Born into poverty in 1836, Jay Gould became one of the richest men in America in the Gilded Age, but had few admirers. This was mainly because the Wall Street financier would do anything to make money: breaking laws, manipulating stocks, bribing officials, chasing friends. No one was surprised in the spring of 1873 when an investor rushed Gould’s table at Delmonico’s and punched the “Little Wizard” in the nose. The New York Times went so far as to suggest that the “flattening of Gould’s nose” could be “an hourly occurrence.”
To benefit personally, “[Gould] would hurt anyone with money in the market,” writes Greg Steinmetz in “American Rascal: How Jay Gould Built Wall Street’s Biggest Fortune” (Simon & Schuster), out now.
When a railroad employed by Gould as a surveyor halted construction due to an impending lawsuit, he came to a meeting—he stood just six feet tall and was only 17 years old—with a suggestion that the railroad be built immediately, the legality is doomed. Gould had a crew and could start that day, he told railroad drivers. The railroad agreed, and Jay Gould’s career of working with the hook or crook was underway.
He worked tirelessly, often days without sleep, and eventually fell ill. When he recovered from typhoid fever at the age of 20, he toiled in a shop and befriended the owners. But when a client wanted to sell the owners a valuable plot of land, Gould bought it himself. That cost him a job, but when he flipped the acreage, he made a profit of $5,000 ($100,000 in today’s dollars).
In 1856, a wealthy tannery owner named Zadock Pratt wanted Gould to examine his property, but the young man suggested doing business instead: Gould lied about a hemlock forest (necessary for tanning) where they built a new facility. could build. Pratt agreed, so Gould roamed the Pennsylvania wilderness in search of that forest. He found it and a tannery co-owned by Pratt and Gould was built. Gould sold the hides from the tannery to Pratt for resale, until Gould realized he could get a better price in New York City. That ended the partnership, but increased Gould’s profits.
Gould didn’t meet the Union Army’s 5’3” height requirement, so he spent the Civil War in New York City, realizing there was more money in buying and selling hides than in producing them . He left the tan to enter the “smoky world of stocks and bonds.” On Wall Street, “brains and information … won the day,” Steinmetz writes, and no one was better than Gould. “He was more methodical, more voracious in search of insights and more patient with details.”
Gould began investing in railroads in 1859—he would eventually check one on every six miles of U.S. track—and smeared the palm of Tammany Hall’s Boss Tweed for help. When Cornelius Vanderbilt and Daniel Drew began fighting for control of the Erie Railway, Gould sniffed them both. While Vanderbilt tried to buy up all of Erie’s stock, Gould bribed a judge to have more certificates printed and Vanderbilt took out nearly $7,000,000. The enraged Vanderbilt got another judge to issue an arrest warrant for Gould, forcing Gould to flee Manhattan to New Jersey one night by rowboat with satchels full of Erie money. Later, Gould sneaked into New York to bribe state officials in Albany — he reportedly arrived with a briefcase “literally filled with $1,000 bills” — and bought his way to freedom. A peace deal was reached with Vanderbilt and Gould was installed as Erie’s new president.
After that ‘Great Erie War’, Gould’s name was made.
He orchestrated some of the most brutal moves in Wall Street history, including an attempt to corner the gold market in 1869—the first “Black Friday.” While Gould made some money in that largely failed attempt, the attempt tarnished the reputation of President US Grant (who was thought to be in cahoots with Gould), put banks on the brink of collapse and threatened the entire US economy.
Gould didn’t care. He believed that his ambition was “divine, a true and noble and necessary path”. While Cornelius Vanderbilt considered Jay Gould “the smartest man in America,” most thought otherwise. Given Gould’s adoration of money, Mark Twain characterized him as “the mightiest disaster that ever befell this country.” Newspapers variously labeled him “Mephistopheles,” “a ghoul in human form” or “the most sinister figure ever to fly like a bat through the vision of the American people.”
Gould played by his own rules. When he wanted to buy the Manhattan Railway — also known as New York City’s elevated trains — he had his New York World newspaper spread stories of its impending demise, causing the stock price to plummet. He then gained control by buying his shares cheaply, after which the world spread stories about the overall health of the railways, causing the stock price to bounce back dramatically. Within six months, the shares that Gould bought for a million dollars were worth 2.5 times that.
“It was one of the best investments he’s ever made,” Steinmetz writes.
Over the course of his infamous career, Jay Gould’s Machiavellian moves caused enraged investors to not only beat him at Delmonico, but also threw him off a Broadway staircase and threatened him with a gun. He was arrested three times, but never spent a day in jail and always tried to get himself out of trouble. Gould died of tuberculosis in 1892, aged 56, worth a fortune estimated at billions in today’s dollars.