS.
WE MUST TELL THE COMMODORE.
25 MORE SHARES.
175 SHARES.
Gordon: SINCE NOBODY KNEW HOW MANY SHARES WERE OUT THERE,
NOBODY KNEW IF HE HAD CONTROL OR NOT, INCLUDING THE COMMODORE.
I HAVE BAD NEWS.
WHAT?
PRICES ON THE ERIE ARE SINKING.
HOW?
Gordon: NOBODY WANTED TO MAKE COMMODORE VANDERBILT ANGRY.
THEY SAID HE WAS EQUALLY EXACT IN FULFILLING HIS THREATS.
THERE'S A FLOOD OF STOCK.
IT CAME ON THE MARKET JUST AFTER NOON.
WHAT?! LET ME SEE THOSE STOCKS.
Ackerman: ONCE VANDERBILT SAW THE STOCK CERTIFICATE,
HE WOULD HAVE SEEN VERY QUICKLY
THAT IT HAD BEEN PRINTED WITHIN THE LAST DAY OR SO.
IT WOULD HAVE HAD NO RUFFLES AROUND THE EDGES.
IT WAS A PHYSICAL PIECE OF PAPER THAT WAS CRISP AND NEW,
FRESH OFF THE PRINTING PRESS.
DAMN! DREW.
HE HAD SPENT A HUGE AMOUNT OF MONEY BUYING ERIE STOCK,
AND SUDDENLY HE FOUND THAT THE GOALPOST HAD MOVED.
WHAT SHOULD WE DO?
DO? BUY EVERY BIT OF STOCK
THOSE SONS OF BITCHES ARE SELLING.
Ackerman: HE WAS NOT ABOUT TO DROP THIS.
IN THE MIDDLE OF THE FIGHT, HE WAS GOING TO KEEP FIGHTING.
THEY THINK THEY CAN PICK MY POCKET, HUH?
HE HAD BEEN CHEATED, AND HE DID NOT LIKE BEING CHEATED.
[ INDISTINCT BARGAINING ]
Narrator: VANDERBILT'S TRADERS, WORK AND TOBIN,
HEAD BACK TO WALL STREET.
GOT 10 MORE SHARES.
VANDERBILT'S SHREWD TACTIC TO KEEP BUYING
BRINGS THE PRICE BACK UP, BUT COSTS HIM MILLIONS.
-SOLD! -I'LL TAKE ALL YOUR SHARES.
Ackerman: THE AMOUNT OF MONEY THAT VANDERBILT HAS SPENT
IS IN THE RANGE OF $8 OR $9 MILLION.
IT WAS ENOUGH TO CRAMP THE STYLE
OF EVEN SOMEONE AS BIG AS CORNELIUS VANDERBILT.
WELL, HOW MUCH DO WE OWN?
YOU CAN'T FIGURE OUT IF YOU HAVE 51% OF THE SHARES OUTSTANDING
IF YOU DON'T KNOW HOW MANY SHARES ARE OUTSTANDING.
WE HAVE NO IDEA, SIR.
THEY'RE IN CONTEMPT!
BRING ME THE SCURVY DOGS.
Ackerman: THE NEXT MORNING, HE WENT BACK TO JUDGE BARNARD,
WHO ISSUED THE ORIGINAL INJUNCTION
AGAINST PRINTING NEW STOCK.
BARNARD DID NOT LIKE SEEING HIS INJUNCTIONS VIOLATED.
Narrator: VANDERBILT ORDERS JUDGE BARNARD
TO ISSUE AN ARREST WARRANT FOR THE ERIE GANG.
HE WAS OUT FOR BLOOD.
Narrator: VANDERBILT IS DETERMINED
THAT THE FUTURE OF AMERICAN COMMERCE
IS NOT GOING TO BE CONTROLLED BY A SCOUNDREL LIKE DREW.
I'LL BURY THEM!
Narrator: IT'S THE WILD WEST DAYS OF THE AMERICAN STOCK MARKET --
AN EPIC SHOWDOWN OVER ONE OF THE NATION'S BIGGEST COMPANIES.
