In this episode, we explore the rise of Jay Gould - one of the most infamous robber barons of the Gilded Age. A deeply driven strategist with an unrelenting focus on power and profit, Gould used cunning financial maneuvers and ruthless railroad takeovers to build a vast fortune, shaping America’s industrial expansion while earning both fierce criticism and lasting influence.
Jay Gould was one of the most controversial and influential figures of America’s Gilded Age. Often labeled a “robber baron,” Gould built a massive fortune through relentless focus, calculated risk-taking, and often ruthless business tactics. His life represents both the possibilities and perils of unchecked capitalism in a rapidly industrializing America.
Born in 1836 in upstate New York, Gould came from modest means and was largely self-educated. His early ventures included work as a surveyor and mapmaker before entering the tannery business. It was there that his innate financial acumen began to shine. He structured deals creatively, reinvested profits wisely, and gained experience manipulating the mechanics of business ownership. Gould was deeply driven, not by status or social standing, but by control and wealth. He wasn’t flashy, but he was relentless.
By the 1850s and 1860s, Gould had turned his attention to the railroad industry, which was undergoing explosive growth. Seeing an opportunity, he began buying undervalued stock in struggling railroads. His major break came when he acquired a controlling interest in the Erie Railroad, placing him in direct competition with powerful figures like Cornelius Vanderbilt. What followed became known as the “Erie War,” in which Gould, along with James Fisk and Daniel Drew, issued fraudulent stock to dilute Vanderbilt’s holdings. The battle was waged in courtrooms, back rooms, and through outright bribery of state legislators. Gould emerged victorious, though the scandal reinforced his public image as a corrupt manipulator.
Gould’s most infamous move came in 1869, when he and Fisk attempted to corner the gold market. Believing they could drive up the price by restricting federal sales, they built large positions and manipulated markets behind the scenes. Their influence even reached the inner circle of President Ulysses S. Grant. But when the government released gold into the market to stop the artificial inflation, prices collapsed—triggering Black Friday. While Gould managed to escape with minimal personal loss, the scandal sent shockwaves through the economy and stained his reputation permanently.
Despite the public outrage, Gould remained undeterred and pivoted to longer-term, structural strategies. He began acquiring and consolidating multiple railroads across the country, most notably the Union Pacific, Missouri Pacific, and Texas and Pacific railroads. His strategic focus on integrating supply chains allowed him to reduce inefficiencies, standardize operations, and expand market influence. At one point, his rail network extended from the Great Lakes to the Gulf of Mexico. However, his tactics—especially his suppression of wages, resistance to unions, and aggressive rate-setting—often put him at odds with workers and regulators.
In addition to railroads, Gould saw potential in telecommunications. He acquired a significant stake in Western Union, the dominant telegraph company, and expanded his empire into information infrastructure. His control of both transportation and communication gave him unprecedented influence over the movement of goods and ideas—an early example of vertical integration. Gould's ability to move between industries showed his exceptional foresight and adaptability, even if his methods were controversial.
Gould’s personal style contrasted with many of his peers. Unlike Rockefeller or Carnegie, he was not interested in philanthropy or public admiration. He kept a low profile and spoke little to the press. Yet his financial strategies were unmatched. He used insider information, timing, and financial engineering to shape industries, even in the face of public backlash. Gould operated like a chess master, always thinking several moves ahead, always seeking an edge.
By the time of his death in 1892, Jay Gould was worth an estimated $72 million on paper, some say it was more like $125 million. Though he never shed the title of “robber baron,” he left behind a legacy that is more nuanced than pure villainy. On one hand, his methods were undeniably ruthless characterized by manipulation, exploitation, and an indifference to public welfare. On the other hand, Gould played a central role in modernizing America’s economic infrastructure. He saw inefficiencies in the system and acted—often unethically—to correct them, consolidating industries that were fragmented and volatile.
His life raises a fundamental question: Can someone be both a builder and a destroyer in the same breath? Gould’s empire advanced America’s industrial development, but at significant social and ethical cost. His story is a reflection of American capitalism in its rawest form—brilliant, brutal, and unapologetically ambitious.
In today’s terms, Jay Gould might be compared to a corporate raider or tech mogul with a relentless drive to disrupt. He never cared much about how he was perceived, only about what he could control. He remains one of the most complex and compelling characters in American business history—a man whose focus, intelligence, and obsession with winning continue to provoke debate over what defines success and legacy.
Books Referenced
Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons
Becoming Trader Joe: How I Did Business My Way and Still Beat the Big Guys
A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market
Sam Walton: Made In America
We are in a moment where there is a particular inevitable future waiting to be made. I see things very, very clearly. I feel inspired with an artist's conception, divine inspiration, I cannot say, but my road is laid out before me in the plainest of ways. I feel as if all the wheels have finally been installed on my life.
Now that I'm at this place, it is a puzzlement to me. How I endured before everything prior seems to have been boxing in the dark, scraping without reason. Now I have my road to walk and my reason for walking it now, the pieces fit and this thing ambition is no longer blind but divine, A true and noble and necessary path.
This selection is from the book I'd like to discuss with you today, and it's called Dark Genius of Wall Street, the [00:01:00] misunderstood life of Jay Gould, king of the Robber Barons. And it was written by Edward J Renehan, Jr. and these words were written by Gould in a letter to his former teacher and friend describing how clearly, he sees his path in life.
And this comes after selling his controlling interest in the Rutland and Washington railroad, or the R&W
in which he would make more than a hundred thousand dollars, which was a great deal of money back in 1865 to accomplish this feat, Jay would have scraped together the money to take control of the R&W. And then he would move in very swiftly to shore up all of the financials. And then through a very direct hands-on approach, he would reshape the management, and then he would make vast improvements to the line.
And then at the end, he would realize quite a handsome profit. But more importantly, it marks a transition for [00:02:00] Jay, who at this time is only 27 years old, from one of a traitor on Wall Street to that of an early robber Baron
who would become larger than life and would use Wall Street as his toy, the ultimate form of leverage to expand his vast empire. This would come to include the Union Pacific Railroad, the Western Union Telegraph, the Missouri Pacific, and the Manhattan Elevated Railroad, just to name a few. And there were many, many, many others.
This opening selection really stood out for me as I read it the first time. And it really made me think about what we talked on previous episodes. That in life we're dealt certain cards and how we play those cards makes all the difference in the world. And when I read a book for the show, when I'm about halfway through, I like to start listening to the audio book as well.
And I do this as a form of reinforcement. When I heard the selection, I was driving in my [00:03:00] car and it actually gave me goosebumps. It was like Jay was sitting next to me basically describing how he had clearly discovered his purpose in life after the sale of the R&W. And I think that's a really profound moment for anyone when they truly discover their purpose and they can have a very clear and focused vision.
The moment when work simply becomes play and you can freely enjoy your passions in life.
Thankfully we have these words from Jay and he captured how he felt. Now I have my road to walk and my reason for walking it, those are very, very profound. And for Jay, that would ultimately be his work and his family as we're gonna see today throughout the episode.
I think that gives us a really nice view and transition point today for our discussion. We can take a look at Jay's early life in those deeply driven motivations that lead him to his purpose. And then [00:04:00] we can watch Jake blast off once he's arranged all of his cards and he knows exactly how he wants to play them for the remainder of his life.
But before we get started, I just wanted to take a quick moment and thank the author Edward J Renehan, Jr. For the amazing amount of work and detail that went into this book. I've thoroughly enjoyed reading this book and listening to it. And then as I've made my outline rereading major sections of the book, I would highly suggest picking up a copy for your own library.
I'll certainly leave a link in the show notes if you'd like to pick up a copy for your own
And before we jump back in time, I just wanted to see if you might be able to do me a quick favor. If you like this episode, if you might be able to just leave me a quick review or some feedback that would help me out a great deal
I have about 50 hours of work into this particular episode. By the time I read the book, listen to it, conduct research, [00:05:00] make the outline, uh, for the show record and edit. There's a great deal of work that goes into that. So if you would just take a moment and leave me some quick feedback, I would appreciate that.
That would help me also understand your thinking so I could make the episodes better for you guys. I would greatly appreciate it and I thank you very much in advance and I appreciate you taking the time to listen to the episode today. Alright, if we jump back in time, we're gonna go back to May, 1863
and
Jason Jay Gould would be born a few miles outside of Roxbury, New York and when he was born, he was, uh, a premature baby and he would remain physically small as compared to the rest of his peers for the duration of his 56 years on Earth. I think it was mentioned that he only reached about five foot or five foot one, so he was on the shorter side,
but his drive and ambition certainly stood head and shoulders above just about everyone.
Jay’s [00:06:00] sister Sarah would recount the following. During his earliest years as the pet and idol of the household, pampered and admired by all the girls, part brother and part baby doll, Jay had, uh, five sisters at home that were older than him and they would all look after Jay as he was growing up.
Now, his father John, at the time, he was a farmer and his mother Mary, she was a homemaker and his mother Mary, was said to have a very strong character and she was deeply loving towards her family, in her religion ,
but Jay didn't get to know her very long because when he was just shy of about five years old, his mother would die. And in an account from his sister Sarah, She would recall him saying the following, it was the messenger summoning us from school, an order that she might give us her last dying blessing.
He said he had never forgotten [00:07:00] how cold her lips were when she gave him her last kiss of love. That's so sad. Sarah would go on to say that Jay had inherited from Mary all his ambition. And that evenness of temper, which enabled him to control himself even as a boy and still more when he became a man.
And right here we can see the first learnings from his mother, and these are gonna shape him for the rest of his childhood
and give him his demeanor in life.
Jay's father would go on to marry two more times while Jay was still a boy, each of whom would unfortunately die shortly after they got married. And they were both buried in the cemetery next to his mother. So at an early age, Jay's already making a lot of trips to the cemetery to bury people that he's close to, his sister would say the following, Jay had seen a great deal of trouble before the age of [00:08:00] 10,
and I think this likely contributed to his ambition and determination to ultimately succeed and drive forward and push hard at things in life. I think he saw early that life is short and that it needs to be living to its full extreme. So what would be his sisters who would huddle around Jay and take care of him as he is growing up, little would they know, that it would be Jay who would ultimately take care of them all later on in life.
Jay was deeply driven towards his family over the duration of his life. And we'll see this many times throughout the episode today, how dedicated he was to his wife, to his family, and even to his extended family. Now, Jay's father would want him to focus on farming, and he tried many times to get him to go learn the ways of farming, but Jay would always make some sort of excuse to try to get out of doing his work.
And many times [00:09:00] he would just say, you know, I need to focus on my studies. Or he would go hide. So they couldn't be found.
and we can see here early on, how driven Jay is at educating himself.
Let me just read for you here so we can get a sense of how he was. Let Jake Gould was a fastidious and serious child, seemingly delicate until challenged. And possessed of a somber maturity that belied his youth. He was remarkably focused. I knew him once to work at times for three weeks on difficult problems and logarithms.
