Childhood & Early Life
Jay Gould was born on May 27, 1836 in Roxbury, a village located in the Delaware County, New York. His father, John Burr Gould, was a farmer and a storekeeper. His mother, Mary More, was the daughter of a businessman.
He started his education at local school at Roxbury. Very soon, he made it clear that he did not want to be a farmer. His father then enrolled him at Hobart Academy, located at Hobart, also in Delaware County. To sustain himself, sixteen years old Jay began working as a book keeper for a blacksmith.
Concurrently, he continued his education in private, studying at night, putting special emphasis on mathematics and surveying. Some accounts also mention that he worked at his father’s hardware store for some time.
By 1853, Jay Gould was offered half interest in the blacksmith shop he had been working in. He sold that to his father in 1854 and with that money he moved to New York, where he opened a survey business.
From 1854 to 1856, over a period of three years, Gould surveyed Ulster, Albany and Delaware counties of the New York State and created the maps of that region. Concurrently, he also started writing and in 1856, published ‘A History of Delaware County and the Border Wars of New York’.
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In 1856, Gould met Zadock Pratt, an established businessman and a tannery owner. He hired Gould to survey another tanning site in Pennsylvania. When the site was found, Pratt and Gourd jointly opened the tannery.
The $120,000 capital was invested solely by Pratt while Gould was entrusted with running the business. According to some accounts Gould also invested $5,000 in the project, which began to expand rapidly. However, the partnership did not last.
Pratt was not satisfied with the returns he received on his investments. Gould next convinced Charles M. Leupp, a rich leather merchant from New York City, to loan him money and in the same year, bought out Pratt’s share for $60,000. Subsequently, he and Leupp became partners in the business.
The partnership ran successfully until the Panic of 1857, in which Leupp lost all his money. Gould now used the opportunity to buy out the properties for himself. However, after Leupp’s death, he was forced to sell his share of the tannery to Leupp’s brother-in-law.
He now moved to New York City and began trading in leather and possibly lumbers. Around this time, he also became involved in banking business at Stroudsburg, Pennsylvania and started speculating at the Wall Street, manipulating prices for his own gain.
His involvement in the speculation business started when in the late 1850s his would-be father-in-law, Daniel S. Miller, asked Gould to help him save his investment in the Rutland and Washington Railroad. In the ensuing Panic of 1857, Gould was able to buy out the majority share of the company at 10 cent per dollar.
Thus he established his control in Rutland and Washington Railroad and skillfully reorganized the company. More importantly, the deal initiated him into the speculation business. He quickly mastered the art of stock trading and manipulation. By 1860, he became a well-known name in the Wall Street.
Throughout the American Civil War, which broke out on April 12, 1861, Gould continued speculating on railroad stocks. When in 1863 the investors took control of the Rensselaer and Saratoga Railroad, Gould was appointed its manager. He now began running the company and made a lot of money from it.
Controlling Erie Railroad
Sometime around 1866, Gould, along with James Fisk, became a board member of Erie Railroad, which was undergoing financial trouble and had been put under receivership. Gould, along with Fisk and Daniel Drew, one of the company financers, now planned to take over the company.
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To do that, they first needed to oust Cornelius Vanderbilt, who was in control of the company. What followed is now known as Erie War. They first began watering down the company stocks and manipulating the share prices.
Next they issued one hundred thousand shares of new Erie stock, using illegal means, which they legalized by bribing the legislatures. Finally in the summer of 1868, they were able to oust Cornelius Vanderbilt and Gould became the President of the company.
Gould now began to expand Erie Railway, which further increased the debt of the company. However, he skillfully traded its stocks and made a lot of money for himself and with that he gained control of another railroad company called Wabash; it mainly carried wheat.
Now he thought of a unique plan to increase the traffic for Wabash. From the late summer of 1869, Gould began to hoard large amounts of gold.This resulted in the rise in gold price and fall in value of dollar.
His idea was that cheaper dollar would encourage foreign merchants to buy wheat, which would result in eastward movement of the crop. However, his aim remained unfulfilled. The stock market crashed on September 24, 1869. The event, known as ‘Black Friday’, led to financial ruin for many investors.
Realizing the situation, the U.S Treasury started selling gold. Although Gould initially made a small profit, he lost it in the law suits that followed. Moreover, public opinion went against him.
In 1870, Gould and Fisk once again collaborated to manipulate the stock price of Erie Railroad, which resulted in a great loss for Drew. He ultimately pulled out, but Gould was yet to assume full control of the company.
Some time in 1873, Gould met a man, who claimed to be Lord Gordon-Gordon and a cousin of the Campbells, the descendents of the ancient rulers of Scotland. Not realizing he was an imposter, Gould gave him $1 million in stock and Gordon-Gordon in turn promised to help him in gaining full control of Erie Railroad.
Instead of helping Gould, Gordon-Gordon cashed the stock and fled to Canada, where he convinced the authorities that he was innocent. Realizing that he had been duped, Gould now went after him and had him kidnapped; but while crossing the border, he was caught and jailed.
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Although he was later freed on the intervention of his powerful friends, the ensuing scandal meant that Gould would never be able to take control of Erie Railroad. However, by then he had made a fortune of $25 million.
Gould now turned his attention to Mid West and West and began to buy stocks of Union Pacific Railroad in bulk. In this he took advantage of low stock prices as well as the prevailing financial instability.
In 1874, he took control of the company and immediately began to reorganize its whole structure. Side by side, he also acquired shares in various other companies such as Atlantic and Pacific Telegraph Company, Missouri Pacific Railroad etc.
Gould acquired Pacific Telegraph Company in 1874 and Missouri Pacific Railroad in 1879. Soon he was in controlof 10,000 miles (16,000 km) of railway, which was about one-ninth of the prevailing railway length in the US of that era.
Continuing with his buying spree, he acquired Western Union in 1881. By 1882, he had acquired controlling interest in 15 percent of the country's rail tracks and owned a huge amount of shares in different railroad companies.
Soon after this, a political controversy erupted over a federal loan he had taken and because of that, he was forced to quit Pacific Union Railroad in 1883. However, by that time the share market had dramatically recovered and so Gould was able to earn a huge profit on the shares he had been holding.
Sometime now, he gained controlling interest in the Manhattan Elevated Railroad. Between 1885 and 1889, he gained control of the Wabash and the Texas and Pacific Railroads and after reorganizing them, he tied them to his Missouri Pacific system. In 1889, Gould organized the Terminal Railroad Association of St. Louis.
Personal Life & Legacy
In 1863, Gould married Helen Day Miller and remained together till her death in 1889. The couple had six children; George Jay I, Edwin I, Helen, Howard, Anna and Frank Jay Gould.
Among them, his eldest son George Jay Gould I became famous as the owner and manager of several railway companies. His eldest daughter Helen Miller Gould became a famous philanthropist.
Jay Gould died from tuberculosis on December 2, 1892 in New York. He was interred in the Woodlawn Cemetery, New York and was survived by his six children.
Jay Gould Memorial Reformed Church, located within the Main Street Historic District in Roxbury bears his legacy till today.