AMERICA HAS NEVER SEEN ANYTHING LIKE IT.
THE IMPEACHMENT OF ANDREW JOHNSON
WAS GOING ON AT THE SAME TIME IN WASHINGTON,
AND THE ERIE WARS WERE GETTING MUCH MORE COVERAGE
IN THE NEW YORK HERALD AND THE NEW YORK TIMES
AND WHAT HAVE YOU.
READ ALL ABOUT IT!
Narrator: AND EVERYONE WANTS TO KNOW
WHO WILL BE THE LAST MAN STANDING.
THE ERIE GANG BASK IN THE GLOW OF SUCCESS.
THIS IS MORE FUN THAN SELLING COTTON TO THE UNION ARMY.
[ LAUGHS ]
THEY'RE SWIMMING IN CASH.
THERE ARE LITERALLY DESCRIPTIONS OF THEM, YOU KNOW,
PILING THE MONEY AND PUTTING IT IN STACKS
AND SEEING HOW MUCH MONEY THERE WAS.
VANDERBILT'S CASH.
Narrator: GOULD, FISK, AND DREW HAVE SCAMMED VANDERBILT
OUT OF $7 MILLION -- OVER $100 MILLION IN TODAY'S MONEY.
AND THEY STILL CONTROL THE RAILROAD
HE'S JUST SPENT A FORTUNE FAILING TO ACQUIRE.
Gordon: AND THIS DEPLETED THE CASH SUPPLY.
$7 MILLION WAS A TREMENDOUS AMOUNT OF MONEY IN 1868.
IT IS A BEAUTIFUL SIGHT TO BEHOLD.
Narrator: WHEN VANDERBILT DISCOVERS THE PLOT AGAINST HIM,
HE'S OUT FOR BLOOD,
AND HE HAS JUDGE BARNARD ISSUE A WARRANT FOR THE ERIE GANG.
Gordon: VANDERBILT DID NOT LIKE BEING MADE A FOOL OF,
AND VERY SELDOM WAS HE FOOLED.
AND IT GETS TO THAT NUB OF VANDERBILT'S ANXIETY --
THAT VANDERBILT, FOR ALL HIS CAPITAL,
FOR ALL HIS WEALTH, IS NOT SMART ENOUGH
TO BE A REAL STOCK-MARKET OPERATOR,
AND I THINK THAT'S PRECISELY THE THING
THAT IRRITATES HIM SO MUCH ABOUT GOULD AND FISK,
WHY HE WANTS THEM ARRESTED.
Narrator: WHILE VANDERBILT PLANS HIS NEXT MOVE,
GOULD, DREW, AND FISK ARE ABOUT TO GET SOME BAD NEWS.
THEY THINK THEY'VE WON, AND THAT'S WHEN THEY GET THE KNOCK ON THE DOOR...
[ KNOCK ON DOOR ] ...AND THEY DISCOVER
THAT BARNARD HAS FIGURED OUT WHERE THEY ARE...
GENTLEMEN, THEY'RE COMING.
...AND THAT THEY'RE GONNA BE SERVED WITH AN INJUNCTION
AND THEY'RE GONNA END UP IN JAIL.
I HAVE NO STOMACH FOR A SPELL IN THE LUDLOW STREET JAIL.
WE HAVE TO GET OUT OF NEW YORK.
SO THE ONLY THING TO DO WAS TO GET OUT OF DODGE.
I HEAR NEW JERSEY'S BEAUTIFUL THIS TIME OF YEAR.
Nelson: GOULD WAS SMART, AND HE BELIEVED
THAT IF HE COULD GET OUT OF NEW YORK CITY,
THE LAW COULD NOT TOUCH HIM.
GIVE ME THE MONEY. I SHALL MEET YOU IN JERSEY.
I'LL GET THE MONEY. YOU GET THE BOOKS.
Narrator: GOULD KNOWS THEY CAN'T LEAVE ANY EVIDENCE BEHIND.