Sarah recalled he would never accept assistance in working out hard problems. No small part of Jay's tenacity derived from the realization that he hated farming. It usually fell to him as the elder of two sons, Jay's brother. Abram was born when he was just three to [00:10:00] perform many of the toughest chores around the Gould household.
So to escape the farm in pursuit of a better education, Jay would've ultimately convinced his father to let him attend a private school called Beachwood. And it was nine miles away.
So he would walk there on Sunday afternoon, stay all week, attend school, and then he would walk home Friday night. at the school. This leads them into mathematics, science, engineering, And the craft of a surveying. And Jay would borrow some surveying equipment so that he could further develop this craft.
And he came very, very proficient in surveying and map making. And at a very young age, he realizes that he can put this skill to use quite quickly. And little does he know that this map making is gonna be of huge value later on in the future when he is looking at railroad maps. But for right now, he's [00:11:00] 16.
, He would take on his first surveying job for $20 a month, and he was working for a man named Schneider, and he was part of a small crew. Now, very quickly, Jay learns that his boss has kind of a bad reputation for not paying his bills, and he would learn it in the following manner.
Schneider, the Mapmaker provided. Jay was serving tools and assigned him to work a precisely defined corner of Ulster County, New York. he also handed Jay a small account book as you go along. He said, you'll get trusted for your little bills, what you'll eat, and so on, and I'll come around afterwards and pay the bills.
Thus armed, Jay set off sketching, measuring, and plotting the raw data that would eventually become part of Schneider's master map. He was three days out when after stopping overnight with a farmer, he started to [00:12:00] enter the fee for the room and board In his little book, the farmer stopped him. Why you don't know this man.
He has failed three times. He owes everybody in the county and you have got money and I know it, and I want this bill paid. Upon hearing this, Jay turned his pockets out and said, you can see, I tell the truth. I have no money. the farmer nodded. I trust you. He said, but I won't trust that man. At this point, Jay is very embarrassed and he feels like he's made a pretty big mistake here.
And he would say the following, it seemed to me as though the world had come to an end. I debated whether I should give up and go home or whether I should go ahead. That reminds me a little bit of, uh, Milton Hershey. I'm reading the book, emperors of Chocolate right now for the second time, and Hershey failed three times [00:13:00] in business before we started the Hershey company,
and many times he just wanted to give up and go work for someone else. he saw that as a much easier path in life, and a couple times he did that very briefly, but he always returned back to business. Hershey was an inventor of candies and he found the business side kind of challenging, so that's why he had failed so many times.
But thankfully he dug in deep and he kept moving forward. Have you ever been in a situation like that? I know that I have, and it takes a lot of determination to pick yourself up and move forward. Let's see how Jay would react right here. gathering himself together. He boldly asked for food at the next house he came to and was made welcome by the farmer's wife.
When Jay explained that he would enter the money owed in his book, the woman agreed. A few minutes later, however, as Jay hiked [00:14:00] down the road with his gear, he heard the farmer calling from behind him, turning around. Jay braced himself for the worst, but was relieved that he wanted him to come back to the house and making noon mark a North South line, run through a window in such a way that when the sun strikes the line at noon precisely, thus allowing one to set a clock.
After Jay performed the task, the farmer offered him a dollar out of which Jay had the man deduct a shilling for his dinner. That was the first money I made in business. Jay remembered, and it opened up a new field to me. so that I went on from that time and completed the surveys and paid expenses all that summer by making noon marks at different places.
And this my friend, is a major cornerstone in Jay's life. Earlier in the day, he wants to quit and go home, but at the age of [00:15:00] 16, he digs in deep, he does honest work, and he's honest with people. And as a result, he's blessed by making his first dollar. But more importantly, it gave him hope and strength to push forward for the rest of the summer with the work that he would be doing.
And I think this is a valuable lesson for you and I to help us reinforce the fact that when things get difficult and we don't see an end, that we can stop and think, just as Jay did, and also Milton Hershey and dig in deep and tap into our inner resources and keep driving forward, look at all of our cards and figure out how we would like to play 'em.
It can be easy just to quit. Go on and do something else. I mean, imagine if Jay would've quit here, he would've done major damage to that deeply driven inner fire, perhaps setting himself on a [00:16:00] different set of railroad tracks leading to a completely different life. this foray into his first little business would lead him to the next taste of success.
When late in the summer, Schneider would come to them and say, I'm bankrupt fellows. I can't pay your salary. So instead he would just release the rights to the map to Jay and the other surveyors . And Jay didn't have a lot of money, so he took a little bit of a different angle on this and he agreed to an 80 20 split.
So the other two guys that were doing the map would get, uh, 40% each, and then he would just take 20% for himself. But in the end, this 20% would put $500 in his pocket. So in just a couple of months, instead of making 20 bucks a month, he makes, you know, a grand total of 500, which is significantly more. And that's quite impressive for a young man in 1852.
So it would be shortly after [00:17:00] this. There's kind of an interesting paragraph in the book where Jay is talking to his friend and we get a glimpse into Jay's thinking about his future. And it's quite ambitious, and I just wanted to read it for you. After long hours of banter on many subjects, Jay suddenly announced Crosby, I'm going to be rich.
I've seen enough to realize what can be accomplished by means of riches. And I tell you, I'm going to be rich. When Crosby asked by what method Gould proposed to achieve this feat, Jay answered, I have no immediate plan. I only see the goal plans must be formed along the way. As his dream of wealth grew, his dream of a college education, ironically faded.
Jay would say, I have long indulged that fortune will throw me in the way of a better education.
From this, I think we can learn two key [00:18:00] elements. Uh, the first key here is
that Jay sees through life he's gonna get a better education, as he progresses, he's gonna learn all the critical things he needs to learn along the way. And Jay would be an avid lifelong learner and a reader.
often retreating to his library to read after a long day of work. In episode one, if you recall, we saw that Henry Ford had kind of a similar view about life's education and how it should be applied. And I'll just paraphrase here, what Ford would say about schooling.
True education begins after formal schooling ends. He emphasized that true education is gained through the discipline of life. And that thinking, not memorizing facts is what defines an educated person. And that also reminds me of Ray Crock right [00:19:00] here as crock became wealthy after he had grown McDonald's.
He was asked to donate money by all kinds of different universities, and he would flatly refuse to do so unless the school had agreed to build some sort of vocational trade where students could actually learn by doing. He felt that pure academics without any sort of application, weren't beneficial in any manner, and that you should be learning as you're going.
And it's interesting to me how Gould. Ford and Crock all have kind of a similar line of thinking. Now, the second key element from Jay's profound statement that we can learn from here is that he can see the goal. he doesn't get bogged down by a perfect strategy. Instead, he develops plans along the way.
And that ties in real nicely to what we [00:20:00] learned on episode three with Joe Colo at Traders Joe's. And that he sets a reasonable strategy to progress his business forward. The reasonable strategy gives you a general idea to follow in business. Because in business, there's no perfect strategy. If you spend all your time looking for perfection, you're never gonna accomplish anything. And this was the core philosophy that Joe used for 30 years at Trader Joe's and was key for their long-term success.
Okay,
and this also works for Jay. He crafts many reasonable strategies over the duration of his career. So both of these key elements are foundational for Jay, one, lifelong learning, and then two, a reasonable strategy of developing plans as he goes along in life to help him meet that grand vision or that big goal that he had
let's take a look and [00:21:00] see what Jay will do next here. At age 17, Jay would undertake, making new maps of Delaware and Albany counties. In addition, he picks up additional surveying work, and then he secures a contract to help build a plank road between Albany in Shaker New York. Now, while they're building the road, they run into an issue with a certain section that was being opposed by the people in the area, and they were gonna get an injunction to stop work.
So all of the attorneys involved were kind of scrambling for a solution, and they had hosted a meeting in which Jay would attend. So during the meeting, he speaks up and they just thought that Jay was someone's son in the back of the room. And he says, Hey, , can you protect the crew from any sort of prosecution before the injunction has been issued?
And the attorney says, well, [00:22:00] yeah, we can protect you, , until the injunction was served. Then you'll have to stop work What happens next? Provides us a great deal of insight for things to come in the future. Let me just read for you here.
As he would so many times later in life, Jay now used the letter of the law to his complete and utter advantage. That same day he hired every laborer and rented every Dre a DRE is, uh, like a fluffed cart he could find. The following morning, he purchased and hauled vast supplies of lumber using the good credit of the Shaker V Road Corporation as his collateral.
Then he put three teams to work on eight hour shifts, day and night. The work of the night crew being lit by torches. by the morning of the day, the roads opponents obtained their injunction. The disputed section of the highway stood finished. [00:23:00] That is amazing.
So just a year or so before Jay is crying in the woods and he's debating whether or not he should quit his surveying job and go home and be done. And then right here, like a year later after picking himself up by his bootstraps, he took control of his destiny and he moved forward under his own command. And it just makes me smile and laugh a little bit as I read that because it just makes you feel good to see people taking control of their life like Jay.
So after this, Jay would continue on with surveying work, and he would do some other historical documentation at this time. And he's carrying a really heavy workload, but things are looking really bright for Jay. I think he was kind of seeing his path forward, but things are gonna take a turn for the worst.
For a little while. In June of 1854, [00:24:00] Jay would come down with a typhoid fever. And then shortly after that, he would be inflicted by a severe bowel infection. And then after that gets healed up in the fall, he would come down with pneumonia. And that kept him out basically for the remainder of the year.
And he needed money at this time. So he would sell his stakes in the Delaware maps and kind of withdraw from other projects that he was working on. But however, Jay got better and he would go start working part-time in a general store for a gentleman by the name of Ed Burns. And next we're gonna see two major things that happen right here.
The first is that while working at the store, he would meet a Dartmouth educated man by the name of John gl, and he would be the new principal of the Roxbury School. And he quickly found out that McClory was an [00:25:00] avid reader and an intellectual. So that was extremely attractive, uh, for Jay. They became pretty fast friends.
And McClory would actually hire him to teach surveying at the school. Gould would become active in the um, literary club that they had at the school. I think the following selection gives us a really nice insight to Jay's level of intelligence. Let me just read for you here.
Gould also became active in the Roxbury Academy Literary Club, though composed mainly of students. The close-knit organization included several professional men of the community at Mac's invitation. Jay began to show up for the weekly debates at which he exhibited not only extended knowledge, but superior powers of reasoning and ability as an orator rarely attained by one.
So young. [00:26:00] McClory recalled that Jay had a happy faculty of expressing his ideas in clear and vigorous language
that made his arguments very forceful. I wonder how Jay would've done as a podcaster, maybe
instead of Rogan on top, it would be Gould. I have almost no doubt after reading this book,
so in the spring of 1856, while Jay was working in the general store, the next major event happens. Two small landowners came into the store one day and they were looking for burns to see if he might wanted to buy some land that they had for sale, as Burns was known to deal in real estate, but Burns wasn't in at the time.
