“Avoid bad luck by being patient” In a great book “Masters of Enterprise”, the author, H.W. Brands, writes about the life of Jay Gould. “Cyrus Mccormick’s enemies, in their objective moments, would have conceded that on balance he was a constructive force in American life. At times Jay Gould’sfriends had difficulty saying as much about him. To some degree Gould had himself to blame for his bad reputation; to some extent it owed to misunderstanding of what he spent his career doing. Even in 1990s,the speculation is an art not universally appreciated. Economists have developed theories explaining how speculation serves a useful purpose by transferring risk from those who don’t like it and aren’t equipped to deal with it to those who do and are. But the theories haven’t entirely dispelled the notion that speculators are gamblers in a zero-sum game, bettors whose winnings derive from luck and perhaps shrewdness but not from any real good produced or worthwhile service rendered. If such is the case at the end of the twentieth century, it was truer still in the nineteenth century, when economic theory was in its infancy and gambling was relegated to the fringes of society rather than leading off the nightly news and topping off the tax coffers of most states. Consequently it wasn’t surprising that Jay Gould, the greatest speculator of his era, was also one of Wall Street’s-not to say Americas-most distrusted and de- spised characters. “The example he set is a dangerous one to follow,” tuttutted theNew York Herald, assessing Gould’s career. “The methods he adopted are to be avoided.” The New York Times was equally critical: “Gould was a negative quantity in the development of the country, where he was not an absolutely retarding and destructive quantity.” Joseph Pulitzer of theNew York World called Gould “one of the most sinister figures that ever flitted bat-like across the vision of the American people.” A business contemporary damned him as “the worst man on earth since the beginning of the Christian era.” Daniel Drew, commenting while Gould still had a couple of schemes left in him, and speaking from personal experience, declared simply: “His touch is death.” Maybe that was because Gould spent most of his life feeling death’s chill fingers clutching at him. He was one of those children who survive their early years by sheer willpower; scrawny from birth, he lost his mother at four, his first stepmother within the same year and his second stepmother three years after that. His father, John Gould, who was nearly as unpopular with his neighbors in Delaware County in upstate New York as Jay would become with his neighbors in southern Manhattan, had to beat off armed attacks; at one point an angry local threatened to drown Jay for John’s sins. John turned to drink, making him more difficult than ever. As a teenager Jay contracted typhoid fever, followed by pneumonia. Each nearly killed him; together they left him, at eighteen, www.capitalideasonline.com Page - 1 “Avoid bad luck by being patient” facing a future clouded by likely invalidism. Yet he refused to give in. While still a boy he announced that he would have nothing to do with farming, John Gould’s occupation, but must instead go to school in the nearby town. John eyed the lad, decided he was serious and carted him off to town, where he left him at the door of the school with fifty cents and a bundle of clothes. Jay talked a blacksmith into boarding him in exchange for keeping the man’s books. Jay had no experience with ledgers and accounts, but he guessed that he knew as much as the blacksmith, or soon would-and soon did. In class he proved an apt pupil, although one essay he wrote, resurrected years later, would send critics into gales of laughter. The title was “Honesty Is the Best Policy,” and it explained how conscience and scripture demanded scrupulous adherence to the highest standards of integrity. Also during this early period, Jay demonstrated a preternatural perception of life’s accelerating pace. “I am growing old too fast,” he declared at the ripe age of sixteen. He accelerated his own pace to keep up. He taught himself surveying and took a job preparing a map of a nearby county. An associate who knew him then saw hints of what he would become. “He was all business in those days, as he is now. Why, even at meal times he was always talking map. My father used to say, ‘Look at Gould; isn’t he a driver?'” Surveying, to Gould, was only partly about locating lakes and rivers and hills and streams; it was also about locating favorable opportunities for branching out into other activities. He learned the value of hemlock trees to the leather-tanning process; he promptly formed a partnership to become a tanner himself. One of his associates, Charles Leupp, had emotional problems, perhaps aggravated by some of