Fifty years in Wall Street
This was a company of exceedingly modest pretensions. It had a capital
of only $5,000. It built the lines of the Western Union Telegraph
Company, with which Mr. Gould paralleled most of the important lines of
Western Union, and cut the rates until the older and larger corporation
found that its profits were being reduced towards the vanishing point.
Then it was glad to make terms with its competitor; a union of interests
was the result, and Mr. Gould obtained control of the united concern.
“Impossible,” said Norvin Green, in high dudgeon, when the insidious
intentions of Mr. Gould were broached to him a few months before the
settlement took place. “It would bankrupt Gould and all his connections
to parallel our lines, and to talk of harmony between him and us is the
wildest kind of speculation.” The genial Doctor was then master of the
situation in Western Union, or imagined himself so at that time, and
regarded with contempt the efforts of Gould and his colleagues to bring
the company to terms. In a few months afterward the Doctor tamely
submitted to play second fiddle to the little man whom he had formerly
despised.
The arrangement in reference to the cable companies followed the capture
of Western Union. The struggle is still pending for the entire monopoly
in the cable business, and it now seems only a question of time when the
Bennett-Mackay party will have to succumb, leaving Gould in the supreme
control of the news of the world. If this should happen he would become
an immense power for either good or evil both in speculation and
politics. In fact it would be too great a monopoly to be entrusted to
the will of one man. Although it might be judiciously managed, as the
cup of his ambition would then be surely full, yet the experiment would
be extremely hazardous.
The controlling interest in the Elevated Railroads of this city,
recently achieved by Mr. Gould through his business and speculative
relations with Mr. Cyrus W. Field, are of too recent date to require any
special notice or comment here. Suffice it to say, that I fear my friend
Mr. Field has not come out at the big end of the horn, although
everything has no doubt been in conformity with the most approved
business principles and in strict adherence to the most honorable
methods of dealing in railroad securities. It is significant, however,
that Mr. Field has preserved a prudent reticence on the subject.
Mr. Gould, from my point of view, has been a public benefactor in the
bold and successful stand which he has maintained against strikers.
Though Western Union lost over half a million dollars by the strike of
the telegraphers, which greatly alarmed the stockholders, yet Mr. Gould
held out until the strikers were obliged to give in. He pursued the same
policy, with a similar result, in the case of the Knights of Labor.
During the strike of the latter I explained my views on the subject in a
circular to my customers as follows:
“The Knights of Labor have undertaken to test, upon a large
scale, the application of compulsion as a means of enforcing
their now enlarged demands. This has necessitated a crisis of a
very serious kind. The point to be determined has been, whether
capital or labor shall in future determine the terms upon which
the invested resources of the nation are to be employed. To the
employer, it is a question whether his individual rights as to
the control of his property shall be so far overborne, as to not
only deprive him of his freedom, but also expose him to
interferences seriously impairing the value of his capital. To
the employes, it is a question whether, by the force of
coercion, they can wrest to their own profit powers and control
which, in every civilized community, are secured as the most
sacred and inalienable rights of the employer. This issue is so
absolutely revolutionary of the normal relations between capital
and labor, that it has naturally produced a partial paralysis of
business, especially among industries whose operations involve
contracts extending into the future. There has been at no time
any serious apprehension that such an utterly anarchial movement
could succeed, so long as American citizens have a clear
perception of their rights and their true interests; but it has
been distinctly perceived that this war could not fail to create
a divided if not a hostile feeling between the two great classes
of society; that it must hold in check, not only a large extent
of ordinary business operations but also the undertaking of
those new enterprises which contribute to our national progress,
and that the commercial markets must be subjected to serious
embarrassments. * * * * * From the nature of the case, however,
this labor disease must soon end one way or another; and there
is not much difficulty in foreseeing what its termination will
be. The demands of the Knights and their sympathizers, whether
openly expressed or temporarily concealed, are so utterly
revolutionary of the inalienable rights of the citizen, and so
completely subversive of social order, that the whole community
has come to a firm conclusion that these pretensions must be
resisted to the last extremity of endurance and authority.”
The manner in which Mr. Gould acquired his great control in some of the
Western and Southwestern railroads was pretty fully developed in the
recent investigation held in this city, Boston and San Francisco by the
Pacific Railway Commissioners. Mr. Gould’s testimony, as reported in the
daily papers of May, 1887, probably contains almost as correct and
succinct an account of his pooling arrangements and schemes in
connection with certain railroads and his methods of making money out of
them as can be obtained anywhere. His testimony, on the whole, was
exceedingly affable, comprehensive and precisely to the point, and has
not been contradicted in any material points by any of the succeeding
witnesses that have yet been examined on this widely interesting
subject. Its substance was as follows:
[_From the Herald, May 18, 1887._]
A dapper little man in plain pepper and salt (the pepper
predominating) business suit entered the Pacific Railway
Commissioners’ offices yesterday morning and sat down quietly
with his not over shiny silk hat on his knee.