Ackerman: IT WAS VERY IMPORTANT FOR DREW, FISK, AND GOULD
TO TAKE NOT JUST THE MONEY, BUT ALSO THEIR SENSITIVE PAPERS,
THE ERIE RAILROAD ACCOUNT BOOKS, TO NEW JERSEY
IN ORDER TO KEEP THEM SAFE FROM THE NEW YORK COURTS.
HERE, HERE, HERE, HERE, HERE, HERE, HERE, HERE.
I GOT IT, I GOT IT. GO, GO, GO.
Narrator: THE ERIE GANG BEAT A HASTY RETREAT.
[ BLOWS WHISTLE ]
Officer: HEY, YOU LOT, STOP RIGHT THERE!
Gordon: THE COPS SAW THESE GUYS RUNNING OUT OF THE ERIE RAILWAY OFFICES
CARRYING STUFF EARLY IN THE MORNING,
AND HE FIGURED THEY WERE ROBBING THE JOINT.
I MEAN, IT'S A REASONABLE CONCLUSION.
WE'RE OFFICERS OF THE ERIE.
THEY EXPLAINED THEY WERE JUST THE BOARD OF DIRECTORS
OF ERIE RAILWAY ESCAPING TO NEW JERSEY.
"PAY NO ATTENTION, OFFICER."
MY APOLOGIES, GENTLEMEN.
I'M SURE HE DIDN'T HAVE ANY IDEA
OF JUDGE BARNARD'S ARREST WARRANT.
I MEAN, THEY DIDN'T HAVE POLICE RADIOS AND STUFF IN THOSE DAYS.
THANK YOU, OFFICER.
THE STREETS ARE POSITIVELY AWASH WITH SCOUNDRELS.
Narrator: AFTER THIS CLOSE CALL,
DREW LEAVES FOR NEW JERSEY,
WHILE GOULD AND FISK RISK SOME REVELRY.
Nelson: THESE TWO GUYS HAD DEFEATED CORNELIUS VANDERBILT.
THEY HAD BILKED HIM FROM $7 MILLION.
THEY WERE GONNA HAVE THEIR FUN,
NO MATTER WHETHER THE COPS ARE AFTER THEM OR NOT.
THAT WAS QUITE THE HAUL. [ LAUGHS ]
Narrator: GOULD CAN'T RELAX.
HE'S CALLING THE SHOTS WITH $7 MILLION AT STAKE.
THE SUM IS FAR SAFER WITH US
THAN IN THE HANDS OF UNCLE DANIEL.
THEY WERE YIN AND YANG.
TOGETHER, THEY WERE MUCH MORE POWERFUL
THAN THEY WERE SEPARATELY.
YOU'RE NOT GONNA EAT?
THEY WERE A REMARKABLE PAIR.
WHY DON'T YOU ORDER US SOME MORE CHAMPAGNE?
WAITER, MORE CHAMPAGNE!
Narrator: WHILE FISK AND GOULD CELEBRATE,
VANDERBILT WAITS FOR NEWS OF THEIR ARREST.
Nelson: THIS IS REALLY WHERE THE WAR IN THE STOCK MARKET IS OVER
AND THE WAR OF INJUNCTIONS HAS REALLY BEGUN.
[ INDISTINCT CONVERSATIONS ]
Narrator: GOULD POSTS A GUARD TO WATCH FOR POLICE.
Gordon: GOULD PLANNED AHEAD.
HE ALWAYS PLANNED AHEAD.
-WE HAVE TO GO. -NOW?
NOW!
THEY LEARN ABOUT MIDWAY THROUGH THEIR LONG MEAL...
GRAB THE BOOKS, JIM! GRAB THE BOOKS!
...THAT THEY'VE BEEN DISCOVERED,
THAT VANDERBILT'S MEN KNOW WHERE THEY ARE
AND THAT THEY'RE ABOUT TO BE SERVED WITH AN INJUNCTION.
AND SO THEY HIGHTAIL IT OUT OF THERE.
JIM!
THEY'RE CARRYING ALL THESE GREENBACKS
ALONG WITH THE REMAINING STOCK CERTIFICATES
AND BONDS AND THINGS LIKE THAT.
