Daniel Drew

Daniel Drew (1797-1879) was one of America's sensational stock manipulators, speculating particularly in Erie Railroad securities.

Born July 29, 1797, at Carmel, N.Y., Daniel Drew Grew up on the family farm. His career began as a cattle drover and horse trader: he drove cattle from the countryside into New York City. Successful, he extended activity into Ohio and Illinois, bringing livestock back to his own New York stockyard.

Drew was said to have watered his beeves heavily before bringing them to market, thus increasing their weight (hence the origin of the term "stock-watering" in connection with the issuance of fraudulent corporate securities). By 1834 he was a New York City resident, operating steamboats on the Hudson River, Lake Champlain, and long Island Sound. A bold competitor, he made money and in 1844 set up the Wall street brokerage firm of Drew, Robinson and Company.

In 1853 Drew entered the life of the Erie Railroad and in 1857 became a director. He was soon notorious as a bold manipulator of Erie securities. He sold its stock short in 1866 and made a killing.

During 1866-1868, along with Jay Gould and James Fisk (Drew was really their "front"), Drew entered into a war with Cornelius Vanderbilt for control of the Erie. Vanderbilt had put together three railroads that gave him a direct line from Buffalo to New York City; he wanted the Erie in order to monopolize entry into New York and to prevent it from becoming a serious competitor on the Lake Shore route to Chicago he was contemplating.

Meanwhile the Erie management, with Drew as treasurer, has authorized issuance of convertible bonds for improvements. In order to check Vanderbilt, Drew (with Gould and Fisk on the sidelines) sold bonds in 1868 in defiance of a court order and issued 100,000 new shares of Erie, thus creating a wild market, with Vanderbilt buying and the manipulators selling short. Drew, Gould, and Fisk fled to Jersey City to avoid court action; then Gould bribed state legislators to get conversion of the bonds into stock legalized. Vanderbilt was frustrated, but Gould settled with him and compensated him for his losses. In the end Gould owned the Erie, and Drew was forced off the board of directors.

Drew's star sank in 1870, when Gould and Fisk sold Erie stock in England to force up its price: Drew, selling short, lost $1,500,000. During the depression of 1873-1879 Drew was finished; his banking firm failed, and in 1876 he filed for bankruptcy. He died on Sept. 18, 1879, in New York, wholly dependent upon his son. In his heyday Drew played the philanthropist, building Methodist churches at Carmel and Brewster, N.Y., and spending $250,000 to set up the Drew Theological Seminary at Madison, N.J.

Further Reading

• Bouck White, The Book of Daniel Drew (1910), is a semifictional biography. The early story of the "Erie War" is in Charles F. Adams, Jr., and Henry Adams, Chapters of Erie and Other Essays (1871). A more sophisticated account is in Julius Grodinsky, Jay Gould: His Business Career, 1867-1892 (1957).
• Browder, Clifford, The money game in old New York: Daniel Drew and his times, Lexington, K.Y.: University of Kentucky, 1986.