of the Michigan Southern and Northern Indiana of that wily speculator. On the very day this last Railroad Company. All these things set Cornelius Vanderbilt to thinking. The more he thought, the more the transgressions of Daniel Drew and the deviousness of his ways as between man and man appeared to him in all their enormity. Something must be done to stop Daniel Drew in his career, and, incidentally, to open an easier way to proprietorship in Erie. February 17, 1868, something was done. On that day Frank Work, the member of the Board of Erie Directors elected in the Vanderbilt interest, applied through his attorneys, Rapallo & Spencer, to Judge George G. Barnard, of the Supreme Court of New York, for an injunction against the Board of Directors of the Erie Railway Company, to restrain them from the settlement of certain outstanding accounts between Daniel Drew, Treasurer of the Company, and the Company itself. These accounts were the ones resulting from the transaction between Drew and the Board in 1866, and which had not yet come to settlement. This action was begun in the interest of Vanderbilt as incidental and auxiliary to his efforts to buy a majority of Erie stock, as it might guard him, as he said, "against any increase of the gross amount of that stock through a repetition on the part of Mr. Drew of his former ingenious expedient,' meaning the conversion of bonds into stock. The injunction was granted, and, two days later, Vanderbilt made another assault on Drew and the Erie, under the statute authorizing the removal of officers or directors guilty of misconduct, and petitioned before Judge Barnard, through Attorney-General Marshall B. Champlain, in the name of the people, for the removal of Daniel Drew as Treasurer of the Erie Railway Company. The grievance that prompted this move on the part of the Vanderbilt interest was, that although they had been buying Erie stock right and left for weeks, they found the market still flooded with it, and there seemed to be as much of it for sale as if never a single share of Erie had been sold. Vanderbilt traced the responsibility for this prodigality in Erie shares to the resourceful Drew, and found that something had to be done at once to block the game Vanderbilt move was made, February 19, 1868, the Erie Board of Directors passed this resolution: It being necessary for the completing, finishing, and operating the road of the Company, to borrow money, Resolved, That under the provisions of the statute authorizing the loan of money for such purposes, the Executive Committee be authorized to borrow such Sum as may be necessary, and to issue therefor such security as is provided for in such cases by the laws of this State; and that the President and Secretary be authorized under the seal of the Company to execute all needful and proper agreements and undertakings for such purposes. This was immediately followed by the issuing of $5,000,000 in convertible bonds, which were at once converted into stock, and this was fed to the Street through the brokerage houses of Smith, Gould, Martin & Co., Robinson, Cox & Co., and William Heath. In the petition for the removal of Drew as Treasurer of the Erie Railway Company, the main charge of misconduct against him was that he and other Directors had induced the Erie Board to lease and contract to complete a certain worthless connecting road, mainly owned by them, and known as the Buffalo, Bradford and Pittsburg Railroad. Having done this, they had then, since January 1st, procured the issue of a large amount of Erie stock in exchange for the stock of this road." The Buffalo, Bradford and Pittsburg Railroad was a road extending from the main line of the Erie at Carrollton, N. Y., 60 miles east of Dunkirk, the building of which the Erie Railway Company had insured by endorsing its bonds. This agreement was made January 1, 1866. In the time when Charles Minot was General Superintendent of the Erie, certain persons not entirely disinterested in the same Company, purchased large tracts of land in McKean and other counties in Pennsylvania, which were alleged to be valuable coal lands. To develop the territory a railroad was necessary. Buffalo, Bradford and Pittsburg Railroad Company was formed, but very little was ever done toward completing it until the Erie Railway Company leased it and practically assumed all its responsibilities by agreeing to buy its 7 per cent. construction bonds, which were convertible into stock. This was done, and the stock exchanged at 80 for Erie stock at par. The Vanderbilt's allegation was that "the Buffalo, Bradford and Pittsburg Railroad was not properly under lease to the Erie Railway Company, and that Daniel Drew had obtained the issue of the Erie stock simply to throw it on the market." Judge Barnard, on this petition, issued an order suspending Drew from his office of Treasurer of the Erie Railway Company, and ordered him to appear on February 21st and show cause why the prayer of the petitioner should not be granted, the same day having been fixed by Judge Barnard for further hearing in the proceedings begun by Director Frank Work. Drew appeared, with David Dudley Field, John E. Burrell, Dorman B. Eaton, Clarkson N. Potter, and others as his counsel. A motion to dismiss the writ for want of jurisdiction was denied by Judge Barnard. Both hearings were postponed, and on March 3d Judge Barnard granted an