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| Biography: Jay Gould |
American financier and railroad builder Jay Gould (1836-1892) began as an unprincipled stock manipulator and became one of the most acute businessmen in America's age of industrial capitalism. He operated in an era when speculative capital could play a constructive role.
Jay Gould, christened Jayson, was born in Roxbury, N.Y., on May 27, 1836, a farmer's son. He obtained some education in a local academy and also learned surveying. Between the ages of 18 and 21 he helped prepare maps of New York's southern counties. By 21, with a stake of $5,000, he and a partner opened a leather tannery in northern Pennsylvania.
Gould then moved to New York City, where he set up as a leather merchant in 1860. Before long, however, he found his forte in Wall Street, ostensibly as a stockbroker but really as a speculator. In that period of unregulated finance Gould quickly mastered the intricacies of corporate management and of security trading and manipulation. He traded in the securities of his own companies, manipulating banks he was associated with to finance his speculations and corrupting legislators and judges. From 1867 to 1872 he was a power and a terror in Wall Street.
Erie War
In 1867 Gould was already on the board of directors of the Erie Railroad, which was in financial difficulties. He set out to control it, push its expansion westward as far as Chicago, and defeat Cornelius Vanderbilt's efforts to acquire this potential competitor. Gould was the behind-the-scenes strategist (using Daniel Drew and James Fisk as his fronts) in the "Erie war" with Vanderbilt in 1868. To check Vanderbilt, Gould issued 100,000 shares of new Erie stock by illegally converting debentures and then went to Albany, where, with the Erie's money, he bribed legislators to legalize the conversion. Vanderbilt discovered he had met his match and settled with Gould, receiving $1 million as a sweetener and leaving the Erie to Gould.
Gould launched the Erie on an expansion campaign that vastly increased its capital debt. Meanwhile, he traded in Erie stock, sold it short, and made a killing before the road went bankrupt in 1875.
Buying Gold to Sell Wheat
As part of the Erie's move westward, Gould obtained control of the Wabash, a wheat-carrying railroad. To improve the fortunes of the Wabash, Gould hit on the scheme of pushing up the price of gold, thus weakening the dollar, and thereby encouraging foreign merchants to buy more wheat.
Using Fisk's brokerage house as a cover, in the summer of 1869 Gould began buying gold secretly in the free market - hoping the U.S. Treasury would not sell - and ran the price up from 135 to 160, where it was on the "Black Friday" of Sept. 24, 1869. By that time Gould had created a short interest in gold of $200 million with only a fraction of that amount available to the short sellers. Then the U.S. Treasury, realizing it had been duped by Gould, sold gold, and the price dropped to 140 and then to 133. A panic hit Wall Street, depressing all stocks. Gould had speculated not only in gold but in stocks and lost a fortune. However, in 1871-1872 he made another.
Well-heeled again, Gould moved his operations westward into the Wabash, the Texas and Pacific, the Missouri Pacific, and the Union Pacific railroads. His operations in the last two exemplify his methods. He bought their securities when they were low during the depression of 1873, obtaining control of both; he also acquired securities of independent lines and feeder lines he wished to add the two trunk systems. Then he forced up the prices of the two amplified major companies. When the stock market recovered during 1879-1884, he sold, making a large fortune out of capital gains.
Manipulator Turned Businessman
Gould was pushed out of the Wabash and the Union Pacific in the early 1880s. He then turned his complete attention to the Missouri Pacific (of which he had gained control in 1879) and built it into a great power. He acquired feeder lines and independent companies; he used stock market profits and capital gains for financing; and he waged a relentless war on competitors, breaking up traffic pools and forcing rates down sharply. His biographer Julius Grodinsky wrote that Gould was "transformed from a trader into a business leader of national proportions." From 1879 to 1882 Gould added 2,500 miles to the road, making a capital addition of about $50 million. And between 1885 and 1889 he reentered the Wabash and the Texas and Pacific railroads, reorganized them, and tied them into his Missouri Pacific system.
At the same time Gould strengthened the other two elements in the triad that constituted his estate. One was the Manhattan Elevated Railroad of New York, which he created as a monopoly of Manhattan's rapid transit system. The second was the Western Union Telegraph Company. Gould had bought the unimportant American Union Telegraph in 1879, consolidated it with the Western Union in 1881, and 7 years later added the influential telegraph network of the Baltimore and Ohio Railroad. By the end of the 1880s Western Union, now the parent company, had no real competitor in the two important businesses of railroad telegraphy and the transmission of Associated Press stories to member newspapers. It was one of the most profitable companies in the country. Gould died in New York on Dec. 2, 1892, leaving the management of his properties to his son George Jay Gould.
