This was the rule of action to which the Commodore rigidly adhered in dealing with the Legislature in the Harlem “corner.”
When a compromise was mooted to him, the Commodore replied, “Put it up to a thousand. This panel game is bring tried too often.”
No doubt he would have put it up to a thousand and totally ruined the members of the Legislature, with the Governor and their friends included, only for the overpowering appeals of his two trustworthy friends, Leonard Jerome and John Tobin.
Mr. Jerome had no sympathy for the Legislature, any more than Vanderbilt had, but he had a patriotic desire to take care of the “Street,” thus showing the large and comprehensive view of which this able financier is capable where a broad speculative question and a variety of diverse interests are involved.
“If you should carry out your threat,” said Mr. Jerome to the Commodore, “it would break every house on the Street.”
The Commodore yielded to that touch of nature that makes all the world akin, and under the magnetism of Jerome’s prudent entreaty, like Pharaoh with the Israelites, agreed to let the Legislature go—at 285 for Harlem.
In one day 15,000 shares matured at this figure. Speculators who read these lines, just pause and think of it for a moment! The stock that sold at $3 when I made my debut in Wall Street in 1857, reached 285 in 1864, and could have been put to 1,000. Don’t you feel astounded at the possibilities of speculation?
Then, again, think of the one-man power that could accomplish this wonderful feat and prevail against a whole Legislature and its Governor, with the choicest assortment of “crooked” lawyers in the State, versed in all the arts of duplicity and cunning to aid and abet said Legislature and its Governor.
Think of this, and then you will have some conception of the astute mind that the Commodore possessed, without education to assist it, in the contest against this remarkable combination of well-trained mental forces. There can hardly be a doubt that the Commodore was a genius, probably without equal in the financial world. There was hardly any achievement of his life which he gloated over with such ineffable delight as the cornering of the Legislature. He would say, when referring to the matter afterwards: “We busted the whole Legislature, and scores of the honorable members had to go home without paying their board bills.” Thus ended the second “corner” in Harlem.
Many large houses were ruined by the “corner,” and a host of private speculators lost all they had. Daniel Drew came very near being swamped in it, but finally escaped with paying a million, chiefly through his influence at court.
It is unnecessary to speak of the celebrated Erie “corners” here, as I have treated them pretty fully in the life and speculations of Drew.
[Illustration:
DANIEL DREW. ]
------------------------------------------------------------------------
CHAPTER XIV.
DANIEL DREW.
DREW, LIKE VANDERBILT, AN EXAMPLE OF GREAT SUCCESS WITHOUT EDUCATION.—CONTROLLED MORE READY CASH THAN ANY MAN IN AMERICA.—DREW GOES DOWN AS GOULD RISES.-“HIS TOUCH IS DEATH.”—PREDICTION OF DREW’S FALL.—HIS THIRTEEN MILLIONS VANISH.—HOW HE CAUGHT THE OPERATORS IN “OSHKOSH” BY THE HANDKERCHIEF TRICK.—THE BEGINNING OF “UNCLE DANIEL’S” TROUBLES.—THE CONVERTIBLE BOND TRICK.—THE “CORNER” OF 1866.—MILLIONS LOST AND WON IN A DAY.—INTERESTING ANECDOTE OF THE YOUTH WHO SPECULATED OUTSIDE THE POOL, AND WAS FED BY DREW’S BROKERS.
One of the most singular and eventful careers in Wall Street was that of Daniel Drew, familiarly called “Uncle Daniel.” This man affords another remarkable instance of the possibility of attaining great success by stubbornly following up one idea, and one line of thought and purpose. His life also shows that education is not necessary to success in the acquisition of money, but, as I have attempted to show in another chapter, may be a great hindrance.
This fact is abundantly illustrated in the lives of both Drew and Vanderbilt. In fact, everybody who knew these two men were of the opinion that with a fair or liberal education they would never have cut a prominent figure as financiers. It is also questionable whether either of them, with all their ability in other respects, would have been capable, with their peculiar predilections for other pursuits, of receiving a common school or college education. They, probably, had not the capacity for that kind of acquisition. Perhaps it might have been impossible for any teacher to make Drew pronounce the word shares otherwise than “sheers,” or convince Vanderbilt that the part of a locomotive in which, the steam is generated should not be spelt phonetically, “boylar.”
