Jay Gould, Notorious Robber Baron

Unscrupulous Wall Street Trader Tried to Corner the Market on Gold

Engraved portrait of financier Jay Gould
Jay Gould. Hulton Archive/Getty Images

Jay Gould was a businessman who came to personify the robber baron in late 19th century America. He had a reputation for ruthless business tactics, many of which would be illegal today, and was often considered the most despised man in the nation.

Over the course of his career, Gould made and lost several fortunes. When he died in December 1892 newspapers estimated his wealth at more than $100 million. Rising from humble roots, he first attained considerable wealth as an unscrupulous trader on Wall Street during the Civil War.

Gould became notorious for his role in two well-publicized business episodes, the Erie Railroad War, a struggle to control a major railroad, and the Gold Corner, a crisis precipitated when Gould tried to corner the market on gold to further his other business strategies.

Many of Gould's notorious episodes involved manipulation of stock prices. For instance, he might buy up as much stock of a company as he could, causing the price to rise. As others jumped in he would dump his stock, booking profits for himself and sometimes creating financial ruin for others.

In some ways Gould seemed to be the epitome of the robber baron. Others to whom the term was applied may have provided useful services or manufactured necessary items. Yet to the public, Jay Gould appeared to be purely a trader and manipulator.

Gould’s fortune was made through very complicated transactions and financial sleight of hand. A perfect villain for this times, he would be portrayed in political cartoons by artists such as Thomas Nast as running with bags of money in his hands. Other illustrators depicted him as the devil.

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

Early Life and Career of Jay Gould

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 as well as surveying.

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.

An early story which often circulated about Gould 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.

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.

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, it's possible Gould saw the value of having a partner who couldn't help but draw 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, the legendary Cornelius Vanderbilt.

The Erie War played out as a bizarre spectacle of business intrigue and public drama, as Gould, Fisk, and Drew at one point 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 to essentially 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 confederates were working to drive up the price. And 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 which would become famous 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 of what had happened, but Gould had carefully covered his tracks. He was not prosecuted for violating any laws.

The "Black Friday" episode made Gould more wealthy and more famous, though he generally tried to avoid publicity. 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 gunned down in a Manhattan hotel. As Fisk lay dying, Gould rushed to his side, as did another friend, William M. “Boss” Tweed, the famed leader of Tammany Hall, New York’s notorious 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 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.

In the 1880s he 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 a notorious 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, though Gould, as ever, seemed to profit.

Gould became known as an associate of the famed 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 always seemed to be the case, rumors swirled around Gould, but nothing was ever proven in court.

Legacy of Jay Gould

Gould has generally been depicted as a dark force in American life, a stock manipulator who certainly could not prosper in today’s world of securities regulation. Yet he did help to build the nation’s railroad system, and it has been argued that the last 20 years of his career were not based on any criminal acts.

Gould married in 1863, and he and his wife had six children. His personal life was relatively quiet. 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.

When Gould died, 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.

An obituary in the New York Times noted that he owned stock in a number of railroad companies, mainly concentrated in the West. He also owned valuable timber lands in the Southwest as well as valuable coal and iron mines.

Though he wasn't known for flashy displays of wealth, one anecdote in his New York Times obituary demonstrated that he once grew impatient with Wall Street rumors that he had lost his fortune:

"During the spring of 1882 affairs were gloomy and unstable in Wall Street. There were repeated financial intimations that Mr. Gould was cramped financially. He acted as though vexed by the insinuations, and on March 13 he invited John T. Terry, Cyrus W. Field, and one or two other persons to accompany him to his vault in the Mercantile Safe Deposit Company. There, according to Mr. Terry's narrative of the occurrence, Mr. Gould displayed securities of the face value of $53,000,000, 'and there was one box that was not opened.' The witnesses evidently got tired of counting."

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