Further Reading
An excellent biography and railroad history of the period is Julius Grodinsky, Jay Gould: His Business Career, 1867-1892 (1957). A lively study of the family is Edwin P. Hoyt, The Goulds: A Social History (1969). The story of the "Erie war" is in Charles F. Adams, Jr., and Henry Adams, Chapters of Erie (1871). For a broad understanding of the era that made the emergence of industrial capitalists like Gould possible, see Louis M. Hacker, The World of Andrew Carnegie, 1865-1901 (1968). Gustavus Meyers, History of the Great American Fortunes (1907), portrays Gould as the "robber baron" par excellence.
| US History Companion: Gould, Jay |
(1836-1892), railroad financier. Christened Jason, Jay Gould was born on a farm near Roxbury, New York. He taught himself the rudiments of surveying, and by the age of twenty-one, the undersized, quick-witted youth had prepared several county maps, written a local history, and saved five thousand dollars. Between 1856 and 1860 Gould operated a tannery but gave it up to join a Wall Street brokerage house. Following the panic of 1857 he had made modest and profitable investments in several short railroads.
In 1867 Daniel Drew, treasurer and longtime director of the Erie Railroad, added Gould and James Fisk to the Erie board of directors. When Cornelius Vanderbilt, of the New York Central, sought to buy control of the Erie a spectacular battle ensued. Gould, Fisk, and Drew promptly issued thousands of shares of new, watered stock. When the angry Vanderbilt obtained an arrest warrant for the three, they ferried company headquarters to Jersey City, and Gould rushed to Albany where a pliable New York legislature authorized the stock issue. Eventually peace was made with Vanderbilt, but that gentleman was reported to have muttered that his trouble with the Erie "has learned me it never pays to kick a skunk." Later in the fall of 1869 Gould and Fisk conspired with the brother-in-law of President Ulysses S. Grant to corner the gold market, causing the panic of "Black Friday," September 24, 1869. Gould continued to loot the Erie until his departure in 1872. His role in the Erie War and the attempted gold corner gave him a reputation as the prime financial predator of the age.
Possessing a fortune, Gould turned to western railroads. In the twenty years after 1872 he was a director of seventeen major lines and the president of five. He purchased much Union Pacific stock and controlled that road until 1878. At first Gould improved the management of the Union Pacific but later blackmailed the company by threatening to have the Gould-controlled Kansas Pacific build a nuisance line to Utah. During the 1880s Gould controlled about half the mileage southwest of St. Louis and Kansas City and tried unsuccessfully to expand his western holdings into a transcontinental rail empire to the Atlantic Coast. He also owned the New York World for a time and held major investments in New York City's elevated railways and several large telegraph companies, including Western Union. In his last years Gould suffered from tuberculosis and died of that disease at the age of fifty-seven, leaving a fortune of $77 million to his six children.
Gould was a man of many faults and virtues. He was cold and unscrupulous but courteous and unassuming, and in his private life, devoted to his family, flowers, and books. He could not be trusted but nonetheless helped build more efficient regional rail systems. He was a wrecker of values but a railway leader who helped achieve major rate reductions. Gould remains the prototype robber baron of the late nineteenth century, although his defects probably have been exaggerated because he was never comfortable with the press.
Bibliography:
Robert L. Frey, ed., Railroads in the Nineteenth Century (1988); Maury Klein, The Life and Legend of Jay Gould (1988).
Author:
John F. Stover
See also Railroads; Robber Barons.
| Columbia Encyclopedia: Jay Gould |
Bibliography
See biographies by M. Klein (1986) and E. J. Renahan, Jr. (2005); C. F. and H. Adams, Chapters of Erie (1871); R. O'Connor, Gould's Millions (1962); E. P. Hoyt, Jr., Goulds (1969).
| Wikipedia: Jay Gould |
| Jay Gould | |
|---|---|
| Born | Jason Gould May 27, 1836 Roxbury, New York, U.S. |
| Died | December 2, 1892 (aged 56) Manhattan, New York, U.S. |
| Occupation | Financier |
| Spouse(s) | Helen Day Miller (1838-1889) (m. 1863–1889) |
| Children | George Jay Gould I Edwin Gould I Helen Gould Anna Gould Frank Jay Gould |
| Parents | John Burr Gould (1792-1866) Mary More Gould (1798-1841) |
Jason "Jay" Gould (May 27, 1836 – December 2, 1892) was an American financier who became a leading American railroad developer and speculator. Although he has long been vilified as an archetypal robber baron, whose successes made him the ninth richest American in history,[1] some modern historians working from primary sources have discounted various myths about him.[2][3]
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Jason Gould was born in Roxbury, New York, the son of John Burr Gould (1792-1866) and Mary Moore Gould (1798-1841). He was born into a poor family, with his mother and father, as well as his dog. Gould's father was of British colonial ancestry, and his mother of Scottish ancestry. He studied at the Hobart Academy, but left at age 16 to work for his father in the hardware business. He continued to devote himself to private study, emphasizing surveying and mathematics. In 1856 he published History of Delaware County, and Border Wars of New York which he had spent several years writing.[4]
Gould later went to work in the lumber and tanning business in western New York and then became involved with banking in Stroudsburg, Pennsylvania.