It is more than probable that professors in grammar would have found it a hopeless task to convince the Commodore that there was anything wrong in the expression, “Never tell nobody what yer goin’ to do, till you do it,” or Drew that it was improper to say to his broker, “Gimme them sheers,” when he desired his stocks reduced to possession. Both men seemed to think with the character in Shakespeare, that reading and writing, like their other attributes, came by nature. They evidently thought that their abilities for financiering emanated solely from that source, and results largely bore them out in that interpretation. Both had supreme contempt for persons of less ability than themselves in the speculative arena, yet they were terribly jealous of rivals who essayed to compete with them in their own peculiar methods of making money. Cunning and shrewdness were the leading characteristics of Drew. Though illiterate himself, he, however, showed that he appreciated education in others, by erecting and endowing a seminary in his native place.
Some people who were not inclined to give Drew any credit for the finer and more generous and genial feelings of man’s nature, said that his motive for this endowment was merely popularity, and a morbid desire, like that of Vanderbilt, to perpetuate his name.
Another motive, however, less ennobling to man’s nature, seemed to be the true one. He saw that the religious element in society was then influential, and that many religious people of his acquaintance were in good circumstances, and he sought to ingratiate himself with them in order to make use of them in his speculations.
This appears clearly to have been at the bottom of his precious gift of a seminary to his native county. It was a curious illustration of retributive justice, if I am right about his motive, that he was obliged to default in the payment of that gift, with the exception of the interest.
Daniel Drew, at one time, could command more ready cash at short notice than any man in Wall Street, or probably than any man in America. His wealth was estimated at thirteen million dollars. He made a very large part of this out of his speculations in Erie stock, of which corporation he was then managing director and treasurer. Being thus on the inside, he was enabled to leave everybody else on the outside in the ups and downs of the market, which he himself generally engineered.
The Street was frequently amazed by fluctuations of 20 or 30 per cent. in Erie stock, sometimes in the course of a day or two, through the able manipulation of Mr. Drew.
It was a sorry day for Drew when Jay Gould took his place in the control of Erie, and it was equally disastrous for the Erie property.
From this period Gould began to grow rapidly to the full stature of speculative manhood, while Drew moved as quickly in a downward direction, until he found himself again at the lowest rung of the financial ladder. It was no wonder that he said of Gould, “his touch is death.”
Drew’s losses followed one another in quick succession, until his thirteen millions had melted away like snow off a ditch, and eventually he died in debt and broken hearted. His last days stand out as a sad, but eloquent warning to the avaricious. And this reminds me of a festive event, the chief incidents of which, I think, are worthy of reproduction.
I remember being at a dinner party ostensibly given to the old gentleman when in the very zenith of his financial fame and prosperity. It was a kind of mutual admiration society, Drew being the king-pin of the social coterie. On account of his thirteen millions he was the centre of cringing admiration, and was by a number of the assemblage almost deified.
As is usual on such occasions, speechmaking was in order, the oratorical talent being called out by the toasts as they went the round of the board.
When it came my turn to speak, I followed suit, to some extent, in picking up the thread of the general glorification extended to the honored guest, to whom I paid marked deference.
“We are honored,” I said, “on this festive occasion, by a gentleman of vast wealth, one who can control more ready money than any man in America, and be it said to his honor, it has all been of his own creation. He is a true representative of American thrift and enterprise. His money and his genial disposition together combined make all men his friends, and I know of only one antagonistic spirit to the continued growth of this already marvellous fortune; but that one, in all probability, may yet work his ruin. I refer to our honored guest, Mr. Drew, and his one enemy which I have in mind is ‘Avarice.’”
In five years from that memorable dinner Daniel Drew was a ruined man, and his thirteen millions had vanished like the baseless fabric of a vision, leaving nothing but the miserable wreck of an avaricious spirit behind.
