Erie Railroad Company

Erie Railroad Company, U.S. railroad running between New York City, Buffalo, and Chicago, through the southern counties of New York state and skirting Lake Erie. It was incorporated in 1832 as the New York and Erie Railroad Company, to build from Piermont, N.Y., on the west bank of the Hudson River, to Dunkirk on Lake Erie. The track was completed in 1851.

The Erie became known as “the scarlet woman of Wall Street” in the mid-19th century when it was the object of financial struggles between Daniel Drew, Jay Gould, James Fisk, and Cornelius Vanderbilt. Drew became a director of the Erie in 1857 and used his position to manipulate the value of Erie stock to his own advantage. In 1868 Vanderbilt tried to gain control of the line by cornering its stock. Drew, in an alliance with Gould and Fisk, manufactured 50,000 shares of Erie stock and dumped them on the market. When a court ordered their arrest, they fled to a hotel in Jersey City. Gould was able to bribe legislators in Albany to secure passage of a bill legalizing what they had done. After making peace with Vanderbilt, Gould and Fisk were left in control of the Erie. They used it as a base for new exploits in stock watering and financial chicanery that led to the panic of 1869.

The Erie went bankrupt four times in its history. It had the disadvantage of competing with other railroads between the Midwest and the east coast. In the 1870s a fierce rate war took place between the Erie, the Baltimore and Ohio, the Grand Trunk, the New York Central, and the Pennsylvania railroads, ending in bankruptcy for the Erie.

The line passed through a number of reorganizations until it merged with the Delaware, Lackawanna and Western Railroad Company in 1960 to become the Erie Lackawanna Railway Company. Before merger, the Erie had operated 2,300 miles (3,700 km) of track. The merger eliminated duplicating track, resulting in a 2,900-mile road. Despite this, the Erie Lackawanna became bankrupt in 1972 and was taken over by Consolidated Rail Corporation (q.v.; Conrail) in 1976.