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From the Godfather movie:

Barzini's people chisel my territory and we do nothing about it. Soon I'll have no place in Brooklyn to hang my hat.

The only meaning I've found for the word chisel is

a tool with a flat metal blade used for cutting wood or stone

It also means doing some work with that tool. In the context it seems nonsensical to say the least, so I guess it's an idiomatic expression. I'd also guess that Barzini's people getting control in his ground, gradually pushing him out of his affairs there.

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    A chiseler (slang) is a cheat. To work with a chisel is to take small pieces off the main piece, a little at a time. See chisel #2 here (merriam-webster.com/dictionary/chisel) – Tᴚoɯɐuo Jul 11 '15 at 11:00
  • @TRomano So that meaning of chisel is the same as to tear the pieces? – Dmitrii Bundin Jul 11 '15 at 11:02
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    Not exactly, but somewhat similar to "tear off pieces". It means constantly removing small bits, thus making the territory smaller and smaller. – Stephie Jul 11 '15 at 11:06
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    The word began as a figurative extension of the physical action of shaving off small pieces, that is, to cheat someone in a manner not likely to be noticed. But it has lost specificity and can mean simply "to be unscrupulous in one's dealings." I think it is used in the more specific meaning in the Godfather. Barzini is "whittling away" at their Brooklyn business. – Tᴚoɯɐuo Jul 11 '15 at 11:07
  • So it could be a double entendre —referring both to cheating and to nibbling away the territory. – Brian Hitchcock Jul 11 '15 at 11:28
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A chisel is indeed a tool used for cutting wood or stone. When used, it removes small pieces of the wooden or stone object, making that object smaller and smaller with each hit.

So here, Barzini's people are stealing small pieces of territory at a time, making the speaker's territory smaller and smaller.

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