Mr. Gould’s smartness was never made more apparent than in his manner of pretending to restore the money which he had misappropriated. He had to make restitution of this stolen money—“stolen” is the word used by the Hepburn Committee. After he had left Erie, the new management sought to ascertain how large was the plunder carried away by Gould. This information could be obtained with complete accuracy only from Morosini, the auditor of the company, and he refused to make up the accounts, leaving Erie to join his fortunes with those of Gould. Morosini now became inseparable from Gould and a notable figure in Wall street. He was a tall, athletic Italian, shrewd and faithful, an ideal private secretary. He had served with Garibaldi in the wars for Italian liberty, and was proud of his service under the great Italian patriot. He had been a sailor, too, and had a wide experience with the world, which, while not making him overscrupulous in his methods, made him invaluable to a man like Gould. When the firm of W. E. Connor & Co., of which Gould was a special partner, was founded, Morosini became partner, and when the firm dissolved, and Morosini retired from business, Gould said that his private secretary was worth $2,000,000 or $3,000,000.

A way was opened, however, by which the new Erie management gained some proof of Gould’s wrong-doing. Gould, in company with Horace F. Clark, had engineered a corner in Northwestern stock, one of the most famous and successful corners in Wall street history. In after years, Gould gave a unique account of this corner to a legislative committee which was investigating corners. “I was interested,” said Mr. Gould, with that charming frankness which he sometimes assumed, “in the Chicago & Northwestern corner. The stock was selling at seventy to eighty. I considered it very cheap,” so he bought. He soon had bought a great deal more than there really was to deliver, and the shorts were cornered. The price went up to $250. “I was induced,” said Mr. Gould, with most exquisite humor, “to part with some at that price.”

Among the shorts caught in this famous corner was Henry N. Smith, who only a short time before had been Gould’s partner in the firm of Smith, Gould & Martin, and who had supported Gould in his great conspiracy to corner gold. Smith is another noted Wall street character, whose life is linked in that of Gould. He was something of an “exquisite,” and had the reputation of wearing corsets, but he was for many years remarkably successful in Wall street. After renewing his relations with Gould he became chiefly distinguished as one of the bear leaders, and was thus continually in antagonism with Gould. Woerlshoffer, Cammack and Smith were a trio that once nearly drove Gould to the wall, but the latter lived to see one dead, the second his associate in certain speculations, and the third involved in irretrievable bankruptcy.

It was not in the Northwest corner that Smith was ruined, but in it he lost a very large sum, which found its way into Gould’s pockets. Smith was not slow in getting his revenge. The books of the late firm of Smith, Gould & Martin were in his possession, and he handed them over to Mr. Barlow, of the Erie, who quickly discovered in them the evidence on which to obtain an order of arrest for Gould and to establish a suit for the recovery of $12,803,059, the proceeds of bonds converted into stock to the extent of 407,347 shares, which were sold by Mr. Gould’s firm and the proceeds transferred to his pocket. That was the charge, and Gould was arrested and placed under very heavy bonds, which he furnished. Here Mr. Gould’s genius displayed itself. He actually entered into a big speculation based on his restitution of this plunder. Gen. Dix, it should be recorded, remained as president of Erie for only a few months, and was succeeded by President Watson, a man who owed his position mainly to Horace F. Clark, who, as has been seen, was in intimate business relations with Gould. Clark undertook to arrange a compromise between Watson and Gould, and all three evidently united to “rig” the stock market by the operation. One day it was reported that Gould intended to restore his plunder, and the price of Erie advanced with a bound. A day or two later a denial of the report would come, and down would go the price. This was repeated two or three times and Gould, of course, bought at the low figures and sold at the top, and the profits must have been big. Finally the restitution, so-called, was announced with a flourish of trumpets. On the face of the agreement Gould made over to Erie an immense amount of property and all suits were withdrawn and Gould released from all criminal responsibility. A clause in the agreement said that in making this transfer of property Gould expressly stipulated that it should not be considered as an admission of wrong-doing. The Opera House and adjoining buildings and other real estate, with the exception of Gould’s Fifth avenue mansion, were made over to the Erie, and, in addition, a mass of stocks of the par value of about $6,000,000. As a matter of fact most of these stocks were worthless. J. G. Guppy told the Hepburn Committee that he would not give $200,000 for the entire lot. Among the securities were $1,000,000 of United States Express stock to be issued, and which Gould guaranteed to be issued, but which, as a matter of fact, never was. When Hugh J. Jewett became receiver of Erie he discovered the utter sham of this alleged restitution. He told the Hepburn Committee: “Mr. Watson had made a settlement with Mr. Gould, in which he received in liquidation of this account, or such portion of it as he supposed he could recover, certain assets. When I came here I sought to realize on these assets. I found many of them totally worthless, and some which were of value were encumbered by existing liens.”

By the closing of these transactions Mr. Gould was entirely freed from all connection with Erie and was enabled to seek new fields for cultivation. It had been a few years before, during the Erie troubles, that Gould and his coadjutors originated the scheme for cornering gold, which consummated on the day which is now remembered as “Black Friday,” the other most disgraceful of the conspiracies of his life.

CHAPTER VIII.
THE GOLD CONSPIRACY.

“Black Friday,” that darkest day in the financial history of America, was not the creation of sudden circumstance, but the culmination of a plan conceived by Gould and his associates, with all its details arranged for weeks before. Whether the whole truth has ever been written about Mr. Gould’s gold operations is open to doubt. The explanation given by Henry Clews, in his noted work, “Twenty-eight years in Wall Street,” seems a trifle naive to those who are not so deeply initiated in Wall street methods. He says:

“In the year 1869, this country was blest with abundant crops far in excess of our needs, and it was apparent that great good would result from any method that could be devised to stimulate exports of a part, at least, of the surplus.

“Letters poured into Washington by the thousand from leading bankers, merchants and business men, urging that the Treasury department abstain from selling gold, as had been the practice for some time, so that the premium might, as it otherwise would not, advance to a figure that would send our products out of the country, as the cheapest exportable material in place of coin, which, at its then artificially depressed price, was the cheapest of our products, and at the same time the only one undesirable to part with. So the government decided to suspend gold sales indefinitely.