Gould’s sharp practices; after Leupp shot himself dead-and after Gould became famous enough to have enemies-those enemies had little difficulty discerning blame for Gould in his associate’s self-destruction. If Gould felt any remorse he didn’t show it. But then he made a habit-an obsession even -of keeping his emotions to himself. He tipped his hand only far enough for others to see the burning intensity with which he pursued his business interests. He didn’t object to the money involved, to be sure, but business held a fascination for him that transcended balance sheets. A lawyer friend remarked this quality in Gould: “When intensely interested in any matter, he devoted his whole concentration of thought upon that one thing, and would seem to lose interest in things, often of greater pecuniary importance but of not so much commercial www.capitalideasonline.com Page - 2 “Avoid bad luck by being patient” fascination. He loved the intricacies and perplexities of financial problems.” His patience was equally striking. Though he felt a chronic compulsion to be making something of himself, in any given operation he could bide his time till the most promising moment. “I avoid bad luck by being patient,” he once explained. “Whenever I am obliged to get into a fight, I always wait and let the other fellow get tired first.” During the 1860s Gould had opportunity aplenty to demonstrate both his intensity and his patience. With many others of that era he gravitated to New York City as the epicenter of industrializing America. Boston had been America’s first financial hub; Philadelphia surpassed Boston in the eighteenth century. But after the founding in 1817 of what became the New York Stock Exchange, the cockpit of the American economy shifted to Manhattan. Improvements in communication and transportation, especially the telegraph and the railroad, allowed both the select few who operated within the walls of the Exchange and the larger number who traded on the curb outside to tap the pulse, and the accounts, of investors all across the country. The discovery of gold in California in the late 1840s, followed by the boom in railroad construction, created a huge market in mining and railroad issues; the Civil War added myriad opportunities for individuals undaunted by risk. Daniel Drew recalled the war years as wonderful for speculation. ”Along with ordinary happenings,” Drew declared, “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 waters.” Gould and Drew fished together; for a third angler they invited Jim Fisk. “Jubilee Jim,” as he was often called, was as outgoing as Gould was introverted. He slapped men on the back and women on the behind (women of a certain class, that is-the class he commonly consorted with); the door of his office on Wall Street was always open, with whiskey on the counter and cigars on the desk. Before the fight with Vanderbilt for control of the Erie, Jay Gould was the least well known of the three, although not the least successful; during that battle he gained a national reputation as one of the most audacious, and least principled, speculators in the land. The image of Gould and Fisk dashing across the Hudson with the Erie charter in one satchel and the corporate treasury in another made them infamous; Gould became even more infamous after his partners dispatched him to Albany to arrange the company’s recharter. In the public mind Gould personified the epic malevolence portrayed in one journalist’s lyrical description of the corruption and corrupters-of the legislature: “On its foul edge stood all the forces of evil in our society, like the demons in Dante’s Fifth Chasm, fishing out one venal legislator after another, as Graffiacane ‘hooked out Ciampola’s pitchy www.capitalideasonline.com Page - 3 “Avoid bad luck by being patient” locks and haled him up to open gaze so that he seemed an otter.'” Now notorious, Gould maintained his reserved demeanor. Questioned by a committee investigating the possibility of malfeasance in the Erie affair, he pleaded repeated failure of memory, undergoing (in the words of an unfriendly but nonetheless appreciative eyewitness) “a curious psychological metamorphosis” into “the veriest simpleton in money matters.” All about him swirled charges of bribery, larceny and worse. “Within the past few days we have seen the most gigantic swindling operations carried on in Wall Street,” a New York editor cried. A great railway “has been tossed about like a football; its real stockholders have seen their property abused by men to whom they have entrusted its interests, and who, in the betrayal of that trust, have committed crimes which in parallel cases on a smaller scale would have deservedly sent them to Sing Sing.” The publicity compelled Gould to be more circumspect, but it didn’t diminish his daring in the slightest.