Shortly after Gould left for Wall Street he made a modest profit by shorting railroad stocks in the panic of 1857.He had made a modest and profitable investment. He then went long in several railroads, shortly after the panic and his timing prooved to be extremely accurate.In 1867 Daniel Drew, treasurer and longtime director of the Erie Railroad,
added Gould and James Fisk to the Erie board of directors. When Cornelius
Vanderbilt, of the New York Central, sought to buy control of the Erie a
spectacular battle ensued.
Gould, Fisk, and Drew promptly issued thousands
of shares of new, watered stock. The poison pill of the time, although Gould may hav been as Erie as the canal, he did revolutionize financial tactics. When the angry Vanderbilt obtained an arrest warrant for the three, they ferried company headquarters to Jersey City, and Gould rushed to Albany where a pliable New York legislature authorized the stock issue. Eventually peace was made with Vanderbilt, but that gentleman was reported to have muttered that his trouble with the Erie has learned me it never pays to kick a skunk. Later in the fall of 1869 Gould and Fisk conspired with the brother-in-law of President Ulysses S.
Grant to corner the gold market, causing the panic of Black Friday, September 24, 1869, and a tremendous margin call for Gould. He was even reported as telling his partners to buy as he was selling tremendous volumes of gold. After the crash his partners were left with nothing as Gould went long the market at the lowest levels.Gould continued to loot the Erie until his departure in 1872. His role in the Erie War and the attempted gold corner gave him a reputation as the prime financial predator of the age.
Possessing a fortune, Gould turned to western railroads. In the
twenty years after 1872 he was a director of seventeen major lines
and the president of five. He purchased much Union Pacific stock and
controlled that road until 1878. At first Gould improved the management
of the Union Pacific but later blackmailed the company by threatening
to have the Gould-controlled Kansas Pacific build a nuisance line to Utah.
During the 1880s Gould controlled about half the mileage southwest of St. Louis and Kansas City and tried unsuccessfully to expand his western holdings into a transcontinental rail empire to the Atlantic Coast. He also owned the New York World for a time and held major investments in New York City's elevated railways and several
large telegraph companies, including Western Union.
Gould was a man of many faults and virtues. He was cold and
unscrupulous but courteous and unassuming, and in his private
life, devoted to his family, flowers, and books.
He could not be trusted but nonetheless helped build more efficient regional rail systems.
He was a wrecker of values but a railway leader who helped achieve major rate reductions. Gould remains the prototype robber baron of the late nineteenth century, although his defects probably have been exaggerated because he was never comfortable with the press.