injunction restraining the defendants from any further conversion of bonds into stock, or from issuing any capital stock in addition to the 241,058 shares appearing in previous reports of the Company, and from issuing or hypothecating any of the Boston, Hartford and Erie bonds that the Erie Railway Company had endorsed and guaranteed, and from proceeding toward carrying out the agreement with the Michigan Southern and Northern Indiana Railroad Company in respect to the construction of the broadgauge railroad from Akron to Toledo. The writ also ordered Daniel Drew to restore to the Erie Railway Company the 58,000 shares of stock delivered to him in May, 1866, and the 10,000 shares received in exchange for the Buffalo, Bradford and Pittsburg bonds. March 10th was named as the day for a hearing on this and all the previous proceedings in the Vanderbilt-Drew embroglio. But injunctions did not worry Daniel Drew. In spite of this one, he converted $5,000,000 of bonds into Erie stock, and put the proceeds on the Street. In less than two weeks the Street had taken 100,000 shares of Erie, for which $7,000,000 had been paid, and Vanderbilt and his friends got the most of it, besides the 58,000 shares issued by Drew in 1866. If they had not made their contracts good, which they did at great loss, a wild panic would have resulted. As it was, the excitement and demorali zation made by this continuous flow of Erie stock caused both Exchanges to take action against it. They ordered officially that no certificates of Erie stock bearing date after March 7th should be a good delivery, or recognized in any way. This had an effect that the solemn orders of the court had failed to produce. Before March 10th, the day set for a further hearing in the Vanderbilt suit, came round, Daniel Drew had prepared a surprise for his antagonists. On March 5th his counsel obtained from Judge Ransom Balcom of Broome County, N. Y., an order suspending Frank Work from the Directory of the Erie Railway Company, on allegation that he was acting in the Board against the interests of the Company, and in the interest of the New York Central Railroad Company, to the great injury of the former. Judge Balcom also issued a writ ordering all the parties in the proceedings already begun to appear before him at Cortlandville, N. Y., on March 7th, and staying all further proceedings meantime. March 7th there appeared in the public prints a report by the Executive Committee of the Board of Directors of the Erie Railway Company to the stockholders, in which all the allegations made against the management of the Company in the Vanderbilt suits were denied, and which declared that the Directors had moved in entire good faith in all they had done in raising money, and for a purpose single to the interests and demands of the road. New rails were badly needed, a double track was rapidly becoming a necessity, better terminal facilities must be secured, new rolling stock must be purchased, elevators, ferry-boats, depots, etc., must be built. The Company had made a contract with the Michigan Southern and Northern Indiana Railroad Company, according to this statement, by which the latter was to put down a third rail on its road as soon as other parties had completed a third rail to Toledo, thus giving the Erie a through Chicago connection. To accomplish this the Board of Directors of the Erie Railway Company consented to deposit bonds of the Boston, Hartford and Erie Railroad Company, issued under agreement between that company and the Erie Railway Company, as collateral with the parties who were to lay that third rail. The committee did not state, though, that those Boston, Hartford and Erie bonds had no value until they were endorsed by the Erie Railway Company to the amount of $5,000,000. The contention of the Executive Committee that by these charges the Erie Railway Company was suffering deep and unjust injury was apparently strengthened by two letters of General Superintendent Hugh Riddle, which were incorporated in the report, and which made a most deplorable showing for the condition and equipment of the road. He estimated that the property could not be sufficiently repaired and renewed for a less amount than $8,787,000; but, at the same time, the fact that the property of the Company should be in such a dilapidated state, with all the money the management had raised during the past two years for the ostensible and declared purpose of improving it, was a fact to weaken and discredit the Committee's statement. There can be no doubt of their further statement, however, that if they had consented to carry out the plans Vanderbilt had made for the future of Erie, the discreditable situation would not have been taken into the courts. The proceedings before Judge Balcom brought about another complication in this rapidly entangling state of affairs. When his writ was served on the plaintiffs, they, through Richard Schell, obtained from Judge Ingraham, of the New York Supreme Court in New York City, an order enjoining the Board of Directors of the Erie Railway Company from meeting, or transacting any business whatever, without the presence of Frank Work in the Board. Then the Drew forces made a new move. Dudley Field, on the morning of March 10th, went before Judge Gilbert, in Brooklyn, N. Y., with a petition made by William Belden, of the Wall Street firm of Fisk & Belden, alleging