So a young curious Jay inquires further and he learns of quite a good deal to be had. So he quickly takes the $2,000 he had saved, and he borrows a couple [00:27:00] hundred dollars from his father, and he makes the transaction for the land. And let me just read for you how this worked out.
Not long after Gould purchased the lots, he sold them again to the adjoining farmers at what Burns described as a handsome prophet. In fact, after Jay repaid his father, some $5,000 remained a lordy sum for one, not yet. 20. The true cost of the transaction. Edward Burns firing him seem more than worthwhile.
Although quite legal Jay's move to edge out, the man who paid his salary was hardly ethical. And for the rest of Jay's business life, he's gonna operate on the edge of what is ethical or unethical. When it came to his family, he certainly leaned heavily into the ethical side, and he took care of his loved ones a great deal.
In the business world? Well, things [00:28:00] would be quite different. .
Jay would ultimately develop a deep understanding of the law and business operations, and he was a master strategist, second to none for his time, or maybe even for today, for that matter, Vanderbilt would call him the smartest man in America.
but at this point, Jay still has a long way to go, and that leads us into the next adventure.
In the spring of 1856, Jay would be hired by a gentleman, za Pratt, to survey his farm. And Jay had first met Pratt in 1852 when he was doing that surveying job of Ulster County. He understood at the time that Pratt had been in successful Tanner. So he kept in close contact with Mr. Pratt. And I suppose maybe that was part of Jay's vision, you know, that one to be rich, that possibly propelled him to keep in touch with Pratt.
He continued to offer his [00:29:00] services. So along with surveying, Jay would begin writing speeches for Pratt and also writing important letters. And many have got a lot of successful feedback and made Pratt look really good. So right here we can see that Jay is working to gain the trust of Pratt and something big is about to happen and he's really gonna need the trust of Pratt to make this happen.
Now Pratt had been basically retired from the tanning business. All the hemlock groves in North Carolina had dried up and he didn't have anything else to go on
for the, uh, tanning process. They peel the bark off the hemlock trees, and then they soak the animal hides and water with the bark, and then the chemicals from the bark, uh, make a reaction and they turn the hide into leather. So after all the hemlock groves were [00:30:00] gone, , Pratt didn't have any more operations, so he's basically retired and somehow Jay believes there's, um, hemlock trees in Pennsylvania.
So he was commissioned by Pratt to go investigate the possibilities. And let me just read for you how this worked out. Commissioned by Pratt to investigate the possibilities, Gould traveled to the Poconos in early August. There he hiked through the woods for several days, carrying a compass and some gear until Jubilantly, he found what he was looking for.
Gould took Pratt to the site a week later and showed the old man vast vistas dominated by Hemlock and Alder as far as the eye could see. Convinced Pratt on the spot formed a 50 50 partnership with the enterprising young man who dreamed of great things. They were an odd couple. [00:31:00] Pratt was tall, old, and prosperous.
Jay was short, young, and hungry.
So right here, Jay believed in his instincts and he goes out with a relentless drive to find what he's after. And this reminds me again of Ray Crock, where he finds the McDonald Brothers outta California and they have this little gold mine of a business, but they can't really see the bigger future, and they're settled in their ways.
They're happy with the way their business is running. So Crock would work pretty aggressively to strike a deal with the brothers to let him run and grow the franchise operations. And Crock would open the first location in De Plaines, Illinois, I believe, around 55, 19 55.
And then within like three years, he had more than like a hundred locations. So Crock, just like Jay, is deeply driven. and they both had that passion to [00:32:00] hunt. For what they wanted and to make it happen. this tenacity is infectious.
And you and I can learn a very valuable lesson right here from these two great entrepreneurs that with focus and determination and deep drive, we could have great success. It's not easy and it's not glamorous and it takes a lot of grit and pure determination. But it is possible, my friend. It is possible.
let's keep going and see how things work out here.
So Pratt would be generally hands off and he would provide insights in regards to setting up the tannery, and he would provide his knowledge from the past in working in the tannery business. And then Jay would invest his youthful energy and he would handle the day-to-day operations and oversee the construction of the new plant.
And then Pratt would put up all the capital. Uh, he said that he put in 120,000 to have the plant built, and then Pratt would [00:33:00] also work to acquire the pelts. And then he would also sell the finished leathers through his, , brokerage house in the swamp. The swamp was, um, an area in New York where leather traders, , set up their shops.
Pratt's brokerage house was one, of course, and Pratt, the Pratt, of course, in this case is George Pratt, who was the son of Jay's partner. And meanwhile, back in the Pennsylvania woods, let's see what Jay's doing. gold, spent his initial night in the woods, sleeping on a bed of hemlock boroughs under the shelter of the blacksmith shops, newly raised roof.
Four days later, Jay and the crew finished constructing a dormitory, rude but large and capable of accommodating everyone comfortably by way of dedication. The rough band of laborers gave a round of cheers for their diminutive, but popular [00:34:00] boss passing by acclimation a motion the place thereafter to be named Gouldsborough.
And I can only imagine the immense pride Jay must have felt at that time. He's only 21 years old, and here he has a town that's already named after him. And it's, uh, interesting to see that Gouldsborough still exist today with about 750 residents and Jay's name is actually on the, um, welcome sign as you go into town.
I thought that's pretty interesting.
Now things are gonna start off a little rocky for Jay and Pratt as they had delays getting production up and running with the plant. Pratt really wanted to use a new form of steam engine that would allow them to produce energy with the spent barks. So basically that would allow them to run all year round versus using, , hydropower, which would force them to shut [00:35:00] down in the winter months when the, , rivers iced over.
And they had a lot of challenges getting the steam engine up and running. And when they actually got it running for the first time, it would fail like a week later. And so they would have to order a second engine. And it took quite a bit of time for the second engine to arrive. And it's during this time that gold would be introduced to his partner's son, George Pratt.
George would introduce him to a lot of the other leather merchants in the swamp. So now that we have a little bit of a feel for Jay, what do you think he might do here? Yep. He learns all about the leather business and how everything works
he's gonna say I've come to realize that it is the merchants. an observant Gould wrote his father during the summer of 1857, who command the true power in this industry. The Tanner that's, Jay's current position appears [00:36:00] to take the greatest share of capital, but merely processes that capital, his expenses being extensive, his risk real, and his labor heavy.
The shippers deal with the next largest sums. But again, have extensive expenses and much work to do. The brokers meanwhile take, what seems the smallest share, but in fact is the largest, theirs is nearly pure profit made on the backs of the shipper and the tanner never their hands dirtied.
So in this case, the broker would take, , like 5% for purchasing the hides for the tanner, and then they would take another 6%, for selling the finished leather. so the brokers making basically around, um, 11%
with this new understanding, Jay would, finally work out the kinks of the steam engine and he began processing pelts starting [00:37:00] in, 1858. And it had been almost a year of delays and the relationship with his partner Pratt was starting to crumble quite rapidly and it would take another hit here when Jay breaks relations with the broker and he starts working with the largest, brokerage firm in the swamp known as Charles M.
Lap and Company
as they offered better terms. And Jay was anticipating doing close to 60,000 hides that year, which was considerably more than Pratt had ever done in his operations before, even when he was the largest operator in the United States. So that is quite aggressive for a young gold here.
however, relations keep getting more strained between the two partners, and Pratt would decide that late in 1858 he was gonna break off the partnership with Jay he thought that he could just take advantage of a young Jay, [00:38:00] but that's not gonna quite happen.
Let's see how this works out. The tannery was doing a rushing business that was always at capacity. Profits however, were very small, but the reason for the small, in fact, non-existent profits in the wake of the 1857 panic leather prices remained severely depressed. Margins were tight against this backdrop with his tannery running at full tilt, but amateurization of his investment slowed by a dismal economy.
Pratt apparently sought to improve his personal profit by ousting his partner at a bargain price. under their agreement, Pratt could buy Jay out for, $10,000 as he had put up all of the capital at the beginning. Remember, he put up 120,000, or on the other side of the coin, Jay could buy PR out for $60,000.
Now Pratt really saw this as a [00:39:00] bargain. He got several years of work out of Jay who had busted his back and his brain to set up this operation. So Pratt basically gives him 10 days to decide, and he doesn't think there's any way in hell that Jay is gonna come up with $60,000.
What happens next is gonna show us the deeply different nature of Jay and is a major stepping stone to his legend and the time allowed him by. Pratt Gould traveled to the New York Swamp where he struck a fast deal with Charles m Lep and LE's partner and brother-in-law, David W. Lee Agreed to acquire a two third stake, one third a piece in Pratt and Gould for a price of 60,000. Returning to Prattville Gould flabbergasted Pratt when he exercises option to buy the firm, offering letters from his new partner as Erti. The deal finalized on January 27th, [00:40:00] 1859, left Pratt with a $60,000 loss overall.
Simultaneously, it left Gould with a one-third stake in the thriving tannery and an alliance with one of the swamps most prestigious brokerage firms.
So again, right here, Jay's back is against the wall
and he didn't back down.
He had been working all of these years to build relationships in the swamp, and if he would've been lazy that entire time. When they were trying to get the plant up and running with that steam engine, he never would've been able to pull this off. He used this downtime wisely to educate himself and to deeply learn this business.
That is such a valuable lesson for both of us to learn right here, to dig in and know our industries at a very deep level. , there's no time to take your eye off the ball when things get slow. As it happens, sometimes we need to dig [00:41:00] in and learn new things, pick up a book, which we should be doing every day anyways. , Listen to a podcast, read some industry news, anything to keep your mind going and growing and getting smarter about the things you're doing in your business.
So under Jay's new agreement, he's gonna lead operations of the plant in his partners lep. And Lee would remain silent. They did this because they were major brokers in the swamp, and they didn't want word getting around that they were partners in a tannery. So during the summer, in the fall of 59, for some reason, Le and Lee would start restricting the number of hides that they were shipping to the plant.
And it was thought possibly they were trying to minimize their risk of outstanding materials or outstanding capital into the business [00:42:00] because they had already sunk. A lot of money into the operations at this point. And this is gonna upset Gould a great deal. And around this time he's gonna be forced to deal mostly with David Lee because trouble was brewing for one of the partners, Charles Lepp, as described in the book.
Starting in July, LEP descended into hallucinations, an elephant in the living room, a vampire bat on his shoulders.
and he also began to displace symptoms of paranoia. He believed probably with reason that his friends were spying on him. And eventually Lee would become even more agitated with gold because he is just gonna continue to insist that the plant run at full capacity. He's put all this work and time and effort into it.
