The Erie War: When Bankers Were Brawlers

Trains, police disguises, and a three-day battle. No, it’s not the latest Western: it’s the true story of how J.P. Morgan set a standard for corporate America.

The Erie War: When Bankers Were Brawlers

Today, we think nothing of investment bankers sitting on company boards, but this wasn’t always the norm. In fact, until J.P. Morgan stepped in to help put an end to literal corporate bloodshed over a railroad dispute in the 19th century, it was virtually unheard of.

The way it all went down is a fascinating story involving stock manipulation, hostile takeovers of rail stations, a train collision, and an actual hand-to-hand, three-day battle between two companies. Grab your monocle; we're about to take a deeper look at the craziest game of Monopoly you've never heard of.

The Albany and Susquehanna: A Small Rail Line

Joseph Ramsey was a New York lawyer with a knack for financing and an eye on the post-Civil War railroad boom. With the help of local investments, he headed up the construction of the Albany and Susquehanna (A&S) railroad line in the early 1850s. The goal: to connect relatively isolated farms to the market in Albany and eventually to coal fields in Pennsylvania.

After weathering labor shortages and financial hurdles, the short line finally reached its strategic destination of Binghamton, NY in 1869. Here, the A&S could connect to four larger railroads, dramatically increasing its reach and value. But Ramsey’s arrival didn’t go unnoticed.

Playing Games with Railroad Stocks

One of Binghamton's existing lines, the Erie Railroad, had its own share of financial troubles. Its director lost control of the company to an enterprising banker who silently bought a majority of Erie’s stocks. So the director enlisted the help of a couple of known robber-barons to help wrest control back: James Fisk and Jay Gould.

(Illustration by Jorge Godoy)
Illustration by Jorge Godoy

Their idea of help entailed issuing spurious shares to water down Erie stock value, eventually gaining back control of the company. The plan worked, and Fisk and Gould earned positions of power with the Erie—just as the A&S line reached Binghamton. Their way of welcoming Ramsey to town? Buying up all the A&S stock they could.

A Rapid Escalation to Hostile Takeover

Ramsey was no fool. In response to Fisk’s and Gould’s tactics, he quickly issued thousands of shares from the A&S company books to himself and his supporters to restore control. Then, he literally buried the books in a cemetery. Maneuvering to get their hands on A&S, Gould and Fisk leaned on a friendly judge to suspend Ramsey from his position as president. But with a judge in his own corner, Ramsey managed to get control of A&S awarded to a partisan recipient. Ramsey’s order passed minutes ahead of a conflicting order from Gould and Fisk, setting off widespread confusion about who was in charge of the A&S line.

At this point, Gould and Fisk were done playing nice. With a band of hired thugs, Fisk stormed the A&S office in Albany in an attempt to falsely arrest Ramsey and other board members. Instead, Fisk was falsely arrested himself—by an A&S worker disguised as a police officer.

When he was finally released from jail, Fisk was incensed. He and some 800 men stole a train in Binghamton and made their way east on the A&S line towards Albany. With a restraining order in his pocket from another friendly judge, Fisk set out to take the railroad over station by station.

The Battle of Susquehanna

As the message about the hostile takeover spread down the line, about 450 A&S men in Albany took off in their own locomotive to stop the oncoming train.

The two trains barreled toward one another on the same tracks like an opening sequence of the Dukes of Hazzard. With both sides fully committed to this game of chicken, they crashed near the Belden Hill tunnel, smashing their headlights and derailing one train. A battle ensued with “fists, tools, axehandles, and revolvers,” historian Lance Geiger explains. The A&S men were outnumbered but managed to push the fight mostly into the tunnel where the battle raged—for three days.

With neither side letting up, New York Governor John “Toots” Hoffman (seriously, you can’t make this stuff up) finally sent a state militia to end the chaos. In the end, eight to ten men were shot. Miraculously, none died. To curb the dispute, Toots temporarily placed the railroad under the control of the state.

Who Won the Spoils of the Erie War?

In need of guidance, Ramsey sought the help of A&S trustee J.P. Morgan. Morgan had dealt with men like Gould and Fisk before. Before the annual company meeting, Morgan had the company books exhumed and delivered through a back window to keep them out of Fisk and Gould’s hands. He rallied Ramsey’s stockholders, bought 600 shares of A&S, and was elected Vice President of the line. (It was rumored that he also threw Fisk down a flight of stairs, but I’m not sure if I believe that—Fisk was a pretty big dude.)

