Sunday, June 15, 2014

The Life of Jay Gould

Jay Gould
He was a man brave enough to clash with one of the wealthiest man in the United States. He proved to be even bolder when he was prepared to use illegal means to achieve his goals. He profited at the expense of other’s money and life savings. From a poor humble background, the life of Jay Gould horrified many.

Jay Gould began from a farm boy and climb up to the ladder as a misguided speculator. Wanting more than a farm to managed, he took the adventure at Wall Street and met other speculators, Daniel Drew and James Fisk. Together, they orchestrated profit seeking schemes that cost a lot to many, including a US President and the railroad tycoon. His actions caused criticisms and categorized him a robber baron

Jason Gould (May 27, 1836 – December 2, 1892) was born to John Gould and Mary More in Roxbury, Delware County in New York. His family owned a farm and a store that helped to sustain their everyday needs. Jay, as he was widely called, had valued education. He studied in a local school appeared as a bright student. He had likings of mathematics, surveying, and history. His love for history was displayed when he authored the book History of Delware County in 1856. While studying, he began to work in their family’s farm. However, the young Gould realized that he doesn’t have the likings of a farmer. He then took a job as a bookkeeper of a blacksmith, using his skills in mathematics.  At the age of eighteen, he worked as a surveyor for the creation of maps in New York. In 1856, he entered to a leather tanning business with a partner. But after 1857 Panic, he used his earning to buy the leather tanning business.

Jay Gould as a speculator began in 1860 when he moved to New York. He first began to speculate stocks of leather hides and made some money.  In 1863, he married a railroad businessman’s daughter, Hellen Day Miller. Hellen Day Miller’s father, Daniel Miller, introduced Jay Gould to the rising industry of railways. Miller helped Gould to become a manager in Rensselaer & Saratoga Railway and later the Rutland & Washington Railways.

During that period, as the Civil War raged, the industry of railway boomed. Gould then began to speculate stocks of railroad companies and met two other mischievous speculators: Daniel Drew and James Fisk. In 1867, Gould, with the help of Fisk and Drew, acquired a large portion of stocks of a lucrative railway that connect New York to the west, at Lake Erie - the Erie Line. By 1868, he became the president of the railway company. But as he took the top position, he soon faced a daunting challenge between, him, Fisk, and Drew against the ferry turned railway tycoon, Cornelius Vanderbilt.

The conflict between them and Vanderbilt became the first smear in his reputation.  Popularly called the Erie War, it began with Cornelius Vanderbilt initiating a hostile takeover of the line. Vanderbilt aimed in owning 51% share of stocks in order town it. Gould, Fisk, and Drew decided to fight Vanderbilt. While Vanderbilt invested a lot of money to buy Erie Railway stocks, they then issued bonds that were convertible to stocks. This moved known today as watering stocks where a stock became worthless because of new stocks that were being issued. Therefore, as Vanderbilt bought more stocks, the bonds that were being converted became stocks; and the stocks bought by Vanderbilt then suddenly became worthless. The three made a fortune from Vanderbilt, while Vanderbilt was forced to surrender and made a loss of more than over $7 million.

After losing a fortune, Vanderbilt decided to sue the three for their illegal practice and urged the legislators of New York to act against them. They, however, had a close tie within the legislature of New York, William “Boss” Tweed. Tweed previously helped Gould and Fisk to acquire the Erie Railroads. Tweed now helped them again to bribe and persuade other legislators to let Gould, Fisk, and Drew off the hook. Their maneuver was a success. The three men escaped from prosecution. They then also drew a peace with Vanderbilt ending with them keeping the line.

Another chapter that haunts Gould as a Robber Baron happened in 1869. Gould and Fisk wanted to increase the profit of the Erie Line. They then saw the increase in freight when farmers sell their wheat to the East Coast if the prices were high.  The duo then began to device a scheme. To force farmers to sell wheat to the east coast, the price of wheat should rise. They saw the cornering of the gold market as a way to drive the prices up. They then began to buy gold that circulated the market to increase its price. To maintain the high price, it was a key that the government shouldn’t sell its gold reserves. Gould with the help of Fisk convinced the brother-in-law of US President Ulysses Grant, Abel Rathbone Corbin, to persuade the President not to sell government gold.  The President was persuaded. Then when Gould began to buy much of the gold in the market, prices skyrocketed. Some farmers, unable to sell wheat in the west, then began to sell wheat to the east coast via the Erie Line. The plan worked, Gould and Fisk made a lot of money from the farmers. They then began to sell the gold that they possessed just in time when Grant discovered the scheme in September 24, 1869. The President ordered the selling of gold by the treasury in order to drive the gold prices down. The flood of government gold caused the prices to plummet. Those who had gold that was bought on a high price then began to sell immediately their expensive gold to avoid the fall in value. It eventually caused the 1869 Panic that devastated many lives causing the day, September 24, 1869, to be dubbed as Black Friday. Many became drown in debt because of buying gold by getting loans in banks. Some loss money because of the sudden drop in prices for their expensive gold. The people as well as the reputation of President Ulysses Grant suffered.

Fisk and Gould proved to be merciless, after the outcry of people against them, the two continued their fraudulent and corrupt business practices. The gold market, President Grant and Vanderbilt wasn’t spared from the ruthlessness of the two. Their own company, the Erie Railroad, wasn’t either. The two used stock manipulation to increase their profits from stocks, and stole large amounts of money from the company coffers to their own ends. Eventually, it was found out that they were stealing from the company. The Board of Directors eventually kicked out Gould and Fisk from the company in 1872.

After a disgrace exit from the Erie line, Gould moved his interest to western railway companies, starting with the Union Pacific Railroad in 1873.  He bought large amount of stocks of the Union Pacific Railroad, and in 1874, he became a board member.  He helped to consolidate the Union Pacific Railroad and Kansas Pacific Railroad in 1880. Nevertheless, the illegal practices of Gould continued. He gave fake insider information to investors in order to gain more profits for himself. After gaining a profit of $10 million from the Union Pacific Railroads, he withdrew his capital from the company.

Gould continued his interests in western railroad companies. He reinvested his money to various numbers of railroad companies, including Central Railroad, Kansas Railroad, and Denver Railroad; also, Missouri and Wabash Railroad Companies.

Beside railroads, he also took interest in investing his money to other businesses. Among this business was newspaper company, New York World, and the telegraph company, Western Union. He also owned the Manhattan elevated Railway company and expanded it into becoming a monopoly of elevated railways in New York.

In 1892, Jay Gould died of Tuberculosis. He left his $72 million to his family. He died hated by the people for his evil business practices. He was loathed by many for the lives destroyed from the panic of 1869, for his corruption on his own company, and the people who also loss their fortune from his stock manipulation.

See also:

Olson, J. Encyclopedia of the Industrial Revolution in America. Connecticut: Greenwood Press, 2002.

Geisst, C. Encyclopedia of American Business History. New York: Facts On File, 2006. 

Miller, R. ed. The Greenwood Encyclopedia of Daily Life in America. Connecticut: Greenwood Press, 2009. 

Black Friday, September 24, 1869.” American Experience. Accessed, November 31, 2013.

“Jay Gould.” NNDB. Accessed October 31, 2013.

“Jay Gould Biography.” Encyclopedia of World Biography. Accessed on October 31, 2013.

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