Let's run this thing at full capacity. And Lee really gets upset and he offers to buy Jay out at [00:43:00] this point for $20,000. well Jay immediately rejects that he's not gonna take $20,000. He can see the bigger future. He wants to drive forward at full force. So tensions are gonna keep just rising and rising and they're writing heated letters back and forth to one another over who has control of the hides, who has control of the business, who should be running operations,
and it just really got very ugly between these two guys. Now, in the fall of 59, LEP would shoot himself in the chest as his insanity had gotten the best of him, uh, up to that point. And what. A crazy story right there. That's just very sad. And this is just one year after they had entered into this partnership.
after LE's death, there's gonna be many months of delays and they're still going back and forth here. Jay finally agrees to buy Lee [00:44:00] out for 20,000 and then he would also pay LE's Estate 20,000 so that he could take full control of the tannery.
It would take many months to get everything finalized for this transaction while the lap estate was being settled. Jay just continues to pester the hell outta Lee to settle the estate because he knows that Lee has the power to finish it. So finally in February of 1860, Lee sets a meeting up with Jay
to finalize this transaction on the 25th. Jay arrives at Lee's office and when he gets there, he's told that he's sick. He should come back three days later on the 28th. So he does. He comes back and then he is told come back the next day. So he does so again, and he comes back the next day. And at that point he learns that Lee has changed his mind about settling the account.
And basically Lee was having [00:45:00] his secretary string Jay along for these four days so that he could travel to Goldsboro and lock himself inside the plant that Jay had built. This is how bad things had gotten. Once Lee arrives in Goldsboro, he lines up about 15 men that worked at the plant, and he went and got about 10 others to help him with his quest.
And he found that most of the men at the tannery respected Jay a great deal, and they refused to go along with him. Meanwhile, back in New York, Gould's first action would be to consult with his attorney, who said, go take your plant back by force if you need to.
And those were the words that Jay needed to hear. So he would arrive in Goldsboro a few days later to confront Lee,
and he would be threatened with his wife if he didn't leave the premises. So Jay retreats, but not for very long. Early the next morning, Jay rounds up about 200 employees and [00:46:00] townspeople and tells 'em what's going on, and he selects about a hundred of 'em that are willing to go with them to the plant.
So once they arrive at the tannery, he takes 50 men and he sends the 50 other men kind of off to the side, and he sends 25 men to the far end of the building. and then Jay would take 25 himself to try to enter through the front.
So when Jay busts through the doors, he's greeted by gunshots, he quickly backs off. He'll charge for a second and a third time.
And while this is going on, the crew at the far end had breached the building and they had gotten inside and started firing in all directions.
And after a long struggle, Gold's crew would ultimately prevail and many of Lee's men would be jumping out of the window to try to escape and no one would die. And Goul would take back control of the plant. Several would be wounded, I guess, including Lee, who was wounded in the finger. But things are not
gonna return to [00:47:00] the land of milk and honey, as Jay had hoped, both parties would wind up in the courts and they would have legal battles that just drug on for many years. And this would cause the factory to be shut down.
And ultimately it just lost all value as the lawsuits progressed. And as a result, Jay would take quite a dramatic hit to his reputation through a negative press. At this time, his credit in the swamp was basically destroyed because Lee was such a powerful figure in the swamp. He had his credit ruined, and then he also lost a great deal of his wealth as a result.
At this time, he is half partner, $60,000 plus he had plans to take over the rest of it. So basically he's out like $120,000 right here. Now, what Jay would do next is he would take a little time to visit the family and collect his thoughts is he did, back when he was 16 in the woods, thinking about quitting from his [00:48:00] survey.
And right here he writes a letter to his former teacher and his friend, and we get a glimpse into Jay's future. He would say the following, I'm trying to start myself into this smoky world of stocks and bonds. There are magician skills to be learned on Wall Street, and I am meant to learn them. And this is the first mention of Wall Street by Jay.
But however he had that experience, , in the swamp dealing with all of the leather brokers. And this gave him a really distinct advantage in dealing with shrewd men at the time. And this is experience he's gonna need very soon. I just wanted to read for you real quickly here how the New York Tribune would describe Wall Street in 1860.
The road to hell is not contrary to popular rumor paved with good intentions. It's paved instead with cobblestones beer and broken promises, [00:49:00] this is Wall Street, plain and simple. The place where the faithless mingle, where dreams are shattered and fortunes are lost and made. At this point, I'd like to introduce you to one of those such shrewd self-serving operators and that of Daniel Drew.
He was 30 years older than Gould when they would first meet. And to give you an idea of Drew's self-serving heart, he would say the following, we fellows in Wall Street had the fortunes of war to speculate about. And that always makes great doings on a stock exchange.
It's good fishing in troubled water.
During the course of Drew's career, he would become associated with Cornelius Vanderbilt. Drew had a lot of
financial troubles and he always went crawling back to Vanderbilt, who for some reason would always forgive Drew. And this is gonna be a critical element later on in the [00:50:00] story as we see Drew backstabbing and going crawling back to Vanderbilt.
just to shed a little more light on the stock market at this time, drew would say the following, he once told Gould that to speculate on Wall Street without inside information made as much sense as to drive black pigs in the dark. in 1860, there wasno rules about insider information obviously.
Needless to say, Drew's about to be essential figure in Gould's business dealings. And he would use Drew to his advantage on many occasions. Other times, he's gonna inflict a lot of pain on Drew as well
as Drew would pit himself inappropriately against Jay in some of their dealings.
As Jay enters, wall Street, he's gonna start off slow and just learn the ropes in the book outlines real nicely, Jay's approach as he gets started here. [00:51:00] Let me just read for you how this worked out for him.
Jay spent his first months on Wall Street nibbling around the edges doing small deals, winning and losing, and learning from his mistakes, intent as ever. The young devotee spent long days researching leads with a monk-like dedication. He also studied the moves of the sharpest players and learned how instruments might be leveraged to provide either the cash or the credit necessary to make one's desired.
Next step possible. Each morning at the Everett House, he arose early and rushed through his breakfast. Then he devoured the financial news of the various New York newspapers. Thereafter, he was on the curb in and out of brokerage houses, buying and selling all day until five or six at night. And right there we can see that Jay's digging in very deeply on Wall Street.
Now, around this time, another major [00:52:00] event would take place in Jay's life when he meets Helen Miller. And he would eventually end up calling Helen Ellie, and they're gonna be married in 1862. And not a lot is really said about how they meet. It's thought that maybe Ellie was the daughter of one of his associates, possibly Jay wasn't the type of person that would just walk up to a lady on the street or in a restaurant or someplace like that and just start talking to her.
But at any rate, uh, Ellie valued a family. She was really a private person, and she really enjoyed reading and hosting family in their home. And we'll see many times throughout the book that in Jay's personal life, he is a deeply private person and he cherished his family in his home life.
That was how he spent his time away from work to take his mind away from the work world. And he would spend a lot of time in his library, or he would be working in his [00:53:00] garden, but on Wall Street, his tenacity just continued to grow, and he became a master at things such as stock watering, short selling, pooling, bear raids, and bear traps.
And his genius goes further. Let me just read for you here what it says in the book. He developed as well into a maestro of margins, one of the many Wall Street wizards capable of creating capital out of thin air and gaining control of companies by using just a few dollars reflected in a hall of financial mirrors. Fund houses of convertible bonds, proxies, and leveraged cash.
eventually gold skills at financial slide of hand were unsurpassed gold valued Wall Street speculation for the most part, as a means towards greater and more complicated ends. And this is where we see Jay start to use Wall Street as his toy, as he starts to eye a [00:54:00] bigger future that's on the horizon.
He sought in the long run to take control of companies that he could manage, improve, and merge. It was thus only a matter of time before he focused his attention on the one sector of the marketplace that offered not only the greatest range of flexibility of financial instruments, but the greatest promise for long-term growth.
with railroads
And we're starting to see a pattern right here.
Gold enters things slowly, but he learns rapidly and he applies his learnings,
and he learns from his mistakes. And then he reapplies that to his learnings. And eventually we just see super rapid growth.
Jay's focus was unmatched,
and he was deeply driven to success, keeping that very early goal in mind that he told his friend that one day he was gonna be rich. But in the meantime, right now, he's still [00:55:00] on the path to that richness.
And after this, it wouldn't take very long for Jay to enter his first railroad. And let me just walk you through how this worked. In the fall of 1863, he's gonna be presented with an offer to sell, uh, like $50,000 worth of bonds in the Rutland in Washington, or the r and w Railroad. Now Jay knew that directors of a railroad were allowed to issue bonds on their own authority if it was used to finance expansion or repairs of the road.
And it also allowed them to convert those bonds into stock and then vice versa if necessary. So Jay does a little quick math right here, and he determined that he could quickly take control of this railroad. So he moves to acquire all of [00:56:00] the bonds at 10 cents on the dollar. So effective January 1st, 1864, he became the president, the secretary, the treasurer, and the superintendent of the r and w Railroad.
This was just a small railroad at the time. It consisted of 62 miles, I believe. And the track was said to be in really bad condition in the staff that was running. The r and w was highly demoralized and they weren't motivated. So Jay saw a lot of potential upside right here. And when Jay comes in, he doubles down on his efforts to help improve the working infrastructure of the line, and then also increasing traffic flow , on the line for more revenues that would come up.
And then he also goes about shoring up the balance sheet to get things looking good for the railroad road. his efforts would be described real nicely in the [00:57:00] book. Let me just read for you here what he didn't know about the railroad business, which was considerable. He made a point of learning.
I left everything else and went into railroading. He remembered a few years later, I took entire charge of that road. I learned the business and I was the president and treasurer and general superintendent. I gradually brought up the road and I kept at work.
After hiring experienced managers and making necessary repairs, he then needed to drum up new freight and passenger traffic.
So after running the r and w for about a year and a half or so, Jay's gonna sell his interest, to a gentleman by the name of William t. Har in Hart already had a connecting line to the r and w. And he wanted to buy this particular road so that he could expand his empire as well. And this is the deal where Jay would [00:58:00] recognize more than a hundred thousand dollars in profits.
And this is his first major victory in business. This is the one we discussed at the opening of the episode. And I'll just paraphrase real quickly what Jay would say. I see things very, very clearly. I feel inspired with an artist's conception. My road is laid out before me in the plaintiff of ways.
I feel as if all the wheels have finally been installed on my life. Now that I am at this place, it is a puzzlement to me how I endured before. Right here, this is that demarcation point. Up to this point, Jay was just looking for his purpose in life. And then he comes in, he takes control of this railroad, he sells his position and makes a knife profit.
This is gonna be his springboard, his launching pad, whatever term you'd like to insert there into the rest of his life. And we're gonna [00:59:00] see massive growth with Jake Gould from this point going forward. So after he sells his controlling interest to heart, they're gonna form what's called the Troy Salem and Rutland Railroad.