Morgan and Ramsey promptly signed A&S over to the Delaware & Hudson Railroad on a 90-year lease, putting an end to the war for the line. For his clever moves, Morgan was made director of the newly merged railroad, launching a trend in banking that continues today.

“This wedding of certain companies to certain banks—‘relationship banking’—would be a cardinal feature of private banking for the next century. It came about not because bankers were strong but because companies were still weak.” Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
(Illustration by Jorge Godoy)

If it weren’t for J.P. Morgan, the A&S line may have been lost. Instead, Ramsey kept his railroad, and Morgan ushered in an era where bankers no longer simply bankroll companies—they get down in the trenches to protect their investments.



Sandeep: Tell me a bit about the early part of your career.

Tom: I spent a decade helping to build start-ups focused on application and database software. This was where I learned how to sell and do business development. I was fortunate to be part of one company going public and another being sold to IBM.

Sandeep: What is something you learned during this time that helped you with consulting?

Tom: I began to appreciate how different customers achieved varying levels of success with the same foundational technology. This made me understand just how critical getting your team and process right can be.

Sandeep: This is something I only came to appreciate years into consulting, especially after the sale of my first consultancy to Capital One.I saw teams in different parts of the company trying to solve challenges like real-time messaging. Same corporate culture, same technology, same internal support mechanisms. Night and day outcomes.

Tom: We saw a lot of the same thing after selling our practice to EMC (sold to Dell in 2015). This is probably the thing I'm most proud of when it comes to the teams I've helped to build: the ability to perform well in a variety of contexts, sometimes in ways that inspires the client team to up their game as well.

Sandeep: Yes. It's particularly cool to see your team succeed in individual ways after an skills definitely translate into the corporate environment.

Tom: Totally. We have people who've stayed on at Dell and risen up the ranks, while others took the opportunity to become successful executives at other Fortune 100 companies....or to start their own agencies and startups.

Sandeep: We've both been around a while. My first consulting project was a Y2K thing for Cisco back in 1998. You've been around a little longer than that :). How do you think consulting has changed most during the past five years?

Tom: I think because there is so much infrastructure available now, consulting has become more delivery and outcome-oriented. A better blend of strategic and tactical. Public Cloud has also enabled velocity to increase at a pace unfathomable 5 years ago.

Sandeep: What has stayed the same?

Tom: It's still mostly about people. People who thrive on change and are focused on their personal and professional development. I love that this has not and will not's what I love about consulting.

Sandeep: I know you're adjusting your work style to COVID. You're still a dude who clearly prefers to drive an hour for a socially-distanced hike or outdoor meeting over Zoom any day of the week :) But personal styles aside, what is specifically compelling about a remote agency during the era of COVID?

Tom: Kunai has been remote for years, which gives them an inherent advantage. There is something about the communication and management styles that just works in a way that other organizations are still figuring out.

Sandeep: Yeah, I think what a lot of people fail to realize is that remote work isn't just office work over Zoom. it's an entirely new paradigm. There needs to be an understanding for asynchronous efficiency...and this just takes time and effort to develop. How do you approach remote work and family? What are you learning about separating work and personal time?

Tom: No matter what the form of interaction, Focus. Be present. Quality over quantity. The best weeks are the weeks where I proactively schedule work and personal time. Neil (Kunai's Head of Delivery) shared a great quote with me "With discipline comes freedom." When I am proactively addressing the majority of my professional and personal commitments, I find I earn a little flexibility. A little freedom.

Sandeep: Tell us about a business hero of yours that I may not have heard of before.

Tom: Paul O'Neill is someone you may not know. His work in both the public and the private sector created a profound impact

Sandeep: We are both over forty years old :). How have you learned how to work smarter during the past decade or so? What do you wish you knew about consulting when you were 25 that you know now?

Tom: Consultants want to make lasting change. Lasting change is often not the act of a single person. Today I work much harder bringing others along on the journey.

Sandeep: Last question. What are you doing here? :) Why join a small consulting company this late in your career when you could have a cushy job somewhere else?

Tom: I love a good challenge personally and professionally. When I turned 40, I decided I would run a 10K every Thanksgiving weekend and try to have my finishing time be less than my age. With the exception of one year where I did not run due to a health issue, I have met the goal. I also recently completed the Leadville 100 Mountain Bike race. So, I guess I'm here because I'm a glutton for punishment :) Jokes aside, our customers have a job to do and I intend to put Kunai in a position to execute flawlessly on their behalf. I love committing jointly to audacious goals for our customers and our business.

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