Biography of Jay Gould, Notorious Robber Baron

Jay Gould (born Jason Gould; May 27, 1836–December 2, 1892) was a businessman who came to personify the robber baron in the late 19th century. Over the course of his career, Gould made and lost several fortunes as a railroad executive, financier, and speculator. Gould had a reputation for ruthless business tactics, many of which would be illegal today, and during his lifetime he was often thought to be the most despised man in the nation.

Early Life

Jayson “Jay” Gould was born into a farming family in Roxbury, New York, on May 27, 1836. He attended a local school and learned basic subjects. He was self-taught in surveying and in his late teens he was employed making maps of counties in New York State. He also worked for a time in a blacksmith shop before becoming involved in a leather tanning business in northern Pennsylvania.

Wall Street

Gould moved to New York City in the 1850s and began learning the ways of Wall Street. The stock market was largely unregulated at the time, and Gould became adept at manipulating stocks. Gould was ruthless at using techniques such as cornering a stock, by which he could drive prices up and ruin speculators who were “short” on the stock, betting the price would go down. It was widely believed that Gould would bribe politicians and judges and was thereby able to skirt whatever laws might have curtailed his unethical practices.

A story that circulated in Gould's time about his early career was that he led his partner in the leather business, Charles Leupp, into reckless stock transactions. Gould's unscrupulous activities led to Leupp's financial ruin, and he killed himself in his mansion on Madison Avenue in New York City.

The Erie War

In 1867 Gould obtained a position on the board of the Erie Railroad and began working with Daniel Drew, who had been manipulating stocks on Wall Street for decades. Drew controlled the railroad, along with a younger associate, the flamboyant Jim Fisk.

Gould and Fisk were nearly opposite in character, but they became friends and partners. Fisk was prone to attracting attention with very public stunts. And while Gould genuinely seemed to like Fisk, historians speculate that Gould saw value in having a partner who drew attention away from him. With scheming led by Gould, the men became involved in a war for control of the Erie Railroad with the richest man in America, Cornelius Vanderbilt.

The Erie War played out as a bizarre spectacle of business intrigue and public drama. At one point, Gould, Fisk, and Drew fled to a hotel in New Jersey to be beyond the reach of the New York legal authorities. As Fisk put on a public show, giving lively interviews to the press, Gould arranged to bribe politicians in Albany, New York, the state capital.

The struggle for control of the railroad finally reached a confusing end, as Gould and Fisk met with Vanderbilt and worked out an agreement. Ultimately the railroad fell into the hands of Gould, though he was happy to let Fisk, dubbed the “Prince of Erie,” be its public face.

The Gold Corner

In the late 1860s, Gould noticed some quirks in the way the gold market fluctuated, and he devised a scheme to corner gold. The intricate scheme would allow Gould essentially to control the gold supply in America, which would mean he could influence the entire national economy.

Gould’s plot could only work if the federal government chose not to sell gold reserves while Gould and his cronies were working to drive up the price. To sideline the Treasury Department, Gould bribed officials in the federal government, including a relative of President Ulysses S. Grant.

The plan to corner gold went into effect in September 1869. On a day that would become known as “Black Friday,” September 24, 1869, the price of gold began to rise and a panic ensued on Wall Street. By midday, Gould’s plan unraveled as the federal government began to sell gold on the market, driving down the price.

Though Gould and his partner Fisk had caused a major disruption to the economy, and a number of speculators were ruined, the two men still walked away with a profit estimated in the millions of dollars. There were investigations into what had unfolded, but Gould had carefully covered his tracks. He was not prosecuted for violating any laws.

The "Black Friday" gold panic made Gould more wealthy and more famous, though throughout this episode he generally tried to avoid publicity. As ever, he preferred that his gregarious partner, Jim Fisk, deal with the press.

Gould and the Railroads

Gould and Fisk ran the Erie Railroad until 1872, when Fisk, whose private life had become the subject of countless newspaper headlines, was murdered in a Manhattan hotel. As Fisk lay dying, Gould rushed to his side, as did another friend, William M. “Boss” Tweed, the leader of Tammany Hall, New York’s infamous political machine.

Following the death of Fisk, Gould was ousted as head of the Erie Railroad. But he remained active in the railroad business, buying and selling vast amounts of railroad stock.

In the 1870s, Gould bought up various railroads during a time when a financial panic drove down prices. He understood that railroads needed to expand in the West and that demand for reliable transportation across great distances would outlive any financial instabilities.

As the American economy improved by the end of the decade, he sold much of his stock, amassing a fortune. When the prices of stocks dropped again, he began acquiring railroads again. In a familiar pattern, it seemed that no matter how the economy performed, Gould wound up on the winning side.

More Questionable Associations

In the 1880s, Gould became involved in transportation in New York City, operating an elevated railroad in Manhattan. He also bought the American Union Telegraph company, which he merged with Western Union. By the late 1880s, Gould dominated much of the transportation and communication infrastructure of the United States.

In one shady episode, Gould became involved with businessman Cyrus Field, who decades earlier had masterminded the creation of the transatlantic telegraph cable. It was believed that Gould led Field into investment schemes that proved ruinous. Field lost his fortune, and Gould, as ever, seemed to profit.

Gould also became known as an associate of New York City police detective Thomas Byrnes. It eventually came to light that Byrnes, though he always worked on a modest public salary, was quite wealthy and had considerable holdings in Manhattan real estate.

Byrnes explained that for years his friend Jay Gould had given him stock tips. It was widely suspected that Gould had been giving Byrnes inside information on upcoming stock deals as bribes. As with so many other incidents and relations, rumors swirled around Gould, but nothing was ever proven in court.

Marriage and Home Life

Gould was married in 1863, and he and his wife had six children. His personal life was relatively quiet. As he prospered, he lived in a mansion on New York City’s Fifth Avenue but seemed uninterested in flaunting his wealth. His great hobby was raising orchids in a greenhouse attached to his mansion.

Death

When Gould died of tuberculosis, on December 2, 1892, his death was front-page news. The newspapers ran lengthy accounts of his career and noted that his wealth was probably close to $100 million.

The lengthy front-page obituary in Joseph Pulitzer's New York Evening World indicated the essential conflict of Gould's life. The newspaper referred to "Jay Gould's Wonderful Career" in a headline. But it also recounted the old scandal of how he had destroyed the life of his early business partner Charles Leupp.

Legacy

Gould has generally been depicted as a dark force in American life, a stock manipulator whose methods would not be allowed in today’s world of securities regulation. A perfect villain in his time, he was portrayed in political cartoons drawn by artists such as Thomas Nast as running with bags of money in his hands.

History’s verdict on Gould has been no kinder than the newspapers of his own era. However, some historians claim that he was unfairly portrayed as being more villainous than he really was. Other historians argue that his business activities did, in reality, perform useful functions, such as greatly improving railroad service in the West.

Sources

• Geisst, Charles R. Monopolies in America: Empire Builders and Their Enemies, from Jay Gould to Bill Gates. Oxford University Press, 2000.
• “Jay Gould: Financier in the Age of Robber Barons.” Jay Gould: Financier in the Age of Robber Barons, www.u-s-history.com/pages/h866.html.
• Hoyt, Edwin P. The Goulds: A Social History. Weybright and Talley, 1969.
• Klein, Maury. The Life and Legend of Jay Gould. Baltimore, Johns Hopkins University Press, 1986.