This was a consolidation of the r and w and the Rensselaer and Saratoga lines. Through this, gold's gonna still continue to prosper. And right here, he's gonna start building more connections with leaders and other associates in the railroad industry. Many of these people are gonna be present for the duration of his life,
This is a really important concept. Let me just cover for you how this is laid out in the book.
gold's abilities. As an entrepreneurial talent scout, selecting the natural leaders from among the naturally led, the innovators from among the drones would loom large in the making of his fortune. In time, he would [01:00:00] surround himself with an assortment of lieutenants who had little in common, other than their drive, their smarts, their inventiveness, and their humble origins.
The best schools only rarely produce the best men. He wrote. The School of the Streets seems the one that teaches the most important lessons to those who have the capacity for learning them in time. Gould's Inner Circle would also include a former Vermont peddler, an Italian immigrant whose only formal training was as a deckhand on square riggers and a onetime grocery clerk from upstate New York.
Gold's natural friends and allies would always be self-made men, and his natural enemies would be those with generational financial inertia on their side. Men of inherited wealth, old ancestral connections, and vast social pretensions.
this is an extremely important [01:01:00] lesson for us here, that in life we should surround ourself with those. We want to be like, and I always like this Tony Robbins quote. It says, energy is contagious. Surround yourself with people who bring out the best in you. And I think that's so true.
High quality people positively affect your emotional state and your confidence.
Build your network with high quality people, my friend. And I think we'll see dramatic results in your actions and in your thinking. Jay would generally surround himself with self-made men who were, highly intelligent and deeply driven. And that leads us into his next high profile deal here.
And that is taking control of the Erie Railroad.
Now, in the book, this takes place over about 45 pages or so, and it involves a big bag of tricks that include things like stock manipulation, complex legal wrangling, [01:02:00] bribery, political alliances that are both known secret. And all of these elements are woven together in a fairly complex web.
It really took a master to navigate through this mess, and it takes a couple times to read through the book and kind of get a grasp on how things went down. And I'm gonna try my best here to walk us through the highlights. if you want all the full details, I certainly recommend picking up a book.
I'm just gonna run through the bullet points of how Gould was able to take control of the Erie Railroad.
So what would be In 1867 Cornelius Vanderbilt starts buying really heavily into the debt laden Erie, and he really wanted the Erie Railroad so that he could expand his vast empire. And by doing so, he would gain a seat on the board. But his old buddy Daniel [01:03:00] Drew, , he had other intentions with the Erie, and he was using the Erie as his own personal looting bin.
The book would describe this action in the following way. Drew quickly became adept under the General Railroad Act of 1850 at using the convertibility of the Erie Bonds to manipulate the amount of Erie common stock, and thereby the stock's price. Drew's interest in the Erie extended only as far as manipulation of its stock.
His ambition was to loo his own corporation, squeezing out cash while reducing the firm's equity, and allowing the line itself to remain in shambles. Financial pundits soon took the calling Erie stock, the Scarlet Woman of Wall Street, a whore serving Drew's purposes. Well, what a crooked character in history, my friend.
My goodness. Now, around this time, uh, [01:04:00] Gould would also be buying up a lot of shares in the Erie. in addition, most of the shareholders that owned Erie stock, they were located in Europe and Jay was handling a lot of their transactions for them. And thus he was taking over a lot of their proxy votes and we're at a critical point here just prior to a board election that's upcoming.
Now, drew, at this point, he goes crying tearfully back to Vanderbilt to forgive him for all of the destruction that he's done for the line. And for whatever reason, Vanderbilt would accept this apology. And he had him reinstalled on the board as the treasurer in October just prior to the election.
And this of course, puts Drew in a position where he could assert his influence over who was gonna get elected to the board. So Drew would help get Jay Gould elected to the board, along with another up and coming [01:05:00] traitor that Drew had been working with for a couple of years by the name of Jim Fisk Jr.
Now, let me just take a minute and introduce you to Fisk. , Jim was quite a colorful character in the story here, and he would become a very close ally, uh, with Gould during the course of their short business career. Now Fisk was known as a storyteller and a joke teller, and he always had a lot of tales full of irony
and he was said to be able to delight just about any man. He was a very natural and talented and gifted salesman. Now, Fisk was also a married man, but he had a distance from his wife and he would say the following about her.
She is just a plump, wholesome, big-hearted, commonplace woman, such as a man meets once in a lifetime and then gathers her up into the first church he comes to and seals her [01:06:00] to himself. For you see, these commonplace women like common sense, are apt to become valuable as time goes on. In the same breath.
Fisk praised his wife's discretion. Never, never does Lucy surprise me with a visit. God bless her.
And Lucy would generally remain in Boston most of the time that Jim is in New York.
The author, adds the following. Lucy in fact had little inspiration for jealousy just as she had little cause to complain about her husband's numerous infidelities. And with this, Jim was known to have many women while he was in New York
and he would have a heated love triangle towards the end of his life, as we're gonna see here in the near future. But like Gould, Fisk would enter Wall Street in a similar manner, and he would learn the ropes very [01:07:00] quickly. And by 1865, he had Allied with Drew, who really liked his style and his tenacity.
Drew would help establish Fisk in business. Of course, this was all Drew's benefit, as he could always convince Fisk to play into his schemes and help him manipulate the market. And one prominent New York broker would actually say the following about Fisk. He came bounding onto the Wall Street Circus, like a star acrobat, fresh, exuberant, glittering with spans and turning double summer sets apparently as much for his own amusement.
As for that of the large circle of spectators, he is first, last, and always a man of theatrical efforts of great grand transformations of blue fire. And with all that success, Fisk is gonna live quite an upscale life in a [01:08:00] very grand fashion. Just listen to this, he likewise upgraded himself to the Fifth Avenue hotel's most expensive suite of rooms.
He became something of a fixture. At the finest eatery in town Del Monaco's near the financial district on Beaver Street, champagne breakfasts, the most exquisite silk suits and Goldhead canes become his permanent norm. so did actresses and chorus girls, a steady procession of them.
Fisk is quite the fellow in the contrast between gold and Fisk is night and day. Gold would be silent. Jim was loud and self-confident. Gould is cautious. Jim is bold. Gould generally kept his mouth shut. Jim said whatever the hell he thought, Gould like to keep his money and Jim just spent it freely. But both men had a large appetite for work and they were both [01:09:00] extremely intelligent.
They were perfect compliments. And with that, the table is set for the eerie war.
This combo of Drew Fisk and Gold would become known as the Eerie ring. and they recognized at the time that Vanderbilt was buying up all the stock so that he could take control of the road.
So what they started doing was engaging in stock watering. Basically this is, they would issue bonds and then they would have 'em converted to shares and then they would dump them on the market. And they did that with millions of dollars worth.
And now Vanderbilt would catch on that they're watering the stock and he's just ferocious. And at that time, drew was up to his old bag of tricks. He was silently shorting the stock on his own, making money on the side. And then he would also have gold and Fisk short the stock at the same time. So we could
see right here in this example that Drew is just stabbing Vanderbilt in the [01:10:00] back after he just gained his good graces.
So Vanderbilt would go and have a court order issued that prohibited company directors from issuing bonds and converting them into stock. And he believed that to be the nail in the coffin for him to gain control. So at this point, he just buys even more aggressively. But that's not gonna quite work out for him because the intelligent gold understands the fine details of the law.
And let's see what happens right here. Gold, that avid reader of fine print readily surmised Bernard's order. Bernard was Vanderbilt's judge contained no words limiting the action of the Erie's executive committee, the later being empowered by the corporation's charter to act for the Erie. In between regularly scheduled board meetings.
So in a closed session on March 4th, the [01:11:00] executive committee dominated by Drew Eldridge Goul, and Fisk fired a volley against Vanderbilt's takeover of the road. The committee approved 5 million in bonds and voted the sale to Drew's broker William Heath. Within hours, those same bonds were converted into 50,000 shares , and the lot dumped onto the market the same evening.
Now, Vanderbilt would go and buy all the stock up, but the rumors of the watered stock that hits the newspaper quite quickly and it causes the stock price to go down even more. Vanderbilt's not aware of this executive committee and the stock's just falling and falling and his mouth is literally watering over the watered stock.
So he just keeps buying more and more and more. So what does the executive team do? They double down and would issue another 5 million of [01:12:00] bonds and convert 'em to stock. And almost immediately Vanderbilt would buy 'em all up and the stock goes into a free fall past this point, which simply enrages Vanderbilt even more.
Then to afflict more pain on Vanderbilt, Gould and Drew, they go down to the bank and they withdraw 7 million in cash, which causes the interest rates to go up. And this is the same cash that Vanderbilt is using to buy shares. Wow, this story is really crazy and I chuckled just a little bit going through this imagining.
all the twists and turns these guys are coming up with to dream up these schemes and execute 'em.
And then on the other side of the coin, trying to imagine what Vanderbilt's going through to take over the line. And he keeps getting out flanked by these guys. At any rate, uh, this would cause Vanderbilt to go seek a court order. And in that order, it calls for the arrest of Drew Fisk and Gould, in [01:13:00] New York.
He really wanted these guys, , brought to justice. Now what happens next is nuts. I mean, this story's already nuts. This is just a crazy crazier part of the story. So later in the evening, Fisk and Gold, they're still in New York, they're feeling confident. So they head down to Del Monaco's with their $7 million, uh, in a bag.
So they're having dinner and they had hired some guards to stand out front. While they're eating, the marshal shows up to the restaurant. So Fisk and Gold, they sneak out the back with their 7 million in cash and they hightail it down to the waterfront and they hire some men to row him across the river to New Jersey in this little like lifeboat.
These guys, you know, they're in a little lifeboat with their 7 million and they barely reach the other side. And when they arrive, they're drenched and they're cold. And I only imagine, like, if we put that in perspective of today,
[01:14:00] Can you imagine like. , Bill Gates and Steve Jobs trying to escape with say, $7 billion packed into a, a small boat rowing across the river to New Jersey. 7 billion probably wouldn't even fit in that small boat anyways, , it's just a crazy story. At any rate, , they're gonna hold up at the Taylor Hotel in New Jersey because they're now wanted men in New York
now, Fisk and Gold, they're quite the dual here. The author would say the following about the pair while Fisk did all the talking. It was Gould who had composed the talking points to him, goes to the credit for the master stroke of framing the fight against Vanderbilt in populous terms, a high-minded battle against a single-minded greed, a war against a monopoly.
And what about Drew? You might ask, well, gold had suspicions that he is [01:15:00] probably gonna betray them at some point. So he had hired a detective to actually follow Drew during this time and keep an eye on things. And it wouldn't take long before they catch. Drew withdrawing that $7 million from the New Jersey banks, and he had moved it back to New York.
