Robber Barons: Gould and Fisk

The names Jay Gould and James Fisk Jr. are linked in American business history in the age of “robber barons.”  Together, they controlled the Erie Railroad, were part of the Tammany Hall set, and wrangled with J.P. Morgan over the Albany & Susquehanna Railroad.

James Fisk, Jr.was born April 1, 1835 in Pownal, VT. His early work history is quite colorful and includes a stint in the circus, as well as work as a waiter, peddler and salesman.  In Washington, D.C. he did well with Army contracts during the Civil War and later became a stock broker. It was about this time that his path crossed with Jay Gould.

Jay Gould’s background was a bit more traditional. He was born May 27, 1836 in Roxbury, NY and eventually worked with his father in the hardware business.  He later worked in lumber, tanning leather, and banking.

Gould and Fisk’s earliest collaboration of note involved the Erie Railroad.  Much of Erie’s stock was owned by Cornelius Vanderbilt, but they wanted to supplant Vanderbilt. To do this they, along with Daniel Drew, came up with the scheme to issue fraudulent stock in the company in an effort to weaken it and weaken Vanderbilt’s position.  This fight over control of the railroad was messy (it was sometimes called the Erie War) but eventually Vanderbilt ceded control of the railroad to the three men and the “war” was over.  Once in control of the company the men sought to curry favor and appointed Tammany Hall’s William Tweed, AKA Boss Tweed, a director of the company in return for legislation favorable to their business interests.  Of course Gould and Fisk couldn’t leave it there, and eventually were able to force Drew out.  Their next venture wouldn’t be as successful.

After the Civil War, the U.S. economy was in a shambles. The government was taking steps to straighten it out and what came to be known as the Black Friday Scandal has its roots in these efforts. One effort was to limit the amount of greenbacks (paper dollars) in circulation and put more gold into the economy.  This meant the government was going to greenback at a discount using gold, thereby putting more gold into the economy.  Unfortunately, this did not fit into the plans of Gould and Fisk who wanted the government to hold onto their gold.  These gentlemen wanted to make a huge profit by buying up gold cheaply and eventually selling it when the price rose.  The government putting gold into the economy would actually drive the price of gold down.

In an effort to thwart the plan, or at least put themselves into a better position, they convinced Abel Rathbone Corbin, the president’s brother-in-law to help them get close to the president in order to convince him to halt the government’s plan.  Unfortunately, for them, President Grant became uncomfortable with Corbin’s excessive interest and in the end, ordered the sale of millions of dollars in gold. Gould and Fisk had started to quietly buy up gold, but on the 24th of September 1869, the government’s gold hit the market and the price of gold plummeted.  Many people, including Corbin, were ruined in what became known the Black Friday Scandal.  While Gould and Fisk lost money, they were able to continue on in their business ventures. [1]

At the same time, the duo had also begun buying up shares of the Albany & Susquehanna Railroad. The fight over control of this railroad got just as messy as the fight over the Erie.  The company’s president, Joseph H. Ramsey, resorted to pretty extreme efforts to block the takeover (in response to some crazy shenanigans by Gould and Fisk) and eventually banker J.P. Morgan became involved. The legal wrangling eventually reached the New York State Supreme Court, which sided with Morgan and Ramsey, and by 1870, Morgan was in control.

The fortunes of Gould and Fisk didn’t go well over the next few years.  Fisk’s longtime mistress took up with Edward Stokes and the two attempted to blackmail Fisk.  Fisk resisted and Stokes, frustrated and facing bankruptcy, shot and killed Fisk in January 1872. About that time, Gould began his efforts to take complete control of the Erie Railroad.  Then this story gets really interesting.

In an effort to take full control of the Erie, Gould was trying to gather up investors and money.  One such investor was a man going by the name Lord Gordon-Gordon. This “lord” was able to swindle Gould out of $1 million in stock and then flee to Canada.  When Gordon was found to be a fraud, the stock dropped and Gould, who had been swindled out of quite a bit of money, was in very dire straits. In an effort to get Gordon back to the United States, Gould and several associates tried to bring Gordon back in a failed kidnapping attempt that caused a small international incident with Canada. In the end, Gould was forced out of the Erie Railroad altogether in 1879.

But Jay Gould wasn’t one to give up.  Instead he went west where he gained control of several railroads, including Union Pacific.

Gould died 20 years after Fisk in December of 1892. But even then, the drama didn’t end. A lengthy and scandalous fight over his estate provided fodder for the news until at least 1897 and revolved around a supposed marriage and an “illegitimate” heir.

References:

[1] American Experience: Black Friday, September 24, 1869