Know Your Labor & Market Manipulators: Jay Gould

April 10, 2009 at 5:27 pm | Posted in Economy, Historical, Labor | 1 Comment
Tags: Jay Gould, labor movement, market manipulation, railroads, unregulated finance

Jay Gould (between 1865 and 1892)

[Jay Gould] found his forte in Wall Street, ostensibly as a stockbroker but really as a speculator. In that period of unregulated finance Gould quickly mastered the intricacies of corporate management and of security trading and manipulation. He traded in the securities of his own companies, manipulating banks he was associated with to finance his speculations and corrupting legislators and judges. From 1867 to 1872 he was a power and a terror in Wall Street.

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By 1881 he owned 15% of all U.S. rail mileage. Having made large profits by manipulating the company’s stock, he pulled out of the company in 1882 and began building a new rail system southwest of St. Louis that by 1890 included half the region’s rail mileage. In 1881 he gained control of Western Union Corp., and he owned the New York World newspaper from 1879 to 1883. He remained ruthless, unscrupulous, and friendless to the end.

Geo. Jr. and Jay Gould at Helen's wedding, January 1913

Black Friday, September 24 1869, also known as the Fisk/Gould Scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange. It was one of several scandals that rocked the presidency of Ulysses S. Grant. During the American Civil War, the United States government issued a large amount of money that was backed by nothing but credit. After the war ended, people commonly believed that the U.S. Government would buy back the “greenbacks” with gold. In 1869, a group of speculators, headed by James Fisk and Jay Gould, sought to profit off this by cornering the gold market. Gould and Fisk first recruited Grant’s brother-in-law, a financier named Abel Corbin. They used Corbin to get close to Grant in social situations, where they would argue against government sale of gold, and Corbin would support their arguments. Corbin convinced Grant to appoint General Daniel Butterfield as assistant Treasurer of the United States. Butterfield agreed to tip the men off when the government intended to sell gold.

At last the annual reports of Jay Gould’s Southwestern railway system have been issued. They are interesting to the point of sensationalism.

— NY Times, March 20, 1888

Lyndhurst, Tarrytown, N.Y. (between 1910 and 1920)

By 1884 Jay Gould was at the zenith of his power, having gained control of Western Union Telegraph, the New York Elevated Railway and the Union Pacific Railroad. Mr. Gould used Lyndhurst as an escape from the pressures of his business life and when his health was impaired by tuberculosis, Lyndhurst served as a country retreat until his death in 1892.

Mrs. George Jay Gould (c. 1903)

Train magnate Jay Gould made himself famous for all American labor historians by saying, “I can hire half the working class to kill the other half.”

He proved his malicious intent by hiring gunmen to murder railroad workers during the Great Southwest Railroad Strike of 1886. The original call for the strike occurred in Sherman, Texas at a Knights of Labor meeting. Gould had been defeated by the union in 1885, but he triumphed in 1886.

Both strikes were led by Texas labor hero Martin Irons. After the big defeat, Irons was blacklisted from his trade as a railroad machinist. He eventually died in poverty in Bruceville, just south of Waco. They put him in a paupers’ grave.

In spite of the strike’s failure, it focused the attention of the public on the railroads and their business practices. A congressional committee investigating the strike held highly publicized hearings in Fort Worth, Marshall, Palestine, and other towns.

Enter Jim Hogg.

Chauncey M. Depew, President of the New York Central Railroad Company (and close personal friend of Jay Gould) caricatured as a railroad cart stove (published 1891 Apr. 4)

WHAT develops in the Wabash Railway labor situation is of more importance than is popularly estimated in New York. The legal issues raised and determined in the courts, the dismissal of the corporation’s prayer for a permanent injunction against the organization of its employes, presented features of interest enough to put aside in the public consideration what actually are the chiefly consequential factors.

— NY Times, April 5, 1903

Born into poverty on an upstate New York in 1836, Gould was too sickly to go into farming. Instead, he went into surveying and then into tanning animal hides. He speculated first in hides and then in railroad stocks, engaging in one of the most colorful struggles in American business history: a fight with Commodore Vanderbilt for control of the Erie Railroad. To prevent gangs of toughs sent by Vanderbilt from gaining access to his records, Gould placed cannons on the Jersey City waterfront and launched a flotilla of four vessels of armed gunmen. As quickly as Vanderbilt bought stock in the railroad, Gould illegally issued more. When Gould was placed under the custody of a court officer for this illegal act, he bribed members of New York’s legislature to change the law.

George Jay Gould, son of Jay Gould, 1864-1923, with family (c. 1910)

He reduced the wages of imported Chinese laborers in his mines to just $27 a month. He was damned as a speculator, rigging markets for short-term gains. But in fact he had a number of actual achievements to his name. He was actually an empire builder who sought to create railroad and communication systems capable of meeting the needs of an expanding nation. He operated New York City’s elevated railroad and led Western Union to victory in its battle for control of the telegraph industry.

Criminal activity is overlooked apparently as long as one is “capable of meeting the needs of an expanding nation.” The more things change, the more they stay the same.

Two of the tiny workers, a raveler and a looper in Loudon Hosiery Mills. Location: Loudon, Tennessee. (December 1910)