And Jay is immediately made aware. So he would put a lot of pressure on Drew to return the money, which ultimately he did. But after that point. Goul would have him removed as treasurer and he merely becomes a bystander in the Erie War from this point on. Now, with all of this, Jay didn't want to get stuck in New Jersey because his wife's in New York and his family's over there and he doesn't like going back and forth.
He was allowed to go to New York legally on Sunday and not be arrested. But he didn't like just going one day a week. He wanted to see [01:16:00] his family more than that. So he just turns his attention to gaining support through the legislature at this time. Gould's gonna go in favor with a gentleman by the name of Boss Tweed.
And that favor is mostly won through bribes. That is, uh, let's be clear about that now, boss Tweed, he was the leader of Tammany Hall, and this was a powerful political organization in the city and the state of New York. They had a lot of power in the legislature. What would happen is they would introduce what's called the Erie Bill, and this was put up for consideration and this bill would legalize all of those bonds that had been issued.
So while this is put up for consideration, Jay goes about and has a lot of extensive reports drafted up that would highlight the dismal shape [01:17:00] of the Erie. And this would help to justify all of those bonds that had been issued. Plus, he puts out some super heavy bribes to buy a lot of votes, In a tragedy, just a few days before the first vote in the Senate, there would be an eerie train that would run off the tracks and this would kill 26 people.
And this was a very sad event. So that mixed with all of Gold's, mastercraft and manipulation would allow the bill to pass. And it's, at this point, Vanderbilt just stops lobbying and buying shares. And basically he is conceding at this point. And then the bill would go to the general assembly and it would pass by quite a large margin.
This would legalize all of those bonds that they had previously issued. And it ultimately gave Gould [01:18:00] control of the railroad and it would allow him to go back to New York to be with his family. But the victory is not so sweet for this one. Under the agreement, Vanderbilt would receive like 5 million in cash and stocks and bonds, and then also in exchange, he would drop all of his lawsuits that were ongoing.
But the Erie was debt laden with more than 9 million in new debts. It didn't have a lot of workable assets. It had an extremely bad reputation.
Finally, in 68, at age 32, gold became president and treasurer and Fisk would be the controller of the railroad. The author did a really great job outlining this in great detail. I highly suggest picking the book up if you wanna learn more. About Jay Gould and the gang of characters and how this took place.
All right, [01:19:00] uh, let's jump ahead a little bit here. So the next great act that gold and Fisker are gonna undertake happens in 1869, and they're gonna try to corner the gold market. It just sounds crazy to even say,
In this great act. It's gonna lead to Black Friday, which is one of the most notorious episodes of market manipulation in the history of the United States. In this really cements Jay's reputation as a dark figure in financial history. But let's see how this is gonna work out.
It would start by Jay speculating in the, , gold markets. So he would buy up $7 million of contracts when gold was between a hundred thirty, a hundred thirty seven an ounce, something like that. And then he would use his influence, and through his influence, he could bully the price of gold up to 1 42, [01:20:00] I think is what it said in the book.
And then once it gets up to this level, he would sell it. Then you would make a nice profit. Now, what Jay realized was that the bull market would continue to run and gold went up to 1 45. And some panic started to happen in the economy and the Treasury Department would dump a bunch of new gold into the market.
and when the government did this, it brought the price down quite a bit. and Jay noticed this. And in the book we learned Jay's thinking right here. If one could control or at least have advanced knowledge of the tre's movements with regard to gold, then one would be in a position in the corner of the market reaping a massive return in the process.
It seems clear to me that Jay thought he could develop a master plan to corner that market. His [01:21:00] plan consisted of a couple of different parts. Let me just outline them here for you.
The first part is that Jay had a good relationship with a gentleman by the name of
Abel Corbin. And Corbin was the brother-in-law of the President, Ulysses S Grant, who Gold had already met several times before. Jay thought as a result of that, he could leverage it to make a great killing through speculation throughout his scheme. And then his second thing that he wanted to accomplish by Quartering, the gold market, was being able to fill up the railroad cars of his struggling eerie.
And this happens when the price of gold goes high. All the European investors would have a lot more purchasing power to buy up crops of wheats and grain and cotton for super [01:22:00] cheap. Then those crops would fill up gold's train cars as they were transported to the east for shipment over to Europe.
so what Jay would do is he would continue to pressure Corbin and he would tell him that if the government were to release, you know, a large amount of gold, this is just gonna
hurt the price and that farmers in the economy would really suffer.
and then to further gain Corbin's support, Gould would set an account up in his wife's name for a million and a half dollars. And for every $1 increase in the price of gold, Corbin would receive $15,000 out of that fund. And then Corbin's job was to press the president to keep the gold reserves super tight into not release any new gold into the market.
That would allow the price of gold to keep going up and up, which would benefit [01:23:00] Jay. But things didn't go a hundred percent to plan. So the next step for Jay was to drive the point home with the president directly.
He was scheduled to be on a cruise in which President Grant would be part of that cruise as well. That's interesting in itself. I mean, imagine just being on a cruise where you have access to the president. That's kinda wild to even think about during the course of this cruise, is not really able to convince Grant of his views on letting the gold prices increase.
Grant was really about sound money and the orderliness of the gold standard, and thus he wasn't gonna really play into any of, uh, Jay's arguments, at least not the way that Jay really wanted him to. So in a typical gold fashion, he's going to try many times over the next coming months to convince President Grant [01:24:00] to take his side.
At one point, grant would actually instruct his butlers to turn Jay away, and he would say the following, he is always trying to get something out of me. And Jay was relentless. He didn't give up. Once his mind was set, he was full tilt on getting this done, and Jay would go and search out other means to help his cause.
In June of 1869 through Corbin, he was able to have some influence.
In the election of the new assistant treasurer and he was able to get his ally General Daniel Butterfield installed as the assistant treasurer Butterfield through his job would execute any orders that were given by the Treasury Department. Now this gives Jay a nice insight source on government dealings so that he could be tipped off in advance of [01:25:00] any moves.
But next, he still needs the supportive grant and he's gonna keep working on this
in the mid July timeframe. Just two months out from Black Friday, the price of gold was at 1 36 and the Department of Agriculture was projecting record crops for the farmers out west. So at this point, Jay brings his and his old buddy, uh, Fisk, to help him start buying gold. And this was starting in August.
next up in the bag of tricks, Jay works his angle with the New York Times. And at this particular time in history, the president was known to hang around with those that were gold supporters. So Jay basically gets the New York Times to do an editorial saying that, you know, the government didn't want to interfere with gold prices due to record [01:26:00] projected crops.
And that President Grant was known to associate with those that supported gold so he is using his power to have the media put influence on gold so that the price would keep going up. And it does, it keeps going up for the next couple of months, if we skip forward to early September, Jay has a meeting, , with President Grant. And this time Grant tells him that the reports from the West show an enormous harvest. And he had changed his views that were more so, they were more in line with Jay's way of thinking.
Basically he's telling him that, , I'm not gonna affect the price of gold. I'm not gonna put new gold onto the market. We're gonna let gold continue to rise. And this literally is the huge window of opportunity that Jay Gold had been waiting for. So he immediately instructs all of his brokers to start [01:27:00] buying as much gold as possible.
I can only imagine what Jay's thinking right here after this meeting with the president and how quickly he acted, listen to how fast he moved. By mid-September, Gould's pool controlled contracts far in excess of the amount of gold to be found anywhere in New York. Outside Federal Vaults
Gould alone held contracts valued at 25 million, and the other members of his click possess contracts totaling 65 million more.
All this buying just increases gold prices a lot more. And this starts to generate a lot of speculation and concerns from both sides, the buyers and the sellers. The president also starts to become suspect that some file plays involved here. Then on September 12th, president Grant gets a letter from his brother-in-law, Corbin, [01:28:00] that is, and Jay had instructed Corbin to write and send this letter to President Grant.
In the letter it says basically, , hold tight. Don't dump any gold into the market. Don't take any federal intervention.
now this letter had been hand delivered and Grant was on vacation at this time in a rural area, and it was hand-delivered by a representative of the Erie Railroad. Now how suspicious is that, that you get a hand delivered letter? Plus it said in the book that the person who delivered the letter stood.
And watched Grant read it, waiting for his response, which grant didn't really give a response, so that's super suspicious. So once the courier leaves his aide, Horace Porter tells Grant that he had turned down a $500,000 gold account, AKA [01:29:00] bribe from Jay earlier in the summer.
At this point, president Grant is just furious. So he instructs his wife to write a letter to her sister, stating the following.
Her husband is very much annoyed by your husband's speculations. You must close them as quickly as you can. So basically he's saying, I know what the f you're up to get out now.
So this letter would be sent and it takes 11 days to reach Corbin. once he has it in his hands, he would almost immediately show Jay. And at this point, Corbin and Jay know they're both sunk. There's new gold getting dumped in the market soon by the government, and that's gonna crash the price.
So Jay would pay Corbin a hundred thousand dollars to keep the letter quiet and immediately, , Jay would start selling gold underneath the [01:30:00] table. And he wouldn't even tell his closest friend and Ally, , Jim Fisk about this. And Gould would go about telling his click just to keep buying and buying aggressively and keep driving the price up.
The day before Black Friday, Fisk would buy 14 million in contracts alone, and Jay would buy 3.4 million, but he would sell a 8 million. And Jay would say the following, I was a net seller of gold that day. I purchased merely enough to make believe that I was a bull.
So it's interesting to note that on this day, Thursday before Black Friday , the gold trade on that day was 239 million, which was 66% more than the previous day. And that just illustrates the level of panic buying that was going on. The next morning, this is the morning of Black [01:31:00] Friday, Jay would continue to sell as much gold as he possibly could, and gold would shoot up from 1 44 to one 60 by noon.
Investors, at the time they were borrowing super heavy to buy more gold. And the interest rate on the cash they were borrowing was also going up at the same time.
This sharp increase would destroy hundreds of bear sellers and their brokerage houses as all of their short sales were getting called in. And then around noon, the devastating news would come. That the government was gonna release $4 million of gold into the market. This caused gold to crash almost immediately down to 136.
The aftermath here is gonna be quite catastrophic. There would be over a thousand investors that would go bankrupt. There were like 14 brokerage houses that closed. Several banks would [01:32:00] close. the stock market fell like 20% on that day. Crop prices would drop by 30 to 40% when that just cause massive pain for farmers all over the United States.
And it says in the book, it took like six months for the economy to bounce back. And in the end, gold would walk away with about 12 million in his pocket.
Even with all of this fallout, gold and Fisk would never be charged with any crimes of wrongdoing. But Jay suffered a severely tarnish reputation. And this is one that he would never live down for the rest of his life or even in the afterlife. He is generally seen as a very dark figure on Wall Street.