THEY KNEW THEY NEEDED TO GET OUT OF TOWN.
Gordon: IT WAS A VERY DANGEROUS, FRIGHTENING TIME, I'M SURE.
[ WHISTLE BLOWS ]
Ackerman: JUDGE BARNARD'S CONTEMPT CITATIONS
WERE ONLY GOOD WITHIN THE STATE OF NEW YORK.
THEY COULD CROSS THE RIVER TO NEW JERSEY,
WHERE THEY WOULD BE SAFE.
[ GRUNTS ]
DRIVER, TAKE US TO THE DOCKS.
ALL SPEED. DON'T SPARE THE HORSES!
[ WHISTLE BLOWS ]
WE SUNK THE COMMODORE. [ LAUGHS ]
DON'T COUNT YOUR CHICKENS YET, JIM.
Nelson: VANDERBILT SENDS AN ARMY
OF BOTH LEGAL AND ILLEGAL FOLKS TO FOLLOW.
BETTER GET THIS TO THE COMMODORE.
I WAGER A BOUT OF HELL WILL BE COMING
WHEN HE FINDS OUT WE MISSED THEM.
NO ONE GETS AWAY WITH CHEATING CORNELIUS VANDERBILT.
IT'S IN THE PAPER. THEY'VE ALREADY MADE --
Narrator: THAT THURSDAY,
THE EXCHANGE VOIDS ALL OF GOULD'S WATERED STOCK.
IT SAYS WHAT?!
THE ADMINISTRATORS OF THE EXCHANGE HAVE RULED
THAT ANY AND ALL CERTIFICATES DATED AFTER THE 7th OF MARCH
DO NOT CONSTITUTE GOOD DELIVERY.
AND SO VANDERBILT HAD TENS OF THOUSANDS OF SHARES
OF THIS NOW-WORTHLESS STOCK.
WELL, THEY'RE NOT WORTH THE PAPER THEY'RE PRINTED ON!
WELL, HE WAS FURIOUS. HE WAS OUTRAGED.
I'M GONNA BUST THOSE THIEVES.
HE MUST HAVE PEELED THE WALLPAPER OFF THE WALLS
WITH HIS PROFANITY.
VANDERBILT WAS A VERY ACCOMPLISHED SWEARER.
I'LL BURY THEM!
Narrator: BOTH SIDES PREPARE FOR A SHOWDOWN
THAT WILL CHANGE THE WAY AMERICA DOES BUSINESS FOREVER.
Narrator: CITIES ALL ACROSS AMERICA THRIVE AFTER THE CIVIL WAR.
BUT WITH PROSPERITY COMES CORRUPTION.
THE GOVERNMENT WAS COMPLETELY CORRUPT AT THAT TIME,
AND SO IT WAS JUST, YOU KNOW, EVERYBODY FOR HIMSELF.
Narrator: AFTER VANDERBILT DISCOVERS
THE WATERED STOCK HE PURCHASED IS INVALID...
DAMN!
...HE WANTS REVENGE.
I'LL BE DAMNED IF I LET THAT OLD CATTLE THIEF
GET THE BETTER OF ME.
Ackerman: VANDERBILT WAS HOLDING THE WINNING HAND, LEGALLY.
HE HAD INJUNCTIONS IN PLACE
HOLDING THE ERIE RAILROAD BOARD OF DIRECTORS IN CONTEMPT.
HE HAD INJUNCTIONS IN PLACE THAT HE COULD RELY ON
SAYING THAT THE STOCK HE HAD BEEN SOLD WAS ILLEGAL
AND THEREFORE VOID, THEREFORE HE SHOULD GET HIS MONEY BACK,
AND HE SHOULD HAVE CONTROL OF THE ERIE RAILROAD.
SO HE WAS IN A GOOD LEGAL POSITION.
AH, DRINK UP, GENTLEMEN.
AH, WELCOME TO THE GRAND AND GLORIOUS TAYLOR HOTEL.