The manner in which Drew was supposed to make religion the handmaid to speculation was satirically touched in the following verses published in the New York _Tribune_ about fifteen years ago:
He was a long, lank countryman, And he stoppeth one of two. “I’m not acquaint in these yeere parts, An’ I’m a lookin’ fur Dan’l Drew.”
“I’m a stranger in the vineyard, An’ my callin’ I pursoo At the institoot at Madison, That was built by Dan’l Drew.”
“I’m a stranger in the vineyard, An’ my ’arthly wants are few; But I want sum p’ints on them yer sheares, An’ I’m a lookin’ fur Dan’l Drew.”
Again I saw that laborer, Corner of Wall and New; He was looking for a ferry boat, And not for Daniel Drew.
Upon his back he bore a sack, Inscribed “Preferred Q. U.” Some Canton scrip was in his grip, A little Wabash, too.
At the ferry gate I saw him late, With his white hat askew, Paying his fare with a registered share Of that “Preferred Q. U.”
And these words came back from the “Hackensack:” “Ef yew want ter gamble a few, Jest git in yer paw at a game o’ draw, But don’t take a ’and with Drew.”
Mr. Drew was negligent in his attire, even to the verge of slovenliness. He dressed like a drover, having originally been employed in that capacity. By the way, the significant term of “watering stock” originated in the practice of Uncle Daniel giving his cattle salt in order to create a thirst in them that would cause them to imbibe large quantities of water, and thus appear bigger and fatter when brought to market. Until he met with Gould and Fisk, it was difficult for anybody to get the best of him in a deal.
He was wonderfully prolific in resources for the purpose of getting advantage of those who attempted to overreach him.
A good story, illustrative of this trait in his speculative character, is told of the time that he was so severely squeezed in Northwestern stock. He was greatly grieved at his ill luck, while the brokers and operators who had been prosperous at his expense were highly elated. They considered it a great thing to have caught the wily old Daniel napping. He was accordingly made the victim of much ribaldry and jesting for several days in Wall Street. Some of the young men carried the joke so far as to meet him and laugh significantly and irritatingly in his face. He seemed to take it all in good part, for he had a happy flow of animal spirits, but he had a terrible rod in pickle for these young men who were making him an object of ridicule. He watched for his opportunity, and one evening as several of them were enjoying themselves in an uptown club, Uncle Daniel walked in, _sans ceremonie_. He appeared to be looking after some man, and though invited to remain, seemed to be in a great hurry to get away, and was apparently excited and warm. He seemed to have something important on hand. He drew a big white handkerchief out of his pocket a few times and wiped the perspiration from his heated brow. When he was about to depart there came out of his pocket with the handkerchief a small slip of white paper which floated around apparently unseen by him, and alighted at the feet of one of the bystanders, who quickly set his foot upon it. When Mr. Drew made his exit the white scrap of paper was instantly scanned. It contained these ominous words in his own handwriting: “Buy me all the Oshkosh stock you can at any price you can get it below par.”
Here was a speculative revelation for the boys, for everybody believed at the time that Oshkosh had already gone too high, and the point had been circulated to sell it “short.” The mysterious words written on this erratic slip of paper, however, convinced these operators that there must be a new deal to give Oshkosh another “kiting.” There was no time to be lost in taking advantage of the unexpected and highly valuable information. They formed a pool to purchase 30,000 shares the next day. They bought the stock according to pre-arrangement, and a new broker of Daniel Drew’s was the man who sold it to them. They only discovered how badly they themselves had been sold by Mr. Drew’s handkerchief trick when Oshkosh began to decline at the rate of a dozen points a day, and Uncle Daniel soon raked in from the jokers and their friends more than he had lost in Northwest.
Mr. Drew first entered the Board of Directors in Erie about the year 1852, and remained there until he was squeezed out, and almost ruined, in 1868. He held the office of treasurer to the corporation.
Drew was born in the town of Carmel, Putnam county, in the year 1797, and was three years younger than Vanderbilt. As I have intimated above, in early life he drove cattle from his native town to New York. He afterward became proprietor of the Bull’s Head tavern in this city.