I think the author, he is done a really good job of looking past all of the negative news and the publicity and the writings that are out there on Jake Gold's Life. And he's really focused on the true facts and he outlines [01:33:00] them very well in the book. I just wanna read what the author says about how Jay was viewed past this point. In the end, no degree of managerial success and no amount of hard won profits built for the shareholders over dozens, upon dozens of quarters would ever be enough to mitigate the easy stereotype of a thieving manipulator out to glut himself on spoils flimflam from unwitting innocence.
the presumption of guilt was to go with Jay to his tomb
for the rest of his life. His motives were, which after all, were simply to make money the same way as any other capitalist would be suspect. And to him, a higher standard of virtue would always be applied. And the press would never give him any breathing room from this point on, other than the couple of newspapers that he owned directly only for a short period of time that he would [01:34:00] eventually sell.
, Jay's general attitude towards the press is mostly of non concern. He doesn't really appear to put a lot of stock in what they say because he just, he didn't really care what they said about him. I believe that he was focused on his family and his business, and he just ignored the extravagant tales that the press contrived about him.
Regardless. It's quite a tale, my friend.
. Jay would spend the next several years running the Erie Railroad, and he would work to improve the line, and he would be involved in a lot of other speculations as well. And then in January of 72, , a great tragedy is gonna strike when his best friend Fisk would be shot and killed.
And what happened is the longtime mistress of Fisk, , who was Josie Mansfield, she had taken on a new lover in Jim. [01:35:00] He was really in love with Josie. And Josie just used him and treated him terrible. But regardless of that, , he tried his damnedest to keep her in his grips. And during this time that she had taken this new lover, she was on and off again with Fisk.
But the new lover became quite enraged once he found out about this. He would eventually shoot, , Fisk one day on January 6th. Fisk would be mortally wounded to a shot to the gut, and he would basically suffer, , until the next morning of January the seventh when he would pass away.
Jay Gould would say the following about his friend. I cannot sufficiently give expression to the extent I suffer over the catastrophe. We have been working together for five or six years, and during that time, not the slightest unpleasantness [01:36:00] has ever arisen between us. He was gentle in habits and beloved by all who had any dealings with him,
There would be, , thousands of people who attended Fis funeral. He was well loved all around town, and he was known as an extremely generous man, helping just about anybody, whoever needed help. And I've always been admired by those who had hundreds or even thousands turn up for their funeral. I think it's telling in life that someone would take the time to come and pay respects.
And obviously Jim had touched them in some way
and they felt connected to him. He took care of people and he may not have been the most morally straight person, but he did care deeply for others. And in the end, I think that's really important and we can learn a super valuable lesson right here, and that's to take care of others. Even small acts of [01:37:00] kindness go a really long way to help someone change their lives for the better.
I certainly applaud, , Fisk for his generosity and his kindness that he showed others throughout the course of his life. I really hope to learn more about Fisk as we grow the podcast, and I can't wait to share those learnings with you. Alright, let's, , keep moving forward here in March of 72, Jay's gonna resign from the president of the Erie.
Under some mounting financial pressures of the railroads and his departure would actually cause the stock price to go up a lot. So even when he left, he made millions upon millions as he eventually sold his stock in the Erie. But Jay's not done with railroads by any stretch here. So he would take all of those learnings and he is gonna put them into building his empire.
Even further in, , [01:38:00] 1874, he would seize control of the Union Pacific Railroad, or the up as it was called. And when this happened, it came as quite a surprise, , to most, like many of
his other dealings. I found this one to play out just as interestingly. We also get to see more of the businessman once Jay takes control of the up. And let's see how the story goes here. So it would be in May of 1873, then he would meet with a gentleman by the name of
Horace Clark, who was the president of the Up. And just a quick side note, Clark was the son-in-Law of Vanderbilt. And Clark would elaborate to Jay during this meeting how fantastic the condition of the up was. And this certainly made Jay curious because everything that he had been involved in up to this point was in a [01:39:00] bad position and needed a lot of repairs.
So he had to focus a lot of efforts on that. But hearing that the road was in good condition, well, he didn't have to worry about fixing it up. He knew that he could come in and take his improvements onward and upward. So this would lead Jay to start buying on what's called a scale down at a price of 35.
Basically that just means to buy any shares that hit the market for $35 or less. In the way that he got control of the road is a little bit circumstantial, according to Jay's words, but not really controversial. , Looking back
in the terms of history. And here's how it worked out. So Jay would go on vacation and when he arrived home, he found out that his buy orders had been executed and he now owned a hundred thousand [01:40:00] shares of the up and by math. This made him 27% owner, also the largest owner. And so how did that happen?
Well, Clark the up president, he had gotten ill during this time and there was speculation that he was gonna die and that caused the stock price to drop. So in addition, the stock market dried up. So Clark tells his broker to go ahead and dump his stocks. I'm gonna die. I want to get the fam the money for my family.
And with all of these outstanding shares on the market, Jay's buy orders get executed and he now holds those a hundred thousand shares. But the author, however, outlines and documents that Clark's passing didn't do anything to the stock price. It actually went up by like a dollar and a half or somewhere around that range.
And that furthermore, there was no [01:41:00] record of him selling the stock that he had owned. It had been public knowledge that the Attorney General was gonna file a bill against the up. That was basically saying that their land grants and their income bonds had been unlawfully issued. And then that was really the true reason of the stock crash.
It was believed that Jake Gould had, uh, insider knowledge of this advance events that were about to take place. So possibly he was trying to keep from growing his reputation for , shoe tactics. And it's really hard to tell right here. But at any rate, Jay would acquire the controlling shares of the up and he would join the board.
And as quickly as he joins the board, he installs one of his allies, Sidney Dillon, as the president. And it's past this point in [01:42:00] his career that Jay would generally install presidents for his companies, and then he would just orchestrate strategically, , through the presidents that he had running his various railroads.
now at this point, Jay's gonna make some bold moves to help strengthen the up. This really shows the business side of Jay and let me just read through you a list of things that he would do. He financially protected the up with a great deal of his own money, even though it cost him personally in the short term.
Reminds me of Elon Musk in one of his first steps. After taking Control, Gould transferred the UPS floating debt due to mature August into a longer term bond issue. He also masterminded a refunding of the firm's 10 million in income bonds as new lower interest sinking fund bonds. Gould brought sued against the federal government, which since March of 1873 [01:43:00] had withheld payments on the movement of the government freight.
This to recoup partial payment of interest owed on US Bonds loan to help finance the U'S construction simultaneously, virtually walked away from another smaller unfinished railroad in which he had been interested since 1872. The New Jersey Southern. Selling his interest at a loss of more than 1 million.
He apparently felt he could not shore up two roads at once in the face of the depression and that he had a larger game to play in the up. So right here, Jay dug in deep to reorganize the up financials, plus he took personal losses to focus on the line. And I think
you shouldn't try to serve two masters
and that when you try to serve two masters, you're thinking and your attention is split. So [01:44:00] you're gonna have mediocre results in two operations. It's better to dump one and have fantastic results in one operation. And I think that's a valuable lesson for us to learn, to be mindful not to serve two masters.
Now as a result of this, the UP stock stood at 15 in November of 73 and it sourced to 78 by June of 75. So in like 18 and 19 months, somewhere around there, that stock went up by 60 bucks. And I think that just shows us that intense focus can be our friend. Don't give in to being split minded, focus on one thing and do it really, really well.
And in this case, Jay digs in deeper and let me read for you how he gets into the details.
Jay [01:45:00] necessarily immersed himself in the minutiae of the UPS operations, coming to know the UPS road resources, strengths and shortcomings every bit. As intimately as he had learned those of the r and WA decade earlier, twice a year, Gould would ride the length of the UPS track as well as tracks controlled by competitors.
After Gould's train pulled into the siding to rest both the machine and the men driving it, Jay would walk the lonely Western towns. Make small talk with whoever happened to be about and quiz the local up employees for their views concerning what the company might do better in that particular neighborhood.
our men on the ground have the intelligence we need. They are agents. And if we fail to know their minds at our own peril, that reminds me a little bit of Sam Walton. [01:46:00] He would regularly visit his stores and walk up and down the aisles talking directly with all of his associates, asking for their input and their ideas and what they could do better.
And many of the ideas that he derived directly from associates would be put in place almost immediately. And if this is good enough for Jay and Sam, then it should certainly be good enough for us to prioritize in our business, my friend. I mean, talk with all those people that work with us and listen to 'em and let them know that you value their ideas and opinions and suggestions.
And it goes a long, long, long ways with building employee culture. And that employee culture is just gonna reverberate and be positive it's gonna spill over and our clients and our customers are gonna see that. And it just takes a little bit of time to listen. And I think Jay and Sam give us a super, super valuable lesson right here.
Now, [01:47:00] Jay is gonna continue to learn the business more and more, and he starts to dabble in the Telegraph business as well around this time. ' cause it's really popular to run all of the wires along the railroad routes. And I guess it still is today. This is gonna put him in contact with a young Thomas Edison.
And at this time, Edison had invented a machine known as the Quadplex Telegraph. This machine could send um, four messages at one time, which was revolutionary because the Telegraph was only capable of sending one. Gould really wanted this for his arsenal. So he would end up paying Edison something like $30,000
edison had already sold a little bit of it off, but Jay wanted to take control of that for his use. It's ironic he didn't eventually end up using the machine, but he did get to meet [01:48:00] Edison. And I just found it very interesting because In episode one we discussed how Henry Ford had inquired with Edison, who was much older at the time, what he thought about his gasoline car.
And Edison would tell him, keep working on your experiments. You are on the right path. This would give Ford a lot of motivation to continue his work driving forward. And was one of the reasons why Ford actually left his job as the superintendent of the Edison Company to go start his own automobile company.
One, he knew the automobile was gonna be successful, and two, the inspiration of Edison propelled him forward to start his own company. Now, Edison would say the following about Gould. He had no sense of humor. I tried several times to get off what seemed to me a funny story, [01:49:00] but he failed to see any humor in them.
I was very fond of stories and had a choice lot, with which I could usually throw a man into convulsions. Then at the same time, the author describes Jay's attempts towards Edison. Gould would try to dazzle Edison with detailed discussions of the complexities of railroad interchanges and finance.
He brandished maps lectured on for hours about his particular passion, all to no effect. The two men barely lived on the same planet. So this all took place around 1875, and then after this time, Jay's gonna start buying up a lot of shares of the Western Union as this was a start of some bigger plans to come in the near future.
Now, in the meantime, Jay continues to acquire railroads, and initially he would acquire the Kansas [01:50:00] Pacific then he would convince the Kansas to pick up the Denver Pacific,
And then in 1879, gold would recognize more than 10 million in profits, personal profits. That is. when he restructures the Kansas Pacific, of which he would use a lot of those proceeds to acquire feeder branches.
and then late in 79, he picked up what would be his crown jewel of all of his railroads, the Missouri Pacific. It was in a depressed state at the time, and he was able to pick it up for really cheap. The Missouri Pacific was so valuable because it had already been built up with a lot of feeder branches, and it also gave him backbone routes to the Pacific Ocean through the south, in the southwest United States.
