Jay Gould

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“I always bought on the future; that’s how I made my money.”

Union_Pacific

Jason “Jay” Gould (May 27, 1836 – December 2, 1892) was a leading American railroad developer and speculator. He was long vilified as an archetypal robber baron,[2] whose success at business made him the ninth richest U.S. citizen in history,[3] although some modern historians working from primary sources have discounted his portrayal by the contemporary press.[4][need quotation to verify][5][need quotation to verify] Condé Nast Portfolio ranked Gould as the 8th worst American CEO of all time.[6]

Early life and education

Jason Gould was born in Roxbury, New York to Mary More (1798–1841) and John Burr Gould (1792–1866). His maternal grandfather, Alexander T. More, was a businessman, and his great-grandfather John More was a Scottish immigrant who founded the town of Moresville, New York.[citation needed] Jay Gould studied at local schools and the Hobart Academy in Hobart, Delaware County, New York.[7]

Early career

Jay Gould (right) in 1855

His principal was credited as getting him a job working as a bookkeeper for a blacksmith.[8] A year later the blacksmith offered him half interest in the blacksmith shop, which he sold to his father during the early part of 1854. Gould devoted himself to private study, emphasizing surveying and mathematics. In 1854, Gould surveyed and created maps of the Ulster County, New York area. In 1856 he published History of Delaware County, and Border Wars of New York, which he had spent several years writing.[9]

Keystone Marker for Gouldsboro, named after Jay Gould.

In 1856, Gould entered a partnership with Zadock Pratt [8] to create a tanning business in Pennsylvania in what would become Gouldsboro. Eventually, he bought out Pratt, who retired. In 1856, Gould entered another partnership with Charles Mortimer Leupp, a son-in-law of Gideon Lee, and one of the leading leather merchants in the United States at the time. Leupp and Gould was a successful partnership until the Panic of 1857. Leupp lost all his money, while Gould took advantage of the opportunity of the depreciation of property value and bought up former partnership properties for himself.[8] After the death of Charles Leupp, the Gouldsboro Tannery became a disputed property. Leupp’s brother-in-law, David W. Lee, who was also a partner in Leupp and Gould, took armed control of the tannery. He believed that Gould had cheated the Leupp and Lee families in the collapse of the business. Eventually, Gould took physical possession, but was later forced to sell his shares in the company to Lee’s brother.[10]

Railroad investing

In 1859 Gould began speculative investing by buying stock in small railways. Gould’s father-in-law Daniel S. Miller was credited with introducing the younger man to the railroad industry, when he suggested that Gould help him save his investment in the Rutland and Washington Railroad in the Panic of 1857. Gould purchased stock for 10 cents on the dollar, which left him in control of the company.[11] Through the Civil War era, he did more speculation on railroad stocks in New York City. In 1863 he was appointed manager of the Rensselaer and Saratoga Railroad.

The Erie Railroad encountered financial troubles in the 1850s, despite receiving loans from financiers Cornelius Vanderbiltand Daniel Drew. The Erie entered receivership in 1859 and was reorganized as the Erie Railway. Jay Gould, Drew andJames Fisk engaged in stock manipulations known as the Erie War, with the result that in the summer of 1868 Drew, Fisk, and Vanderbilt lost control of the Erie, while Gould became its president.

Tweed Ring

It was during the same period that Gould and Fisk became involved with Tammany Hall, the New York City political ring. They made Boss Tweed a director of the Erie Railroad, and Tweed, in return, arranged favorable legislation for them. Tweed and Gould became the subjects of political cartoons by Thomas Nast in 1869. In October 1871, when Tweed was held on $1 million bail, Gould was the chief bondsman.[12]

Black Friday

Main article: Black Friday (1869)

In August 1869, Gould and Fisk began to buy gold in an attempt to corner the market, hoping that the increase in the price of gold would increase the price of wheat such that western farmers would sell, causing a great amount of shipping of bread stuffs eastward, increasing freight business for the Erie railroad. During this time, Gould used contacts with President Ulysses S. Grant‘s brother-in-law, Abel Corbin, to try to influence the president and his Secretary General Horace Porter. These speculations in gold culminated in the panic of Black Friday, on September 24, 1869, when the premium over face value on a gold Double Eagle fell from 62 percent to 35 percent. Gould made a small profit from this operation, but lost it to subsequent lawsuits. The gold corner established Gould’s reputation in the press as an all-powerful figure who could drive the market up and down at will.[citation needed]

Lord Gordon-Gordon

Lord Gordon-Gordon

In 1873 Gould attempted to take control of the Erie Railroad by recruiting foreign investments from Lord Gordon-Gordon, whom he believed was a cousin of the wealthy Campbells looking to buy land for immigrants. He bribed Gordon-Gordon with $1 million in stock. But Gordon-Gordon was an impostor and cashed the stock immediately. Gould sued Gordon-Gordon; the case went to trial in March 1873. In court, Gordon-Gordon gave the names of the Europeans whom he claimed to represent, and was granted bail while the references were checked. He fled to Canada, where he convinced authorities that the charges against him were false.[13][14]

After failing to convince or force Canadian authorities to hand over Gordon-Gordon, Gould and his associates, which included two future governors of Minnesota[who?] and three future members of Congress (Loren Fletcher, John Gilfillan, andEugene McLanahan Wilson) attempted to kidnap him. The group snatched him successfully, but they were stopped and arrested by the North-West Mounted Police before they could return to the United States. The kidnappers were put in prison and refused bail.[13][14] This led to an international incident between the United States and Canada. Upon learning that the kidnappers were not given bail, Governor Horace Austin of Minnesota demanded their return; he put the local militia on a state of full readiness. Thousands of Minnesotans volunteered for a full military invasion of Canada. After negotiations, the Canadian authorities released the kidnappers on bail.[13][14] The incident resulted in Gould losing any possibility of taking control of Erie Railroad.[citation needed]

Peak career

Cartoon depicting Wall Street as “Jay Gould’s Private Bowling Alley”

Gould’s portrait hanging in his office at Lyndhurst. Gould purchased the mansion in 1880.

After being forced out of the Erie Railroad, in his 40s Gould started to build up a system of railroads in the Midwest and West. Beginning in 1879, he gained control of four western railroads, including the Union Pacific, which had completed part of the Transcontinental Railroad, and the Missouri Pacific Railroad. By 1880, he controlled 10,000 miles (16,000 km) of railway, about one-ninth of the length of rail in the United States at that time, and, by 1882, he had controlling interest in 15 percent of the country’s tracks. Because the railroads were making enormous profits and had control of rate setting, his wealth increased dramatically. When Gould withdrew from management of the Union Pacific in 1883 amidst political controversy over its debts to the federal government, he realized a large profit for himself. He obtained a controlling interest in the Western Union telegraph company, and, after 1881, in the elevated railways in New York City.

From 1868 to 1888, Gould was connected with many of the largest railway financial operations in the United States. During the Great Southwest Railroad Strike of 1886, he hired strikebreakers.[citation needed] According to trade unionists, he said at the time, “I can hire one-half of the working class to kill the other half.”[15]



 

This profile is partly adapted from a Wikipedia entry on Jay Gould, available under the Creative Commons Attribution-ShareAlike License.

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