The natty gentleman, unobtrusive possessor of the small dark and
brilliant eyes, was the man of millions.
He had lots of information for the Commission, and he gave them
more of the inside facts of the early consolidation deals of the
Union Pacific than they hoped to get.
It had been expected that Mr. Gould would prove a wily witness,
hard to corral and liable to shy over the fence at the slightest
provocation, but at the very outset his manner was a complete
surprise. He told the Commission that he was suffering from
neuralgia, and said that he could not speak very loud in
consequence. There were times during his examination that his
tone was faint, and it was only loud two or three times, when he
became very much interested in some explanation. At all times,
however, it was well modulated, and now and again had a musical
cadence about it that was very pleasing. He first became
interested in Pacific roads in 1873. He bought Union Pacific
stock in the market, but it went down to fourteen cents on the
dollar. He held about 100,000 shares. He had a consultation with
Sidney Dillon, and finally made a proposition to fund the
floating debt in bonds, of which he took a million dollars’
worth at above their par value. In 1874 he became a director and
served on the executive committee. He continued in the direction
during 1874, 1875 and 1876, and went over the road twice a year.
He had no interest in the Fisk suit, but knew it was brought. He
had no contingent interest whatever in the suit.
He became interested in the Kansas Pacific in 1878, but thought
he knew the road in 1874. He remembered a proposition looking
toward a unity of interest between the Denver Pacific and the
Colorado Central.
Being examined as to the positions of the roads, and as things
did not appear to be very clear, Mr. Gould, putting his hand to
his inside pocket, said: “I have a little map here if you are
not familiar with the location.”
The little map was brought out and all hands gathered around it,
while Mr. Gould’s index finger went on an excursion over States
and Territories in absolute defiance of the Inter-State Commerce
Law. He recalled the fact that the plan of consolidation was
considered as early as 1875, after Mr. Anderson read some
extract from a paper, but he said it was not carried out then.
He might even have had a talk with Scott about it on further
consideration.
The little road connecting with the Colorado Central was built
by him, and was the result partly of the contest between the
Union Pacific and the Kansas Pacific. Prior to 1878 he could not
recollect having owned any stock or securities of the Kansas
Pacific. His interest in the Union Pacific has increased to
200,000 shares, the total issue of stocks being 367,000 shares.
He kept books of his transactions. Mr. Morosini kept them a part
of the time.
Q. Where are the books? A. I have them.
Q. Where? A. In my possession.
Q. Are they at the service of the Commission? A. If they desire
them, with the greatest of pleasure.
This was the first sensation of the day, and the witness smiled
blandly as he felt the full force of it.
Up to this time he had answered every question promptly. There
appeared to be no hesitation on his part, and, indeed, there was
none during the entire day’s session. Almost every preceding
witness had taken refuge behind “I don’t know,” or “I cannot
remember,” or “Really I am not sure,” but there was none of this
from Gould. And the apparently full and free offer of his books
capped the climax.
After this whenever his memory was in any way at fault the
witness fell back on the books. In asking him what he had bought
certain stocks for he said the books would show.
“Will your books also show who the broker was?”
“Oh, yes; certainly, certainly, certainly.”
In the matter of the St. Louis pool he had conversed with a
number of persons.
Q. With whom did you converse? A. I presume with all the signers
of the agreement.
Q. Will you tell us all about the preliminary measures leading
up to this? A. I would have the neuralgia a good deal worse than
I have if I undertook to tell you all of the details.
This was the original proposition of consolidation, which was a
stock instead of a bond agreement, and it was soon demonstrated
that it would not work.
Q. How soon after this was the new arrangement entered into? A.
Almost immediately afterward, I think. The object was the
funding of a heterogeneous mass of securities into one class of
securities.
Q. Did you confer with others? A. I conferred with myself as
well as others. What I thought was a fair price for me was a
fair price for the others.
Q. To whom did you deliver your bonds? A. I suppose to the
committee, but I do not know.
Q. But you would not deliver $2,000,000 to a man in whom you did
not have confidence? A. Probably not.
Q. Who kept the accounts? A. I don’t know.
Q. You don’t remember? A. I don’t charge my memory with these