This allowed him to compete with the Northern routes going to the [01:51:00] Pacific Ocean.
and then in addition, he leased out a lot of the lands on either side of the railroad and then also leased out the mineral rights that came along with the railroads.
plus he leased out the rights to the telegraph companies to build their transmission lines along the tracks.
His acquisition spree just continues. He would take over other great lines, such as the international and Great Northern Railroad, the Texas and Pacific Railroad, the Wabash Railroad. And then later in his railroad acquisition career, he would eventually take over the Manhattan Elevated in New York.
And I guess if you're playing Monopoly against Jay, he'd be that guy aggressively soaking up all those railroads. But he did that in real life. So that's even more impressive. And I just wanna highlight one [01:52:00] deal for you that Jay was able to pull off.
So he was able to merge the Kansas Pacific and the Denver Pacific into the up. And this one deal alone would make him more than $40 million, which is crazy impressive so all during this time, he's building his interest in the Western Union
But he's gonna take a little bit different approach. With a couple familiar elements to take control of the Western Union. Through the late 1870s, Jay had started a competing company by the name of American Union Telegraph. this opened up around 2000 offices that were mostly located along the railroad tracks, and it had about 50,000 miles of wire.
And this really started to cut into the Western Union profits quite a bit by 1880. And [01:53:00] then what Jay would also do is he would form a pool of investors to short sell the Western Union stock. And with all of this mounting pressure, the president of Western Union, who was William h Vanderbilt, who was the son of Cornelius,
would basically surrender to consolidation efforts. And what would happen is the American Union would merge into the Western Union. This put another 30 million in Jay's pocket, and it allowed him to take control of the Western Union. So at the end of 1881, Jay had major holdings in both transportation and telegraph communications in the United States.
the author makes an important observation that really shows the dominance of Jay during this time In comparison with our world today, in [01:54:00] under two years time, Jay had accomplished the 19th century equivalent of creating a startup Apple computer and leveraging it to force a merger with IBM.
He was now the key figure in the two most important cutting edge sectors of the US industrial scene, transportation and communications,
which is quite amazing. And past this point in Jay's life, he would certainly be directly involved with his businesses and stock market dealings, but we also get to see that he has some enjoyment for the last 10 years of his life. And I just wanted to highlight a few things here for you. He was really a great family man, and he loved his wife deeply and he helped out everyone in his family.
In 1880, Jay would purchase an estate by the name of Lindhurst, and this was a 300 acre estate that had a [01:55:00] castle on it and a massive greenhouse. And today it's open to the public. And I looked at the images online and it's quite impressive. I can only imagine what it must be like to go there and explore around or what it was like to even live there during that time, uh, especially to see the greenhouse.
Jay really loved the greenhouse. It was a place of solitude for him. Listened to how the author describes it. Jay instructed his gardener to source large supplies of rare roses, orchids, and other treasures. Every evening in the summer after coming home on the New York Central and sharing dinner with his family, a quietly pleased Gould would shuffle off to the greenhouse, wearing his business suit and carpet slippers There he worked happily with marigold's sorting and planting. He had spent more than $40,000 on various varieties of flowers and plants. he was [01:56:00] frequently to be found at Lyndhurst on the weekends playing with his roots and bulbs. Now, this greenhouse would be destroyed by fire, and it's not gonna really stop Jay much from making it better.
. The author describes it very well. Let me just read real quick here for you how Jay rebuilt it. Within weeks working with an independent architect and the famous solarium maker, Lord and Barnum Jay finalized plans for a replacement structure of equivalent size that would stand complete in early 1882.
the nation's first steel framed greenhouse, Jay's, new Eden, included a grapey at its west end, along with a cold house for Chams I synthesis and bulbs. On the other side, the Eastern Wing featuring individual houses for carnations, roses, orchids, azaleas, and other flowers.
Jay's favorite was the orchid house, which [01:57:00] he eventually filled with the most significant collection to be found anywhere in North America. 8,000 plants, 150 species, the greenhouse's semi-circular section. Meanwhile featured a large fountain surrounded by exotic palms.
That sounds simply sublime to me. And I can only imagine having the opportunity to be there with Jay and have him show you around to all of the different exotic plants and orchids. That would've been quite fantastic. Imagine if you could have got a couple business lessons with him at the time as well.
Think about how much that would propel you in business right there. Jay was a master at everything that he did. And in addition, I think this is a really important lesson for you and I, that business can be very difficult and that we should find some kind of creative outlet to harness our energy in positive ways.
For Jay, [01:58:00] it was his plants and his family. And I'll ask, what's your outlet, my friend?
For me it's family and reading. I love working on this podcast and running each day.
those are just a few small things that let me get through the day. Now, speaking of family, Jay was known to help his family a great deal. And that included all the people who worked in his house as well, that served him and his family. He took care of them. And let me just read for you how the author describes how Jay took care of his family and friends.
On several occasions, he funded scholarships for men and women of the household and the grounds and staff. At 5 79. Uh, 5 79 was his mansion in Manhattan and Lynn Hurst. In this regard, Jay reserved his wisdom for younger employees, candidates whom he triaged in an interesting manner. After an invitation was [01:59:00] made, those who had veiled themselves to Gould's personal libraries with some frequency on their off hours were in turn spoken to by the master and offered help in contributing to their education.
Thus, more than one job, scrubbing Gould's floors, tending Gould's Gardens or driving Gould's carriages eventually morphed into a career in school, teaching the law, or counting a pattern emerges. Jay never came across a candidate for bootstrapping who he did not wish to applaud and help, and I think that is quite honorable.
Now, around the age of 52, Jay's gonna be diagnosed with tuberculosis, which in those days was basically a death sentence. And for the next four years, this is really gonna keep Jay from doing a whole lot. He would order his doctor to keep this a secret from his [02:00:00] friends and family. They didn't even find out , what his ailment was until after he had died and they saw the death certificate.
So most of his days, he would spend at Lindhurst with his family and his flowers, and he would progressively get worse and worse.
In January of 1889, his dear wife, Ellie would pass away and she would be entombed in a granite mausoleum in Woodlawn Cemetery that's located in the Bronx. This is one that Jay had constructed a few years previously. And to this day, it's still one of the prominent personal mausoleums in the cemetery I looked at at it online.
And it's quite an impressive structure. There still looks like it's in great shape. Jay here, he would go on to survive a few more years. But in late 1892 on his deathbed, he would call for his family [02:01:00] members and he would take a little bit of time to speak to each of his children. And as well, he took time to speak to every member of his staff that really showed how much he cared about those who were directly around him.
After this, he would close his eyes and lapse into a coma and he would die a couple hours later at 8:15 AM on December the second, 1892. Then he would eventually be in tomb next to his wife in Woodlawn Cemetery. Now, at the time of his death, he was set to be worth around 72 million. And this is from a tax perspective, but the author says his actual estate was something more around 125 million.
he would go on to have this estate divided up mostly amongst his six children.
Before we close down the episode, I just wanted to take a few minutes and highlight a few of the top lessons that we learned along the [02:02:00] way. I know this has been a long podcast, and I really thank you, my friend, for listening up to this point. I personally think it's really important to take time for reflection, and I just wanted to leave you with a couple key ideas that we learned along the way.
So number one, it takes tenacity to pick yourself up during difficult times. we see Jay do this at a young age, and it really changed his future in Milton Hershey. He did the same thing. He failed three times in business before he became successful. And if Jay wouldn't have done this, it certainly would've changed the trajectory of his life.
, Number two, life gives us an education. And we see this through Jay Henry Ford and Ray Crock. They were all lifelong learners and they believe that the lessons in life is where the true education comes from. And we should really strive my friend to always be learning [02:03:00] and growing and enhancing ourselves, making ourselves better.
Number three is that of a reasonable strategy. And Jay really built plans and his strategy for each step in his life. this is similar to what we saw Joe Colom do over at Trader Joe's, and this really pays big dividends because there's no perfect strategy in business. We should develop plans and move forward and be flexible to adjust and change as we go.
And when we do that, we're gonna have a great deal of success. We don't need to get stuck in perfect, we just need a reasonable strategy to move forward. , Number four was focus. Focus yields great success . We really see Jay focused to hunt down new hemlock groves. Early in his young life, [02:04:00] they were believed to be all gone and he goes out and finds them. In a similar manner, Ray Crock was focused, , in convincing the McDonald's brothers to let him franchise operations.
And thus we have McDonald's today. So I mean, this intense focus yields great success. , Number five is surrounding ourselves with those that you want to be like. Over the course of Jay's career, he developed a network of close allies and he trusted his managers, and this made him great.
Don't forget that Tony Robbins quote, energy is contagious. Surround yourself with people who bring out the best in you.
put good people in your path, my friend. Number six, take care of others. Life is really short. Even just small acts of kindness and generosity go a really long way to help others. [02:05:00] And at the same time, it nourishes our soul. We should all be doing this. It's easy. Take care of others. That's number six.
Number seven is that of a split focus and being double-minded, and we really gotta pay attention to this and pay attention to the things that we're working on. It can be really easy to fall into the trap of being split focus or double-minded. Jay personally lost over a million dollars to get rid of a railroad so that he could focus directly on developing the Union Pacific.
And then by doing so, he made over $40 million by focusing.
And then the last one I'll leave you with here is seeking creative outlets. So for Jay, he had family and friends, and for us, we should seek creative outlets, whether that be family and friends or some sort of hobby. Something we can do [02:06:00] outside of business hours to take our mind off of all of those intense things that we have to deal with every single day.
Find something that get your creative juices flowing and dig into it and have fun. I hope you found these helpful. My friend Jay was certainly deeply driven. He had a passion for business and a deep love for his family. I would highly suggest picking up this book. It's truly an insightful read, plus it has a lot of lessons.
If you have a moment, my friend, if you could do me a really big favor and just leave a quick review or some feedback on the episode, it would really help me out, especially since I'm new and I'm trying my best to make quality episodes for you.
the episode might only be two hours long, but by the time I read the book and listen to it, reread major sections, research and outline crosscheck facts, and summarize everything down. Then record and edit. You're looking at more [02:07:00] than 50 hours of work just for this one episode. And I truly enjoyed reading the book and doing the research, and I really love making these podcasts for you and I wanna keep doing it, and I hope to grow the show to reach more people.
So if you would just take a couple minutes and leave me a quick feedback. I thank you in advance, and I also want to thank you for just taking the time to listen, even if you don't leave a review or any feedback. Thank you for listening. It's a great honor to speak with you. I hope you enjoyed the episode and learned a few things along the way.
Until next time, make it a beautiful day in the neighborhood, my friend.