Daniel Drew - Biography

Biography

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 steamship business, competing unsuccessfully with Cornelius Vanderbilt but running numerous profitable lines outside of New York.

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. 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. The tactic was used in the Erie War to block Vanderbilt from getting ownership of Erie.

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.

In 1864, Drew once again struggled with Vanderbilt, speculating on the stock of the New York and Harlem Railroad. 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 1866-1868, 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.

In 1870, Fisk and Gould betrayed Drew, manipulating the stock price of the Erie Railroad and causing him to lose $1.5 million. (Fisk was killed in January 1872 by a jealous rival over a mistress and 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. He died in 1879, dependent on his son for support.

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.

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."