He never changed his style of dress from that to which he was accustomed to wear when he was a drover, and when he was worth thirteen millions, instead of sporting a gold headed cane, he went around Wall Street with the handle of an old broken umbrella in his hand. While treasurer of Erie he used every opportunity to manipulate the stock to his own advantage, irrespective of the rights or interests of any other person. He was the leading bear of the market for many years. Like Vanderbilt, he was interested to some extent in steamboats, but he made Erie stock the great medium of acquiring his vast wealth. He got the name of the speculative director, and at the outbreak of what was known as the Erie war he was supposed to be almost financially impregnable.
The “corner” of 1866 was the beginning of Uncle Daniel’s troubles. Up to that period all had gone merry as a marriage bell with him, and he was piling up the millions at a rate which no other financier or speculator had ever dared to imitate. Erie stock was selling at 95 in the spring of that year. The company was badly off for money. It made application to its treasurer for the needed relief. He was ready to serve it in that way at all times, but he wanted security for the loan. There were then 28,000 shares of unissued Erie stock. The company also claimed the right to raise money by the issue of bonds convertible into stock at the option of the holder.
This was an old trick in the management of Erie matters. It had saved Jacob Little on one occasion, as I have mentioned in a former chapter, during the earlier history of speculation in Wall Street. It was, therefore, not original with the Drew management of Erie, as some people have supposed.
The 28,000 shares of unissued stock then, and three millions of dollars of convertible bonds, were placed in the hands of Mr. Drew as security, and he advanced the loan of 3½ million dollars to relieve the pressing necessities of the corporation.
When Drew found himself thus fortified with the convertible bonds, he laid another trap for the boys in the Street. Erie had been rapidly absorbed for some time, and was very strong at 95 with anxious purchasers. The stock was, therefore, becoming very scarce. Mr. Drew had a large number of contracts to fill, and operators were wondering where he would get the stock to settle. Many of them were laughing in their sleeves at his impending embarrassment, as they had done on a former occasion, and were in ecstasies of delight at the idea of the terrific “squeeze” which the old man was about to experience. When he seemed on the very horns of this dilemma, upon which the rampant bulls thought they would successfully impale him, he converted his three million bonds into an equivalent amount of stock, threw 58,000 shares on the market, met all his contracts, and fed the voracious bulls with all they wanted.
Hungry as the Street had been for Erie, this was an overdose that it was utterly incapable of digesting. The bulls were paralyzed, and before they could rally their broken ranks from the demoralizing effects of this unexpected sortie from the stronghold of Erie, the stock had declined from 95 to 50, wiping out the broadest margins and putting the whole army of bulls, reserve forces and all, to utter rout.
Millions were lost and won in a day in this deal.
This was regarded as a grand _coup d’etat_, and one of Drew’s most brilliant exploits in operating. In fact, at the time, it seemed to throw every prior operation of this nature totally in the shade, and the other leading operators of the street were blue with envy, green with jealousy, and raging mad over their losses and the way they had been entrapped and almost ruined by the deeply-laid scheme of the Erie treasurer. Drew was despised, feared and revered on account of this unparalleled achievement. He then essayed to rest on his oars for a short time, but his period of repose was but short-lived.
There was a little side-show in connection with the maturing of the operations in the pool just referred to, which is so characteristic of Daniel’s methods that it is worth relating. There was a young man in the Erie pool, but not in the wheel-within-the-wheel in that sacred circle, who imagined that the purpose of the pool was to put Erie stock up, and accordingly he borrowed money from Uncle Daniel, his credit being good and having money in the pool funds, to purchase Erie. The accommodating treasurer not only lent him the money, but his private brokers sold the young man the Erie stock desired. He was duly fed from day to day with the quantity which his speculative appetite craved. After the dump just referred to, this unsophisticated youth and some other members of the pool among his friends, went to Uncle Daniel and requested him, as manager of the pool, according to the programme supposed to have been agreed upon, to put Erie again on the line of advance, in order that the young man and his friends might get in and out again, so as to cover their recent losses.
Mr. Drew, however, coolly informed them that the pool had no Erie stock and did not want any, and was not prepared to trade in that security any more at that time.
“I sold all our Arie at a profit,” said Uncle Daniel, “and am now ready to divide the money.”