that a combination to ruin the Erie Railway Company had been formed by Cornelius Vanderbilt, Richard Schell, Augustus Schell, William H. Vanderbilt, and others, among them the Hon. George G. Barnard, Justice of the Supreme Court of New York, and asking for a writ restraining all the parties in the previous suits from proceeding further, ordering the Erie Directors, with the exception of Frank Work, to discharge the duties of their places, and directing the further issue of convertible bonds. Judge Gilbert granted the The Vanderbilt-Drew litigation had now become so confused and entangled, with writs and motions. and counter-motions, that when, on March 10th, the parties to the litigation came before Judge Barnard, counsel for both sides were bewildered as to what move to make next, and Judge Barnard adjourned the proceedings until March 14th. A bold and entirely unexpected coup was made by the Erie party on the 12th, which changed the whole course of these litigious events, the news of which fell into the Vanderbilt camp like a bomb. Probably restful under the uncertainty of judicial procedure, and believing that the situation had assumed a degree of complication that demanded heroic treatment, Daniel Drew, accompanied by President Eldridge, Jay Gould, James Fisk, Jr., and all the other members of the Board of Directors except Alexander S. Diven, Frederick A. Lane, William B. Skidmore, and J. C. Bancroft Davis, fled from New York in the night, and took up his quarters in Jersey City, not forgetting to carry with him all the Company's books, papers, funds, etc. Directors Diven, Davis, and Skidmore were arrested and arraigned before Judge Barnard on charge of contempt of court. Drew, his fellow-Directors, and all the books and papers of the Company now being out of the jurisdiction of the New York courts and of legal reach of the Vanderbilt people, the proceedings in this remarkable litigation took a new turn. At the hearing before Judge Barnard in the matter of Directors Diven and Skidmore, Judge Barnard held the accused in nominal bail, and issued an alias for the missing Directors, announcing that he would hold them in $500,000 bail each should they be brought before him. Horace F. Clark, of counsel for the Vanderbilt interests, asked for an order of court appointing a Receiver into whose hands the "seven to ten millions of dollars which had been realized from sales of Erie stock," in violation of an injunction, should be placed, and the matter sent to a referee for a hearing. Against the protests of the Drew counsel, Judge Barnard issued the order requested, and appointed George A. Osgood Receiver. As Osgood was a son-in-law of Cornelius Vanderbilt, and a close personal friend of Judge Barnard, who stood charged in the affidavit made before Judge Gilbert with being an accomplice of his and Vanderbilt in the alleged Erie conspiracy, the appointment naturally prompted much suggestive criticism. The ink was scarcely dry on the order appointing the Receiver before counsel for the Erie Directors had obtained from Supreme Court Judge Clerke of Ulster County, on petition of George M. Diven of Elmira, an injunction staying all proceedings in the Receivership matter until the first Monday in April, 1868. The venue in this proceeding was placed in Steuben County. Proceedings in the matter of the injunction obtained from Judge Gilbert by the Drew party on the Belden affidavit came up before that judge on March 18th, as appointed, and he dismissed the writ, declaring indignantly from the bench that he had been deceived into issuing it. Thus relieved from that injunction, the Vanderbilt contingent resumed operations on the old line, and filed a motion before Judge Barnard, on March 19th, for the purpose of having the question of the Receivership settled. Judge Barnard issued an order citing the Drew party to appear before him and show cause why Judge Clerke's restraining order should not be vacated. The defendants answered this through counsel with another injunction, issued by Judge Clerke, which was so sweeping that it enjoined all further proceedings on the part of the plaintiffs in any of the actions already begun, and forbade the beginning of new ones, and restrained all actions in the appointment of a Receiver by the court, and enjoined all clerks of the Supreme Court. of New York from entering any order for such appointment. In defiance of this writ, however, Judge Barnard proceeded in the Receivership matter, and a clerk of the Supreme Court was found. possessing sufficient temerity to enter on record this order for Osgood's appointment. But even if no further move had been made to interfere with his Receivership, Osgood would have had some difficulty in performing the duties of a Receiver, for the millions he was appointed to receive and adjudicate upon were safe in the watchful custody of the Erie fugitives across the Hudson, in an alien State, and it is not likely that they would have gathered them together, hurried with them to the Receiver, and poured them into his lap. Osgood was not permitted, however, to enjoy even the empty honor of the place. An appeal from Judge Barnard's order was taken to the General Term. This was not argued until April 8th, but in the meantime, on March 27th, Judge Ingraham had granted an injunction, the tenth in this remarkable and by no means laudable litigation, by which Osgood was