Narrator: HOLED UP IN THE TAYLOR HOTEL IN JERSEY,
THE ERIE GANG ENLISTS THE PRESS TO SELL THEIR SPIN ON EVENTS.
Gordon: THE PRESS JUST ABSOLUTELY LOVED IT.
MM, WRITE -- WRITE THIS -- WRITE THIS.
"WE ARE JUST TRYING TO PROTECT THE GOOD PEOPLE OF NEW YORK
FROM ANOTHER MONOPOLY."
WHAT THEY'RE CLAIMING FROM NEW JERSEY
IS THE ERIE WAR'S ALL ABOUT BREAKING VANDERBILT'S MONOPOLY.
ASK YOURSELVES, ASK YOUR READERS,
HOW MANY RAILROADS DOES ONE MAN NEED?
Ackerman: WHAT GOULD AND DREW REALIZED AT THIS POINT
WAS THAT FOR THIS TO BE SOLVED ON THEIR TERMS,
THEY NEEDED SOMEHOW TO OVERTURN BARNARD'S INJUNCTIONS.
AND THE ONLY WAY THEY COULD DO THAT
WAS TO GO TO THE STATE LEGISLATURE.
THAT WAS THE ONLY WAY
THAT THEY COULD HAVE THEIR WATERED SHARES MADE LEGAL,
THEREFORE THE MONEY THEY HAD TAKEN IN
SELLING THEM TO VANDERBILT WAS ALL LEGITIMATE.
I'LL SEND YOU A CABLE FROM ALBANY.
MM. DO THAT.
Narrator: ENTERING NEW YORK AGAIN IS RISKY
BECAUSE GOULD COULD BE ARRESTED.
BUT REALIZING THEIR FATE RESTS WITH THE LAW
MAKING THEIR WATERED-DOWN STOCKS VALID AGAIN,
GOULD RISKS IT AND LEAVES WITH A SUITCASE FULL OF CASH
TO ENTICE LEGISLATORS TO SEE THINGS HIS WAY.
WHEN VANDERBILT GETS WIND OF THIS,
HE ALSO LOOKS TO ALBANY FOR HELP.
HE TURNS TO INFAMOUS POLITICAL POWER BROKER BOSS TWEED.
APPRECIATE YOU COMING OUT TODAY.
Gordon: BOSS TWEED IS A VERY COMPLICATED CHARACTER.
HE'S NOT THE EVIL POLITICIAN
THAT MOST PEOPLE MAKE HIM OUT TO BE.
HE WAS CERTAINLY CROOKED.
LISTEN, I HAVE SOME IMPORTANT BUSINESS
I WANT TO DISCUSS WITH YOU TODAY.
BOSS TWEED IS POWERFUL IN NEW YORK CITY,
BUT BOSS TWEED ALSO HAS IMPORTANT CONNECTIONS TO ALBANY.
IF VANDERBILT CAN GET THE LEGISLATORS
TO VOTE AGAINST A BILL
LEGALIZING THE WATERED-DOWN STOCK,
HE'LL GET HIS MONEY BACK, OWN THE MAJORITY OF ERIE STOCK,
AND WIN CONTROL OF THE RAILROAD.
I WANT YOU TO FIX THINGS IN ALBANY.
TAKE THIS, AND WHEN THAT ERIE BILL COMES UP,
MAKE SURE IT DON'T PASS.
THAT'S WHAT OLD FRIENDS ARE FOR, CORNELIUS.
IT'S CRUCIAL THAT VANDERBILT HAVE BOSS TWEED IN HIS POCKET.
I'M COUNTING ON YOU, BOSS.
YES, SIR.
Gordon: VANDERBILT WAS AN HONEST MAN,
BUT HE HAD TO DEAL WITH THE WORLD AS IT WAS,
AND IF THE WAY TO GET SOMETHING ENACTED IN NEW YORK STATE
WAS TO BRIBE THE LEGISLATURE,
WELL, HE WAS PERFECTLY HAPPY TO BRIBE THE LEGISLATORS.
HE DIDN'T CARE.