So this youthful member had the felicity of discovering that while he was speculating on his own account for a rise, Uncle Daniel was looking after his interests in another direction, and had realized at the most opportune moment.
Thus this amateur operator, whom Uncle Daniel had amused, without letting him into the secret, in the way described, got nearly enough of money back to pay the loss he had sustained experimenting outside the pool on his own account, and upon his own independent but fallacious judgment.
If he had not speculated outside, he would have had very handsome profits from the pool, but he would not have obtained the useful experience which was connected with his losses, and the independent attitude he was ambitious to assume in speculations.
------------------------------------------------------------------------
CHAPTER XV.
DREW AND VANDERBILT.
VANDERBILT ESSAYS TO SWALLOW ERIE, AND HAS A NARROW ESCAPE FROM CHOKING.—HE TRIES TO MAKE DREW COMMIT FINANCIAL SUICIDE.—MANIPULATING THE STOCK MARKET AND THE LAW COURTS AT THE SAME TIME.—ATTEMPTS TO “TIE UP” THE HANDS OF DREW.—MANUFACTURING BONDS WITH THE ERIE PAPER MILL AND PRINTING PRESS.—FISK STEALS THE BOOKS AND EVADES THE INJUNCTION.—DREW THROWS FIFTY THOUSAND SHARES ON THE MARKET AND DEFEATS THE COMMODORE.—THE “CORNER” IS BROKEN AND BECOMES A BOOMERANG.—VANDERBILT’S FURY KNOWS NO BOUNDS.—IN HIS RAGE HE APPLIES TO THE COURTS.—THE CLIQUE’S INGLORIOUS FLIGHT TO JERSEY CITY.—DREW CROSSES THE FERRY WITH SEVEN MILLIONS OF VANDERBILT’S MONEY.—THE COMMODORE’S ATTEMPT TO REACH THE REFUGEES.—A DETECTIVE BRIBES A WAITER AT TAYLOR’S HOTEL, WHO DELIVERS THE COMMODORE’S LETTER, WHICH BRINGS DREW TO TERMS.—SENATOR MATTOON GETS “BOODLE” FROM BOTH PARTIES.
One of the most interesting episodes connected with the speculative life of Drew, in the somewhat sensational history of Erie affairs, was the interposition of Commodore Vanderbilt in one of the famous deals of the Erie clique. His object was to swallow up the corporation, and it came pretty near swallowing him. He was only saved by the skin of the teeth, after one of the most prolonged and desperate financial struggles of his life.
In order to explain clearly the manner in which the Commodore became involved in the Erie matter with Drew and his partners, it will be necessary to take a brief resume of the history of a few of his other prominent deals, more fully dwelt upon elsewhere.
In 1860 Harlem stock had sold as low as eight or nine dollars a share. In January, 1863, when Vanderbilt got full control of the property, the stock had advanced to 30, and in July of the same year it had bounded to 92. In August, when the “corner” was effected, it went to the remarkable figure of 179.
It was put through a similar operation the succeeding year, and the stock, which sold in January below 90, was settled for in the following June at 285. Drew had been drawn into one of these transactions, and his losses reached nearly a million.
Vanderbilt’s prospects with the Harlem property were seriously menaced by the competition of the Hudson River railroad. He bought up the competing line, and thus destroyed the competition. He made this purchase when the stock was at par. He soon manifested his superior power in management, and displayed his skill in the art of “watering,” which he had invented. He had the stock advanced to 180 in a very short time.
Seeing his great success with these two properties, through his novel and unique methods of financiering, the managers of the New York Central, thinking that discretion was the better part of valor, and perceiving that they could not hold out against the edicts of manifest destiny very long, offered their property to him almost at his own price, which he very cordially accepted, approving their good judgment and keen perception.
He obtained full control of New York Central early in 1867. As soon as this triple amalgamation was complete he set his insatiable and avaricious heart upon Erie, and essayed to compass his designs and effect his purpose of reducing it to possession through the speculative machinery of Wall Street.
It was through this channel that he had obtained Hudson, and in defiance of the scientific maxim that lightning never strikes twice in the same place, he was inspired with full confidence in his ability to “scoop” Erie in the same manner. He tried first to arbitrate and consolidate, but his efforts in that direction failed.