enjoined from acting as Receiver, pending the appeal. The decision was handed down on June 30th. Judges Barnard and Cardozo sustained the appeal (Barnard having issued the original order of Receivership), and Judge Ingraham dissented. Pending this appeal, Peter B. Sweeny, of the Tammany Ring, had been appointed by Judge Barnard Receiver of the Erie Railway Company in place of Osgood, for what reason was not plain to the common people. The popular excitement over the "Erie War," as these scandalous proceedings were called, was intense. The questionable operations of the principals in the litigation were supplemented by open insinuations that judges concerned in the matter were guilty of bribery and corruption. The subsequent fate of at least two of the judges (Barnard and Cardozo) went a great way toward substantiating these allegations, for they were removed in disgrace from their high office, on impeachment proceedings taken on charges among which these Erie scandals were much in evidence. The anti-Erie party held that their cause was the holy one, and that it was the duty of the newspapers and the public to sustain it. The Erie party declared that theirs was the righteous cause, and that they were doing battle against monopoly, and endeavoring to avert the evil consequences to the public which would result from the success of their adversaries. The Chamber of Commerce favored the Erie side, on the ground that the success of Vanderbilt would result in the consolidation of the Erie and New York Central Companies, and in the placing of New York at the mercy of a gigantic railroad monopoly. The flight of Drew and the rest did not strengthen the Erie cause in popular estimation. It was an admission that their contention was an untenable one. They had failed to justify the over-issue of stock, and to extricate themselves from the dilemma they made petition to the New York Legislature to legalize their acts, they having in the meantime obtained from the New Jersey Legislature an act legalizing domicile of the Company in that State. The Erie petition was referred to the Railroad Committee of the New York Assembly, which held it in consideration three weeks, and then reported adversely upon it, which report was concurred in, March 27th. In the meantime, the Erie muddle and its scandals having become of common notoriety, the New York Senate had taken the matter up, and a special committee, consisting of Senators Pierce, Bradley, Mattoon, Chapman, and Humphrey, was appointed to examine into the condition of the Company and the charges of corruption made against its managers. (Page 445, "Under the Legislative Probe.") A majority and a minority report were the result of this investigation, the minority report sustaining the Erie management, and recommending the passage of the legalizing bill asked for. Senator Mattoon at first agreed to sign this report, with Senators Chapman and Humphrey. The day before the committee reported, however, he called on the fugitive Erie officials at Jersey City, and submitted the report to them. This was on March 30th. According to testimony given before the Investigating Committee, he told the Erie people that "the majority of the committee had found the thing all right, and thought it was an act of justice to the committee that some representative of the road should go to Albany and explain away the prejudices against the Erie bill.”’ The Erie exiles in Jersey City had been hiding there under protection of the police, to be guarded against the possibility of being kidnapped by emissaries of their opponents, and of being carried by force back to New York State. Fear of arrest had also prevented them from being properly represented at Albany, although Charles O'Connor, of Vanderbilt's counsel, guaranteed Daniel Drew immunity from arrest and safe return to Jersey City if he would simply appear for examination before the Investigating Committee, which he did not seem inclined to do. When Senator Mattoon submitted the report to them at the Taylor House, the Erie people decided that it would be well for some one of them to go to Albany and give attention to important business there. It was accordingly resolved that an attachment which had been issued against Jay Gould by Judge Barnard on Monday, March 30th, and which was returnable on Saturday, April 4th, should be submitted to, and the Messrs. Field, it was claimed, made an agreement with Sheriff James O'Brien that Mr. Gould should be present then, and that he should not be arrested before that time. Thereupon, on March 30th, Mr. Gould left Jersey City. It was given out at the headquarters of the Erie party in that city that he was on his way West to complete the arrangement with the Michigan Southern and Northern Indiana Railroad Company for the laying of the 87 miles of broad-gauge track from Akron to Toledo. On the morning of March 31st, however, the following despatch, received by David Dudley Field, threw the Drew faction into great trepidation, and confused the public as to the westward journey of Mr. Gould: David Dudley Field, New York: ALBANY, March 31, 1868. I am just arrested by the Sheriff, returnable Saturday. This is in violation of your agreement with the Sheriff. Bail, $500,000. JAY GOULD. It seems that Mr. Gould had arrived at Albany on Monday and taken rooms at the Delavan House. This fact was telegraphed to New York by emissaries |