He married Helen Day Miller (1838-1889) in 1863 and had six children:
It was during the same period that Gould and James Fisk became involved with Tammany Hall. 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.
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% to 35%. Gould made a nominal profit from this operation, but lost it in the 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. For the rest of his life, newspaper writers would attribute to Gould almost any market development they could not explain otherwise.[citation needed]
In 1873 Gould attempted to take control of the Erie Railroad by getting foreign investments from Lord Gordon-Gordon, a cousin of the Campbells looking to buy land for immigrants, Gould bribed Gordon-Gordon with $1 Million in stock. However, Gordon-Gordon turned out to be a fraud, cashing the stock immediately. Gould sued Gordon-Gordon, with Gordon-Gordon put on trial in March 1873. Gordon-Gordon gave the names of his European personages in court, whom he claimed to represent, and was granted bail while the references were checked. Gordon-Gordon took this opportunity to flee to Canada, where he convinced authorities that the allegations brought against him were false.[11][12]
After failing to convince or force Canadian authorities to hand over Gordon-Gordon, Gould and his associates, which included two future Governors of Minnesota and three future Members of Congress, attempted to kidnap him. The group was successful, but were stopped and arrested by the Northwest Mounted Police before they could return to the United States. The kidnappers were put in prison and refused bail.[11][12] 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 and put the local militia on a state of full readiness. Thousands of Minnesotans volunteered for a full military invasion of Canada. However, after negotiations, the Canadian authorities released the kidnappers on bail.[11][12]
The whole incident resulted in Gould losing any possibility of taking control of Erie Railroad.
After being forced out of the Erie Railroad, Gould started, in 1879, to build up a system of railroads in the Midwest by gaining control of four western railroads, including the Union Pacific and the Missouri Pacific Railroad. In 1880, he was in control of 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% of the country's tracks. Gould withdrew from management of the UP in 1883 amidst political controversy over its debts to the federal government, realizing a large profit for himself.
Gould also obtained a controlling interest in the Western Union telegraph company, and, after 1881, in the elevated railways in New York City. Ultimately, he was connected with many of the largest railway financial operations in the United States from 1868-1888. During the Great Southwest Railroad Strike of 1886 he hired strikebreakers; according to labor unionists, he said at the time, "I can hire one-half of the working class to kill the other half."[citation needed]
Gould died of tuberculosis on December 2, 1892 and was interred in the Woodlawn Cemetery in The Bronx, New York. His fortune was conservatively estimated to be $72 million for tax purposes. Although a donor to charity from the 1870s onward, he willed all of his fortune to his family. At the time of his death, Gould was a benefactor in the reconstruction of the Reformed Church of Roxbury, now the Jay Gould Memorial Reformed Church.[1] The family mausoleum was designed by Francis O'Hara (1830-1900) of Ireland. Gould's mausoleum contains no external identification.
In his lifetime and for a century after, Gould had a firm reputation as the most unscrupulous of the 19th century American businessmen known as robber barons. Many times he allowed his rivals to believe that he was beaten, then sprang some legal or contractual loophole on them that completely reversed the situation and gave him the advantage. He had no scruples about using stock manipulation and insider trading (which were then legal but frowned upon) to build capital and to execute or prevent hostile takeovers. As a result, many contemporary businessmen could not compete, did not trust Gould and often expressed contempt for his approach to business. John D. Rockefeller named him as the most skilled businessman he ever encountered.
The New York City press published many rumors about Gould that biographers passed on as fact. For example, they alleged that Gould's dealings in the tanning business drove his partner Charles Leupp to suicide. In fact, Leupp had episodes of mania and depression that psychiatrists would now recognize as indications of bipolar disorder, and his family knew that this, not his business dealings, caused his death. These biographers portrayed Gould as a parasite who extracted money from businesses and took no interest in improving them. He was often suspected of being Jewish due to his name and business acumen as well as his large nose, and was depicted in anti-semitic caricatures, even though he was born a Presbyterian and married an Episcopalian.
More recent biographers, including Maury Klein and Edward Renehan, have reexamined Gould's career with more attention to primary sources. They have concluded that fiction often overwhelmed fact in previous accounts, and that despite his methods, Gould's objectives were usually constructive to him.
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