Narrator: THE FATE OF THE ERIE WAR
IS NOW IN THE HANDS OF THE VERY CORRUPT NEW YORK LEGISLATURE.
[ TRAIN WHISTLE BLOWS ]
Brokamp: IT WAS A MATTER OF ALL INTERESTED PARTIES
SENDING PEOPLE TO ALBANY WITH THEIR SACKS OF MONEY
TO TRY TO BUY THE VOTES AND INFLUENCE ONE WAY OR THE OTHER.
Narrator: GOULD BANKS ON THE ERIE BILL PASSING
SO THEY CAN ALL RETURN TO NEW YORK CITY AS RICH MEN.
PLEASE, ACCEPT THIS CONTRIBUTION
TO CONTINUE YOUR GOOD WORK IN THE LEGISLATURE.
ANY TIME, MY MAN.
THANK YOU. -THANK YOU.
Gordon: THE LEGISLATURE HAD APPARENTLY BEEN HAVING A VERY POOR YEAR
IN TERMS OF BRIBES, AND SO THEY WERE DELIGHTED
WITH THIS GOLDEN ECONOMIC OPPORTUNITY
TO ENRICH THEMSELVES.
Gould: THE OFFICERS OF THE ERIE
WOULD LIKE TO GARNER YOUR SUPPORT FOR UPCOMING VOTE.
THE MONEY WAS FLOWING LIKE, YOU KNOW, CHAMPAGNE.
Narrator: GOULD AND TWEED PLY THE SENATORS.
TWEED.
BUT TWEED HAS THE LAW ON HIS SIDE.
SHOULD YOU PREPARE FOR A COURT DATE?
GENTLEMEN, GENTLEMEN. GENTLEMEN, GATHER AROUND.
Gordon: VANDERBILT HAD THE DEEPER POCKETS,
BUT THE ERIE RAILWAY HAD PLENTY OF CASH.
I BRING THE COMMODORE'S GOOD TIDINGS.
SO THIS WAS A BATTLE OF TITANS.
THEY WERE BOTH HEAVYWEIGHT FIGHTERS.
WOULD YOU TAKE $1,000 FOR YOU SUPPORT, SIR?
VERY NICE. THANK YOU.
Ackerman: IT'S ESSENTIALLY AN EXERCISE
TO BRIBE AN ENTIRE STATE LEGISLATURE.
THANK YOU.
DREW, AT THIS POINT, IS GETTING TIRED OF THE FIGHT,
AND HE SNEAKS BACK INTO NEW YORK CITY
WITHOUT TELLING JAY GOULD OR JIM FISK THAT HE'S DOING IT,
AND HE SECRETLY SEES VANDERBILT.
Narrator: VANDERBILT SENDS WORD TO BOSS TWEED IN ALBANY
TO STOP PAYMENTS.
HE KNOWS THAT DANIEL DREW WANTS TO MAKE A DEAL.
HE KNOWS THAT DANIEL DREW WANTS OUT OF THIS.
GENTLEMEN, I'M SORRY TO SAY, YOU'VE CLEANED ME OUT.
[ SIGHS ]
Ackerman: WITH THAT, THE ALBANY LEGISLATURE
PASSED THE LEGISLATION 101 IN FAVOR TO 6 AGAINST,
PARTLY OUT OF RESENTMENT AGAINST VANDERBILT
FOR CUTTING OFF THEIR MONEY. -GREAT.
THANK YOU. THANK YOU.
THIS WAS, ON ITS FACE, A VERY GREAT VICTORY FOR JAY GOULD.
TO THE ERIE, AND TO YOUR VOTE.
Narrator: BUT WHEN GOULD AND FISK RETURN TO NEW YORK CITY,
THEY'RE IN FOR A RUDE AWAKENING.
Nelson: THEY BARGE INTO THE MEETING
AND DISCOVER THAT THERE IS THE ENTIRE BOARD --
THE REST OF THE BOARD.
DREW, WHAT IS THIS?
WELL, WE AND THE COMMODORE HAVE COME TO AN UNDERSTANDING.
THEY RECOGNIZE THAT HOWEVER THIS COMES OUT,
THEY HAVE JUST WON A MAJOR VICTORY.
