Daniel Drew
| Daniel Drew | |
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| Born | July 29, 1797 Carmel, New York |
| Died | September 18, 1879 (aged 82) New York City |
| Occupation | Finance |
| Years active | 1840-1875 |
| Known for | Stock market speculation and manipulation |
| Spouse(s) | Roxanna Mead |
Daniel Drew (July 29, 1797 – September 18, 1879) was an American financier.
Drew is popularly credited with introducing what would be called "watered stock" to the New York financial district, to describe company shares that were issued by false means such as counterfeit certificates or shares issued that were not authorized, resulting in a dilution of ownership. The term supposedly came from his time in the cattle business, when he would have his cattle drink water before selling them, to increase their weight temporarily.[1]:44-54 The tactic was used in the Erie War of the 1860s, where he blocked arch rival Cornelius Vanderbilt from getting ownership of the Erie Railroad.
Biography [edit]
He was born in Carmel, New York.
Drew was poorly educated. His father died when Daniel was fifteen years old. Drew enlisted and drilled, but because he enlisted too late, never fought in the War of 1812. After the war, he started a successful cattle-driving business. In 1823, he married Roxanna Mead. In 1834, he entered the steamboat business, purchasing a share of a boat operating on the Hudson River. He competed unsuccessfully with Vanderbilt, but ran numerous profitable lines outside of New York.[2]
While working in the steamboat business Drew began to speculate in stocks. He founded the brokerage firm of Drew, Robinson & Company in 1844, which dissolved a decade later with the deaths of his partners. He continued to work in the brokerage business as an independent operator.[2] In 1857, Drew became a member of the board of directors of the Erie Railroad and used his position to manipulate the firm's stock price. He joined forces with Vanderbilt to rescue the Erie from bankruptcy, and also became a director of the New York and Harlem Railroad, where he collaborated again with Vanderbilt to prop up that company's finances.[2]
In 1864, Drew once again struggled with Vanderbilt, speculating on the stock of the New York and Harlem. Drew was selling the stock short, but Vanderbilt and his associates bought every share he sold, ultimately causing the stock price to rise from 90 to 285 in five months. Drew lost $500,000.
In 1866 to 1868, Drew engaged in the Erie War, in which Drew conspired along with fellow directors James Fisk and Jay Gould to issue stock to keep Vanderbilt from gaining control of the Erie Railroad. Vanderbilt, unaware of the increase in outstanding shares, kept buying Erie stock and sustained heavy losses, eventually conceding control of the railroad to the trio.[1]:207-232
In 1870, Fisk and Gould betrayed Drew, manipulating the stock price of the Erie Railroad and causing him to lose $1.5 million.[1]:364-379 (Fisk was killed in January 1872 by a jealous rival over a mistress.[3] Gould himself would later be swindled out of $1,000,000 worth of Erie railroad stock and never controlled the Erie Railroad). The Panic of 1873 cost him still more, and by 1876, Drew filed for bankruptcy, with debts exceeding a million dollars and no viable assets.[2] He died in 1879, dependent on his son for support.[1]:423
Drew, a devout Methodist, built churches in Carmel and Brewster, New York, contributed to the founding of Drew Theological Seminary in Madison, New Jersey, which is now part of Drew University, and Drew Seminary for Young Ladies in his home town of Carmel.
Drew Street, in eastern Baltimore, Maryland, is reportedly named after him due to Drew's involvement as an investor in the Baltimore Canton Company, which owned and developed much of the area through the early 1900s.[4]
Daniel Drew is often credited with the saying on the nature of short selling: "He who sells what isn't his'n, must buy it back or go to pris'n."[5]
See also [edit]
References [edit]
- ^ a b c d White, Bouck (1910). The Book of Daniel Drew. New York: Doubleday, Page & Co.
- ^ a b c d "Death of Daniel Drew". New York Times. 1879-09-19.
- ^ "James Fisk Murdered". New York Times. 1872-01-07.
- ^ Jones, Carleton (1991). Streetwise Baltimore: the Stories Behind Baltimore Street Names. Chicago: Bonus Books. ISBN 9780929387277.
- ^ Waggoner, John (2005-11-25). "Betting against shorts isn't wise". USA Today.
- Cunningham, John T. (2002). University in the Forest: The Story of Drew University (3rd ed.). Phoenix Color Corp. ISBN ISBN 0-89359-017-7.
- McAlpine, Robert W. (1872). The Life and Times of Col. James Fisk, Jr.. New York: New York Book Co. pp. 46–152.
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