Fifty years in Wall Street
things after they are over, but my books will show, and they are
at the service of the Commission.
Mr. Gould’s manner in saying this was unusually suave and
polite, and the lines of his mouth relaxed just enough to
suggest a smile.
In speaking a few moments later of the securities bought by Mr.
Gould from the “St. Louis parties” he was asked of whom he
bought them.
“I cannot tell about that off-hand, but my books will show it.”
“Which of the St. Louis people did you confer with?”
“I think they came on here to see me. They were tired out and
wanted to sell, and came over to do it.”
“Then you bought all the securities first and tried to get some
other gentlemen to go in with you afterward?”
“Yes, several gentlemen whom I thought would be of service to
the road. There ought to be some books. Somebody must have kept
accounts of the transactions. My recollection is that these
people came on and told me they wanted to sell. I asked them how
much they thought they ought to have and they gave me the price
quoted in the agreement.”
“I simply said, ‘I will take them,’ and that was all there was
to it. That is my recollection. In 1879 I owned about $4,000,000
worth.”
The examination led into the stamped income bonds of the Kansas
Pacific, and Mr. Gould was asked as to the condition of the
road. He thought it was poor. The road had a large intrinsic
value, but it had been badly financed and its securities were
way down.
Q. Did you not buy some of your securities abroad? A. I bought
two millions of Denver Pacific at seventy-four cents, I think,
from some Amsterdam people. I was in London and heard that they
wanted to sell. I was afraid to go over, because I had very
little time, and thought they would probably take a couple of
days to smoke before finding out whether they would sell or not.
But I was mistaken. I went over and got to Amsterdam in the
morning; washed and had my breakfast. I saw them at eleven,
bought them out at twelve, and started back in the afternoon.
When Mr. Gould was asked as to the prices he had paid for the
securities with which he had acquired the Kansas Pacific bonds
he took out his papers and handed the Commission a series of
neatly written reports on these purchases and sales.
He purchased in 1879 St. Jo. and Denver first mortgage bonds,
$1,562,886.69, for $603,204.78.
Of these, $617,000 worth he sold to Russell Sage, F. L. Ames,
Sidney Dillon, S. H. H. Clark, Ezra H. Baker, F. G. Dexter and
Elisha Atkins for $246,800.
On January 24, 1880, he surrendered $956,779.76 in these bonds
and scrip in exchange for 9,568 shares of Union Pacific at par.
For St. Jo. and Denver Pacific receivers’ certificates to the
number of fifty-nine he paid $60,695, and on January 24, 1880,
he surrendered them for 590 shares of Union Pacific at par, or
$59,000.
Of St. J. and Denver stock during 1879 he acquired 8,819 shares,
and sold 3,806 shares to the same persons purchasing the bonds.
On January 24 he surrendered the 5,013 shares he had remaining
on hand at par for $100,200.
During the same time he bought $784,000 worth of the St. Joseph
Bridge bonds for $586,940, of which he sold to Sage and Dillon
$150,000 worth for $112,500.
He also bought 4,000 shares of stock for $6,000, making the
total cost of $634,000 bonds and 4,000 shares of stock $480,440.
Received in exchange for the whole business, 6,340 shares of
Union Pacific stock at par, making $634,000.
The gentlemen to whom Gould sold the securities were all
directors of the Union Pacific. These gentlemen, the witness
thought, retained their bonds until the consolidation, as they
were bought with a purpose. “The Denver stock was called
trimmings,” said Mr. Gould, smiling, “and went with the bonds.”
On the consolidation of the company he transferred 27,000 shares
of Union Pacific Railroad stock for new stock.
He had transferred his Union Pacific stock at one time to some
other parties on account of a peculiar law in Massachusetts,
which enables an attachment of stock on a suit, whether there
was anything in it or not.
“I found out about that law,” said Mr. Gould, “and put the stock
in somebody’s else’s name. You can’t tell anything,” he
continued, sharply, “about any stock list. There are many shares
of stock held by brokers for years.”
After the consolidation he had begun to distribute his stock
among other holders.
“I made up my mind,” he said, “it would be better to have four
or five stockholders do a little of the walking instead of one.”
Q. That idea was very much stimulated by the rise in the stock
after the consolidation, was it not? A. Yes, because the stock
went up then so much that there wasn’t enough to go round.
The witness told the story of the employing of General Dodge and
Solon Humphreys to recommend the consolidation. They were fair
men, he thought, and would make a fair report.
He had not talked to them after they went West to make their
report.
Q. How is that? A. Well, he naively replied, while they were
making their examination my interests had changed.
Q. They had changed? A. Yes, I had bought the Missouri Pacific.
Q. Did General Dodge and Mr. Humphreys look into the past
history of the road? A. I consider the future of a road more
important than its past.
Q. Yes, but what I want— A. The past was no criterion as to the
Union Pacific road.