HE'S OFFERED US A GENEROUS SETTLEMENT.
Nelson: HE DOES STILL HAVE A SERIES OF INJUNCTIONS
AGAINST DREW, GOULD, AND OTHERS
THAT IS GONNA MAKE IT DIFFICULT FOR THEM TO OPERATE IN NEW YORK.
[ CHUCKLES ]
THE WAR FOR THE ERIE -- IT'S OVER.
Nelson: VANDERBILT, IN A WAY, CAN DEMAND HIS TERMS.
HE'LL GET HIS MONEY BACK AT A RATE THAT THEY'LL AGREE ON.
WHAT EXACTLY ARE YOU OFFERING US?
[ CHUCKLES ] THE ERIE.
Nelson: THIS WILL ALLOW GOULD, FISK, AND DREW
TO CONTINUE OPERATING ON THE STOCK EXCHANGE
WITHOUT THE DANGERS OF LAWSUITS AGAINST THEM.
Narrator: SICK OF THE DISHONESTY AND CORRUPTION,
VANDERBILT GIVES UP HIS BID FOR THE ERIE.
YOU WANT IT, IT'S ALL YOURS.
GOULD AND FISK TAKE CONTROL OF THE ERIE RAILROAD
AS PRESIDENT AND TREASURER.
IN THE END, DANIEL DREW IS THE BIGGEST LOSER.
Nelson: THE ERIE WAR HAS BROKEN DREW IN A WAY THAT IT HASN'T VANDERBILT.
HIS SIGNIFICANCE, HIS POWER ON THE STOCK EXCHANGE
IS GONNA DECLINE RAPIDLY.
Gordon: HIS DAY WAS THE WALL STREET WITHOUT THE RULES.
AND ONCE THE RULES WERE IN PLACE,
HE COULDN'T PLAY THE GAME, REALLY, ANYMORE.
Narrator: DREW GOES BANKRUPT AND DIES A DECADE LATER.
THE REAL WINNER IS WALL STREET'S NEW ROBBER BARON, JAY GOULD.
Gordon: EVERYBODY REALIZED THAT JAY GOULD
WAS A FORCE TO BE RECKONED WITH ON WALL STREET AT THIS POINT.
HIS STOCK WENT WAY UP.
HE WAS WORTH ABOUT $56 MILLION WHEN HE DIED IN 1893.
Narrator: THINGS DID NOT END WELL FOR HIS PARTNER FISK,
WHO WAS MURDERED IN A LOVE TRIANGLE IN 1872.
CORNELIUS VANDERBILT RECOUPS HIS MONEY.
Nelson: THE ERIE WAR HAS SMIRCHED VANDERBILT'S REPUTATION,
BUT NOT HIS FORTUNE.
Narrator: WHILE HE NEVER WINS CONTROL OF THE ERIE,
HE EVENTUALLY BUILDS AN IMPRESSIVE RAILROAD PORTFOLIO
THAT ENSURES HIS LEGACY.
Gordon: HE LEFT A FORTUNE OF $105 MILLION.
HE WAS ALMOST CERTAINLY
THE RICHEST SELF-MADE MAN IN THE WORLD.
THE IMPORTANCE OF THE ERIE WARS
WAS THAT WALL STREET REALIZED IT HAD TO REFORM.
Ackerman: THE NEW YORK STOCK EXCHANGE ITSELF
STARTED REQUIRING STOCK TO BE REGISTERED...
Gordon: AND BECAME THE OVERWHELMINGLY DOMINANT STOCK EXCHANGE
IN NEW YORK, WHICH MEANT IN THE UNITED STATES.
Narrator: THE ERIE WAR LEAVES VANDERBILT'S LEGACY INTACT,
BUT IT TRANSFORMS THE WILD WEST NATURE OF WALL STREET.
IT LAYS THE GROUNDWORK FOR CAPITALISM TO FLOURISH
AND FOR AMERICA TO BECOME
THE FINANCIAL SUPERPOWER OF THE WORLD.