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American Moguls: Jay Gould

Mark Wyatt McGinnis

Jay Gould, acrylic on paper, 2022, Mark W McGinnis

Jay Gould

1836-1892

The Mephistopheles of Wall Street. The Most Hated Man in America.

Jason Gould, later Jay, was born to farming parents in Roxbury, New York. His mother died when he was four. His father remarried twice, each wife lasting two years before they died. Then his sister suddenly died. Jay had to grow up in a hurry. He dreaded farm work, but he loved reading and learning. Jay went to a local school when he could get away from farming and was then accepted at Hobart Academy, paying his fees by bookkeeping for a local blacksmith. At Hobart, he wrote a well-received essay titled “Honesty is the Best Policy,” in the following decades, this would have brought his competitors to tears of laughter.

He taught himself the trade of surveying and struck out on his own. Gould met Zadock Pratt, who owned the largest tanning business in the country. Gould had a manner that quickly won over many people; he was polite, quiet, and obviously very intelligent. Pratt offered the young man a partnership in a new tannery, with Pratt providing the funding. Gould jumped at the opportunity.

The tannery was built in the pristine forest of Pennsylvania. The 20-year-old Gould was 5’1″ tall and had the face of a 12-year-old. This appearance did not impress the burly tanners. Gould grew a full beard and a mustache that covered his youthful mouth. This seemed to solve his appearance problem. He was to keep the facial hair for the rest of his life.

The business became successful, but Gould began using company funds to make other investments without informing Pratt. Pratt inspected the company books and found high sales and very little profit. Gould’s dishonesty was apparent. Pratt dissolved the partnership and demanded Gould buy him out for $60,000. With his persuasive ways, Gould secured a loan from a New York City leather merchant and formed a new partnership. Again, Gould started using company funds for personal speculations, and his partners demanded he pay them for their part in the business. Gould raised the money but put some shady wording into the contract. His opponents stormed the tannery with armed men and occupied it. Gould assembled a larger force, lubricated them with whiskey, and they took the tannery back. The incident came to be known by the inflated name “The Battle of Gouldsboro.” A protracted legal battle ensued for the tannery, and Gould finally abandoned the controversy and left for New York City and Wall Street, where he could engage in serious speculation.

And engage he did. He saw the great stock investors as magicians, and he rapidly learned their tricks and more. His quiet, reserved demeanor cloaked the most cut-throat investor that haunted Wall Street. He began to accumulate one of the greatest fortunes in the country. In 1869, he decided to corner the country’s gold market by purchasing large amounts to manipulate the price and advance his business interests. He convinced some government officials that he was doing so for patriotic reasons and gained their assistance. But his government conspirators panicked, and his complex plans began to collapse. It fell apart on September 24, 1869, called Black Friday, and gold and most stocks plummeted. Gould’s maneuvering managed to save most of his investment, but many others were ruined— they rallied to lynch him. He quietly escaped out the back door. This incident sealed his reputation as a ruthless, selfish, cold-blooded demon of New York’s financial world. It was said he was “one of the most sinister figures that have ever flitted bat-like across the vision of the American people.” None of this bothered Gould in the least. Money on its own does not seem to be the primary motive for his titanic financial and business ventures; he was focused on power and winning, and money was the means.

One of Gould’s favored tactics was to buy companies’ stocks at bargain basement prices, often driving the prices down himself before buying, taking control of the company, dressing them up and reselling, or fusing them with his other assets. He was the master of this with railroads. 1867 marked one of his famous adventures. He was on the board of directors of the Erie Railroad, but he did not have a controlling interest. Along with two other infamous robber barons, Jim Fisk and Daniel Drew, they were determined to have the railroad. A major problem arose when the even more infamous robber baron, Cornelius Vanderbilt, decided he wanted the railroad too. All of them bought as much stock as they could find. When it looked like Vanderbilt was going to win, as a director of the Erie, Gould had the railroad issue 50,000 new shares. Vanderbilt lost $2,000,000. The share offering was illegal, but Gould and his partners-in-crime bought the entire New York State Senate and several judges, who legalized the shenanigans. Gould and his cronies escaped to New York City with $6 million in cash stuffed in suitcases. It was a very rare defeat for Vanderbilt, and he offered a $25,00 reward for kidnapping the three villains. In the long run, Gould repaid Vanderbilt for his losses; after all, Gould had the railroad. The convoluted conflict became known as “The War of the Erie.”

In the 1870s, he turned his attention to the west and bought and combined railroads, eventually controlling 10,000 miles of railway. In his vast holdings, he employed 100,000 men. He paid the lowest possible wages, always looked for new ways to decrease the labor, cut wages whenever he could, often doubled workloads, made workers sign pledges not to join unions, and had blacklists of workers who belonged to unions.

Gould bought and consolidated nearly all the country’s lucrative telegraph companies into the Western Union Company. He built a $2 million headquarters of Western Union in New York City. It was a bomb-proof citadel where his offices provided him with protection along with his armed guards. He had made many enemies, great and small. Gould created an army of spies and agents gathering information on the weakness and strengths of companies he could exploit, ever-growing his empire.

Many considered him the most powerful person in the United States, bar none, and one of the wealthiest men in the world. Gould purchased a castle on the Hudson River for a fraction of its value. Its walls were constructed of thick white and gray marble; it had towers, embattlement, and turrets situated on 550 acres. With around-the-clock armed guards, it provided near complete security for Gould and his family. It was also where his wife and six children could escape from the condescending elite of New York City. Its greenhouses were the home to one of most extensive orchid collections in the world (his one hobby). Nearly every morning, Gould would cruise in his luxury steam yacht down the Hudson to his NYC offices.

In the 1880s, a group of wealthy people he had wounded over the years began to see some cracks forming in his monstrous organization, and they used their financial chisels to widen the cracks. They came to the brink of bringing him down when he threatened to take them all with him, and he could. They backed off and left him with some resources; that he then turned against them and gave them a pecuniary thrashing. He escaped and toned his dealings down to a more conservative approach.

Gould had long suffered from poor health and chronic pain. In 1889 he contracted tuberculosis, then called consumption, and died in 1892 at the age of 56, still having grand plans to increase his enormous fortune of 77 million, over two billion today. He had next to no interest in charity and had most of his wealth divided into six trust funds for his children. There was no public mourning after his passing. The New York Times wrote a scathing obituary deploring his career.

Some consider Jay Gould the worst of the 19th-century robber barons. This is due to his nature as both predator and scavenger. He was an economic sociopath who was concerned for no one. He would ruin an associate as readily as an enemy if it advanced his objectives. Gould did not have a morsel of concern about how his cut-throat adventures impacted the country or economy unless feigned concern also brought him gains. Gould was one of the originators of unbridled, unproductive wealth. There was no meaningful trickle-down. His attitude toward the tens of thousands of men who worked for him was that of a wicked feudal lord. His complete lack of safety precautions was the path to the greatest profits. How many hundreds might be killed or maimed was unimportant. The workers could be quickly replaced.

Yes, Jay Gould may have been the worst of the worst.

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