Q. But don’t you think that General Dodge and Mr. Humphreys—? A.
“All my life,” said Mr. Gould, warming up; “all my life I have
been dealing in railroads—that is, since I have been of age, and
I have always considered their future and not their past.”
“That is the way I have made my money,” said he. “The very first
railroad I ever bought had a most deplorable past, but its
future was fair. I paid ten cents on the dollar for its bonds,
and finally sold the stock for $1.25. It was the future of the
Union Pacific that drew me into it. I went into it to make
money.”
“You were not in favor of the consolidation at the time it was
made?”
“No, my interests had changed.”
“Did you try to stop it?”
“Well,” said Mr. Gould, slowly, “my opposition to it was known
and they were greatly alarmed.”
“Who?”
“Ames, Dexter, Atkins and Dillon. They came on from Boston to
see me about it. They had heard that I was going to build an
extension to the Denver Pacific and connect the Missouri
Pacific. They said I was committed to the consolidation and laid
right down on me. I offered my check for $1,000,000 to let me
out, and I have offered it since.
“I will pay it now,” said the witness, with a strong rising
inflection of the voice and looking hard at the Union Pacific
people in the room.
“I offered them a million, but they would not let me out of the
room until I had signed an agreement to carry out the
consolidation.”
“Where is that paper?”
“I suppose it is in Boston. If I could have carried out my
Missouri Pacific plan I would have a property now that would be
worth par.”
“I don’t think you have any reason to complain of your profits
in the matter,” replied Mr. Anderson, at which Mr. Gould partly
closed his eyes to hide their twinkle, and said nothing.
The paper which he signed was an agreement to carry out the
consolidation on certain terms. The consolidation was an assured
fact after January 15, because the witness held the controlling
interest.
“But I have now ceased to be the tower of the Union Pacific,” he
said.
In asking Mr. Gould about his connection with Lawyer Holmes at
the time of the consolidation, Mr. Anderson asked him whether he
was sure about a certain conversation.
“Yes,” he said, “for I had it impressed on my mind.”
“How was that?”
“Well, I remember parting with a lot of stock at ten cents for
which I could have got par a few days afterward. Wouldn’t that
impress the occasion on your memory, Mr. Anderson?”
Everybody laughed at this, and the witness, although he had lost
a million or two, laughed as heartily as the loudest.
As far as the Denver Pacific stock was concerned Mr. Gould said
it was worth practically nothing unless the consolidation was
made. It was the signature of the Union Pacific that made it
good.
“Do you consider that the trustees fulfilled their duty in
letting this stock out of trust?” he was asked.
“I consider that it was the only thing to do, and I stand on
what was done. I am ready to take the responsibility for it that
day, or this day, or any other day.”
[_From the New York Times, May 19, 1887._]
Jay Gould gave another day to the Pacific Railway Commission
yesterday. His manner was, as usual, cool and collected, and he
was apparently full of a patient desire to tell everything he
knew. Yet Mr. Gould told very little, although he answered
hundreds of questions, some of them puzzling enough to drive a
less long-headed financier into a corner. The Denver Pacific
stock and the way it got out of the trust were first taken up.
Mr. Gould said he thought the course taken was best for
everybody. Naturally he wanted the Denver Pacific to go into the
consolidation, holding as he did, $1,000,000 of the securities,
and being trustee of over $3,000,000 more. At first it was
doubtful if the Union Pacific would take it, but it did for the
franchises. “I want to say again,” declared Mr. Gould, “that no
director or person connected with the Union Pacific ever made a
dollar out of Denver Pacific. I am glad to put a final nail in
that coffin.”
His plan at one time was to build a line from Denver to Ogden,
via Salt Lake and Loveland Pass. It would have been shorter than
the Union Pacific and obtained more local business, for the
Union Pacific ran north of the mineral belt and the Southern
Pacific south of it. After he obtained the Missouri Pacific he
saw what a good thing he had in it, but he was persuaded to give
his pledge to go on with the consolidation of the other roads.
The Boston folk became agitated within a month after he bought
the Missouri Pacific, and got the pledge from him. If the
Missouri Pacific had been put through it would have injured the
Union Pacific a great deal.
“According to the ethics of Wall Street,” Mr. Gould was asked,
do you consider it absolutely within the limits of your duty,
while a director of the Union Pacific, to purchase another
property and to design an extension of the road which would
perhaps ruin the Union Pacific?”
“I don’t think it would have been proper. That’s the reason I
let it go.”
“Did you consider your duty to the Government?”
“I had considered it.”
“How would the Government claim have been affected by building a
parallel line?”
“It would have been wiped out.”
After the Thurman bill had been sustained by the Supreme Court
Mr. Gould had a plan to build a road from Omaha to Ogden, just
outside the right of way of the Union Pacific, and give that
road back to the Government. It would give others “a chance to
walk.” The Government tried to squeeze more out of the turnip