Erie Railroad
35 Shares Preferred Stock Certificate

What You See Is What You Get

Lot ERR12142:

• (1x) 1950 Erie Railroad, 35 shares Preferred stock. $100 per share par value, with a 5% dividend.

Litho by the American Bank Note Company in browns and black on heavy certificate bond paper; crisp, clean and sound throughout. Usual staple holes and occasional broker marginalia. No heavy cancel or transfer stamps to face. Terms on back. Measures approx. 8" x 12". Hand signed by transfer agents, printed company officer signatures. Punch cancelled. The particularly nice thing about this certificate is that the vignette was not punched when cancelled, unlike many of the later (post WWII) Erie certificates which tend to suffer from this particular defect. Overall condition rates an old-school VG+. See scans.

Appealing to railroadiana and scripophily collectors, model train enthusiasts, historians, and educators alike, it's an interesting addition to railroad, Second World War and financial collections. Makes a nice gift for the railroader, modeller, or history buff in your life!

Shipped FLAT via USPS Ground Advantage, with tracking. YES! Will combine shipping - First lot ships in U.S.A at standard rate, all other lots in same order ship free (except where noted).

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Please see my other items for more historical curios, stocks and bonds.

Q: What am I buying, and why would I want it?

A: This preferred stock certificate is from the last decade of the Erie Railroad. A study in how companies decline.  

The Erie Railroad was chartered in 1832 as the New York and Erie Rail Road. Its intended route stretched from Piermont, on the Hudson River north of New York City, to the town of Dunkirk, on the shores of Lake Erie. It was constructed as a broad gauge (6 foot) line across the southern tier of New York state. Although it was the most direct route at the time from New York City to Lake Erie, it inconveniently bypassed most of the farming and industrial centers that could have contributed greatly to its car loadings.

In the 19th Century the Erie was considered to be one of the shadiest of all the "Scarlet Ladies" on Wall Street, and was a plaything in the hands of speculators such as Daniel Drew, Jim Fisk, and Jay Gould. Many observers of the day said that the entire capital of the company consisted of nothing but "water" (from the practice of selling artificially inflated securities, called "stock watering." Wall Street got the term from cattlemen who'd let their herds fill-up on water, and increase their weight, before taking to sale). Such financial shenanigans burdened the railroad with an ever increasing debt load, and left little in the way for investment to compete against their rivals, the Pennsylvania Railroad and New York Central Railroad.

One of the more amusing episodes of the early Gilded Age was the “Erie War.” It began in 1866 when 'Commodore' Cornelius Vanderbilt (shipping magnate, and owner of the New York Central and Hudson River railroads,) tried to gain control of the line. The management of the Erie, consisting of Drew, Fisk and Gould, counted on bribes in the New York state legislature to protect their interests; but the Commodore, who had deeper pockets and ethics just as slim as theirs, kept on buying Erie stock - and politicians as needed - and was on the verge of winning the battle.

Facing financial defeat, the Erie triumvirate chose flight and absconded with the corporate records. They armed a dingy with a small deck canon, and set sail from Manhattan bound for New Jersey and safety from New York state court rulings. Once in the Garden State, they immediately set their printing presses to work churning out thousands of new Erie shares and warrants which diluted Vanderbilt’s holdings into insignificance, and cost him millions in the process.

Soon after, in 1868, at the price of a seat on the Board of the Erie for him, Tammany Hall’s notorious Boss Tweed lent his political talents to the trio, who soon thereafter won retroactive approval from the legislature in Albany for their "stock watering" scheme in New Jersey. In subsequent litigation Vanderbilt was able to recover much of his loses, but the sting of losing the Erie was something which he never forgot.

In 1960 the Erie and the Delaware Lackawanna & Western merged to form the Erie-Lackawanna, a move which only delayed the inevitable. In spite of meager profits in the mid 1960's which came about mostly through aggressive cost cutting, the combined railroad was still faced with ever declining amounts of traffic. In 1968 the company was indirectly acquired by the Norfolk and Western Railway through their Dereco holding company.

In 1972 Hurricane Agnes struck and wiped out 395 miles of track, causing US$9 million (US$60 million 2021) in damages. Bankrupt once more, the EL's remaining rail assets were folded into Conrail in 1976. Following the 1998 buyout and division of Conrail, most of what’s left of the non-commuter lines of the EL are now part of Norfolk Southern, again. Several short lines also operate over former EL territory.

In honor of its 30th anniversary in 2012, NS painted 30 of its locomotives in heritage livery. The Erie was represented by an EMD SD70ACe unit numbered 1068, and the Lackawanna by another EMD SD70ACe, numbered 1074.

You will hold history in your hands.