With all his marvellous foresight and almost unerring judgment in speculative affairs, the Commodore was greatly at fault in his calculation regarding the magnitude of the task he had now undertaken in Erie. He had no idea of the immense volume of the stock which, after the speculative battle began to rage, seemed to spring out of the ground, spontaneously, as the reserve troops of Wellington were said to appear to do in the eyes of Napoleon when the struggle waxed warm at Waterloo. He had to contend with the ablest generals in speculation and finance that ever Wall Street had produced. His first bold, flank movement was an attempt to “corner” Drew. He knew how to manipulate the courts almost as well as the Erie Ring did. Accordingly, he made use of the services of Frank Work to obtain an injunction from Judge Barnard, of Tweed Ring notoriety, restraining Drew from the payment of interest on 3½ million bonds, pending an investigation of his accounts as treasurer of Erie. This was followed up in a few days by another application to the court for the treasurer’s removal from office.
These measures were resorted to by Vanderbilt to prevent the issue of this stock, into which these 3½ million bonds were convertible, and thus enable him to get a “corner” in the stock with greater facility. He thus attempted to make the court instrumental in forcing Drew into a position where he would be obliged to commit financial suicide.
The Erie Ring had managed to get legally around what in reality was an over-issue of Erie stock and bonds in the following subtle manner:
There was a statute of New York which authorized any railroad to create and issue its own stock in exchange for the stock of any other road under lease to it. The Ring had obtained the Buffalo, Bradford & Pittsburg road, which was comparatively worthless, for carrying out this scheme. The Erie management then set about supplying themselves with the amount of Erie stock required, by leasing their own road to the road of which they were directors. They then created stock and issued it to themselves in exchange under the authority vested in them by law.
The nominal price of the road with which they worked this game of legerdemain was $250,000. They issued bonds in its name for two millions of dollars, payable to one of themselves as trustee.
Vanderbilt, before he could get a “corner” in Erie, had to place a limit to the issue of the stock. Otherwise he would have been throwing away millions, like pouring water into a sieve, in his attempt to make a “corner.”
Drew was enjoined by the Commodore to return to the Treasury 68,000 shares of the capital stock of Erie. This was the amount that was said to remain in the unsettled transactions of the Erie corner of 1866. This was the sword of Damocles which Vanderbilt had suspended over Drew’s devoted head.
Vanderbilt thus undertook to play the double game of manipulating the courts and the stock market at the same time, and against wily opponents, who were experts in both operations.
There were at this time three competitors for the possession of Erie in the field. The Drew party, the Vanderbilt party, and the Boston, Hartford and Erie party. Drew had tried to appease Vanderbilt to some extent, and had an interview with him at Vanderbilt’s own house prior to the election of the Erie directors. He agreed to “let up” on Vanderbilt, and offered him greater swing in purchasing Erie, while, on the other hand, Vanderbilt consented not to press the proceedings in court against Drew.
Before this, the Boston party and Vanderbilt had been fixing matters to oust Drew from the Erie directory. Now, Vanderbilt changed his tactics, and resolved to let Drew remain. The Boston party was with him, but to keep up the appearance of what had been formerly determined, the new board was to be elected ostensibly without Drew, and a vacancy created afterwards by which he could be chosen in the board. This method of whipping the Devil around the stump was adopted to put public opinion off its guard, and help to forward Vanderbilt’s purposes of consolidation. The election scheme was successfully effected, but the ruse, though well conceived, fell far short of accomplishing its designs.
There were wheels within wheels during this speculative deal. Drew and Vanderbilt entered into a secret alliance to exclude the Boston party, who was Vanderbilt’s ally. The new board was elected, leaving Drew out. This was a surprise to Wall Street, but a greater surprise was in store for it when a vacancy was created the next day, and Drew was re-elected to the Erie Board of Directors. The Street was confused and confounded, and at a loss to know how to act, and the Boston party was groping around to find out where it stood. Frank Work was elected to the Erie Board in the Vanderbilt interest. A pool was then formed to put up Erie, as it was in a very depressed condition. Drew was to manage the pool and manipulate the market.