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Erik Visits an American Grave, Part 143

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Behind these doors lies the decayed bones of Jay Gould.

Unfortunately, Gould was spawned into this world in 1836. He had a terrible relationship with his parents, who eventually just dropped him off at a school with a few bucks and hoped for the best. His principal took a liking to the boy and eventually got him a job working as a bookkeeper for a blacksmith. He worked as a surveyor and then wrote a book about New York history in the mid-1850s. Always enterprising, he started his first business in 1856, a tanning operation. He quickly bought out his partner and started another business. During the Panic of 1857, that partnership dissolved and Gould took advantage of the economic crisis by buying up as much cheap property as he could. He also began investing in railways, speculating on struggling railroads and buying up cheap stock that allowed him to control them. This would become his specialty. He got to know other sharpers of the era such as Cornelius Vanderbilt and Jay Fisk. They would work together and compete with each other and try to screw each other as much as possible, even as they were “friends,” in the sense of having economic interests that would occasion cooperation when convenient. All of these men began working togehter on the Erie Railroad in 1859 and by 1868, Gould and Fisk had manipulated their rivals out during the “Erie War,” in which Gould was brought on by the railroad speculator Daniel Drew to issue spurious worthless stock to screw over Vanderbilt into becoming indebted, with Gould and Fisk then doing something similar to Drew. To make all of this happen, they put Boss Tweed on the railroad’s board of directors so they could get what they wanted in Albany. When Tweed got busted in 1871, Gould paid his bail. Through all of this, Gould and Fisk maintained their own opera house, not out of their personal pockets. That was for losers. They used the company funds for it.

This is why I don’t think the Civil War was all that important to the establishment of Gilded Age corruption. Yes, it was hugely significant because of the vast growth of the American economy but that was going to happen in some form anyway and a lot of this naked corruption that became notorious in the 1870s and 1880s was already in its infant form by the 1850s, with all the lies and self-justifying and hypocrisy from those engaging it already existing. Gould himself spent the Civil War engaging in his railroad speculations rather than doing anything for the war effort.

The Erie War brought Gould to the public spotlight, that and his attempt to corner the gold market using his connections to Ulysses S. Grant, who was the easiest mark to ever hold the Oval Office except perhaps Donald Trump. Grant loved being around rich people and while he wasn’t personally corrupt, he was ready to give his trust and money to the corrupt, which burned him over and over. In 1869, again working with Jay Fisk, Gould attempted to drive up the price of gold so that it would also drive up wheat prices, force western farmers to sell it, and then he would profit on not only the gold but on the freight charges on the Erie Railroad. He sold information to Grant’s brother-in-law to make this happen. It worked briefly, but created a bubble that caused the price of gold to collapse. This made Gould a public enemy to the American public, who were disturbed that a single individual’s machinations could affect the economy so greatly. Henry Adams wrote a book exposing the whole scam. But Gould wasn’t done yet.

When the British noble Lord Gordon-Gordon passed some bad checks to Gould (as part of a way Gould and his partners were trying to scheme the Brit), they crossed into Canada and kidnapped him when he fled, getting caught as they tried to smuggle him across the border. Gould and his friends, including 2 future governors of Minnesota and 3 future members of Congress, were arrested and put in prison. This so outraged the governor of Minnesota that he raised a militia and threatened to invade Canada to free Gould. At the verge of a major international incident beginning, Canada let Gould and the others go. Through all of this, Gould was finally forced out of the Erie Railroad.

So Gould moved his area of operations west. He started buying up railroad lines in the Midwest and the West. When the Panic of 1873 took place, he swooped in and bought the Union Pacific on the cheap. By 1882, he controlled 15 percent of the nation’s rail lines. He sought monopoly control and his purchases led, after his death, to an anti-trust lawsuit as his company completely controlled all rail traffic coming in and out of St. Louis, a major hub. Through these years, he routinely would release fraudulent information about his own railroads to manipulate the market and make himself money. He notoriously did this with the Union Pacific, going into massive debt on government railroad contracts, then talking up the railroad, creating a bubble that burst just after he sold all his stock for a tidy $10 million profit. This played a significant role in the economic downturn that spiked the next year.

Of course, he sought to maximize profits on the backs of workers. This led to several strikes against his operations. He famously and perhaps apocryphally said “I can hire one half of the working class to kill the other half.” Whether that was true or not, he lived by the general philosophy. Part of the reason to monopolize the railroads was to undermine labor’s independence and the ability of workers to bargain for wages. By 1885, he sought to significantly lower his labor costs. The growing Knights of Labor rail unions went on strike, this caught Gould a bit off guard, and Terence Powderly sat down with him and hammered out an agreement. This victory spurred the great growth of the Knights. Gould wanted to strike back as quickly as possible. This he would do the next year, when the Great Southwestern Strike began. That strike started when one of his railroads fired a worker for attending a Knights meeting and it ended just a couple of days before the legendary Haymarket Riot that gets the primary credit for undermining the Knights. But at least as important if less sexy was Gould eliminating the union from his railroads after the railroad baron hired armed thugs and got his allies who held various governorships in states such as Missouri and Texas to call in the militia.

Gould died of tuberculosis in 1892. He left about $72 million, which is nearly $1.8 billion in 2015 dollars, to his family. Of course this was completely untaxed. Although Gould’s body should have been devoured by pigs, a la Deadwood, he is buried in Woodlawn Cemetery, Bronx, New York.

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