W

XXIII

HEN you set out to ride a colt, see that your saddle is girt good and tight. That's what I did now. I didn't want

to tackle the Commodore before I had first made good and ready. This is the way I set about it:

At one of the meetings of the Erie Board of Directors I got the matter of steel rails to take the place of the old and unsafe iron rails acted upon by the Board. Our road, further, was being hurt because it had a six-foot track, whilst the other railroads were being built with only a narrow, that is, the present standard-gauge, track. Their cars couldn't go on our road, nor ours on their road. It had been proposed that the Erie lay a third rail inside the other two rails, in order that narrow-gauge rolling stock could run on the track in the same train, if need be, with our own broad-gauge cars. This, and the steel rails to replace the iron ones, were two such needed improvements that I now made them an excuse for getting the road to issue some new shares of stock. By means of my control of the Executive Committee, I got them to vote to issue ten million dollars of convertible bonds, the proceeds of which

so they supposed were

improvements.

to go into these

The advantage of convertible bonds was this: There was a provision in the charter forbidding the Erie Road to issue new stock except at par — which wouldn't have suited my purpose. Bonds would have been equally useless, seeing they are of no value in stock-exchange dickers. Bonds convertible into stock, however, were just the thing. Because it was only another name for an issue of stock at the market rate...

The

So now I had one hundred thousand shares of stock at my disposal, whenever I should care to turn the trick. Of course, legally speaking, these shares were not just at my disposal, either; because they were meant as a means of raising money to be put into the improvements and repairs that the road then needed. But all's fair in love and war. And in this particular case I felt that I was more in need of this nine or ten million than the Erie Road was. road was under my management, because I controlled the Executive Committee, and, therefore, the finances. I felt that I was entitled to a few pickings, as it were. It's an ill cook that can't lick his own fingers. So, instead of using the money to buy steel rails, I had the old iron rails turned, in order to bring the unworn outside edge onto the inside now. Of course, this wasn't altogether as safe as new steel rails would have been. But I

1

needed in my stock-market operations the money which this new bond issue was raising. And inasmuch as I had put in a good deal of valuable time as treasurer of the Erie Railroad, I felt I had a right now to sluice off some of her revenues into my own. pocket. When you own a cow, you own her milk also. As to legal objections, by getting one of the as will be seen later judges on my side got the law courts so jummixed up that they didn't know where they stood; and so the law couldn't touch me.

we

Whilst in the midst of these busy preparations, I had to cease operations for a couple of days and go out to the formal opening of my theological seminary at Madison, N. J. It was an occasion of great spiritual refreshment, and I'll write about it later. Just now I must finish telling about this Erie Railroad affair.

Supplied with ammunition in the shape of this fine, big issue of stock, I was now prepared for war. And I wasn't a moment too soon, either. Vanderbilt was already at work. He was out in the open market buying Erie with the boldness of a lion. I guess he was figuring that I was on his side, or he might never have been so bold and confident. Anyhow, he was going ahead as though there was nothing now that could stop him. I didn't say anything. I thought I'd let him go ahead, and sort of take him by surprise when the time came.

Vanderbilt wanted to buy Erie shares. All right. I was willing he should buy all he wanted. In fact, I thought I would help him in the matter. So I went onto the market, and sold Erie short in enormous quantities.

My friends thought I was going it wild. "What in the world, Uncle, are you up to?" they said to me. "Don't you remember those luckless Bears that went short of Harlem and got their feet caught in the trap? That's just what you're doing now. The Commodore is going to corner you tight as a fly in a tar-barrel." But I only smiled.

The Commodore now learned that I was against him, and got very much het up. His crowd taunted me.

beginning to count your pro"Don't boil the pap till the

"You're already fits?" said I to them. child is born, that's all." stock short.

And I went on selling the

Vanderbilt now made a move which he hadn't tried before. He went to the law courts and got out an injunction forbidding me and my crowd to issue any more shares of Erie stock. This last was a proceeding I was not willing to stand for. As chief director of Erie, I had a right to operate her as I saw fit. But here was Vanderbilt going to the law courts and putting a higher power over Erie's affairs than I was. He was tying my hands. So I went into the law-court business, too. I called a council

of Gould and Fisk. We decided, since Vanderbilt had got a judge of the Supreme Court on his side to issue injunctions for him, that we'd get a judge too. So we went out to Binghamton, and got a judge there. Vanderbilt's judge had enjoined us from issuing any more Erie stock. This new judge of ours now got out an injunction commanding us to issue more stock. He wasn't a New York City judge. But he had as much power, so far as his legal standing was concerned. Because these Circuit Court judges work side by side. Any one judge has power extending over the entire state. Ordinarily they are supposed to stand by each other; but this was just after the Civil War, when things were topsy-turvy. Johnson was being impeached. The legal machinery of the country was that unsettled, we could do with it 'most anything we wanted.

When Vanderbilt had got out his injunction, restraining us from manufacturing any new certificates of Erie stock, he thought that he had all the leaks corked up at last good and tight. He supposed, therefore, that in issuing orders to his brokers to take all the Erie that was offered, he wasn't in any possible danger. I went onto the Exchange as though nothing had happened, and proceeded to sell more Erie. I sold all that I could didn't set any limits agreed to deliver all the stock I could find buyers for. Of course, in the Commodore I found a ready buyer.