“His own contracts were all fulfilled. Fisk’s contracts all except one, in respect to which the broker was able to compel a settlement, were repudiated. Gould probably suggested to Fisk that it was better to let Belden fail, and to settle a handsome fortune on him than to sacrifice something more than $5,000,000 in sustaining him. Fisk, therefore, threw Belden over, and swore that he had acted only under Belden’s order. One of the first acts of the Erie gentlemen after the crisis was to summon their lawyers and set in action their judicial powers. The object was to prevent the panic-stricken brokers from using legal process to force settlements and to render the entanglement inextricable. Messrs. Field & Shearman came and instantly prepared a considerable number of injunctions, which were sent to their judges, signed at once, and immediately served. Gould then was able to dictate the terms of settlement, and after a week of complete paralysis, Broad street began at last to show signs of returning life.
“The fate of the conspirators was not severe. Mr. Corbin went to Washington, where he was snubbed by the President, and at once disappeared from public view, only coming to light again before the congressional committee. General Butterfield, whose share in the transaction is least understood, was permitted to resign his office without any investigation. Speculation for the next six months was at an end. Every person involved in the affair seemed to have lost money, and dozens of brokers were swept from the street. But Mr. Jay Gould and Mr. James Fisk, Jr., continued to reign over Erie, and no one can say that their power or their credit was sensibly diminished by a shock which, for the time, prostrated all the interests of the country.”
CHAPTER X.
GOULD AND THE WESTERN RAILWAY SYSTEMS.
After Mr. Gould was ousted from Erie, he entered into that career of acquisition which made him the master of several of the most important railroads in the United States, of the Yale system of telegraph and of the chief line of transportation in New York city. In nearly all his railroad operations he repeated, to a greater or less extent, his career in Erie. His scheme was to buy up cheap and bankrupt roads, reorganize them, issue new stock and bonds, unload on some other road, or else, by the payment of dividends, get the public interested in the property and sell at big profits. Or he would reverse the operation and take a great property and squeeze it like a lemon. His career in Union Pacific comes naturally first in order. For ten years he was master of this great system which, with the Central Pacific, constitutes the first and most important of the lines leading to the Pacific coast. His record in this road has been a matter of official investigation, and this part of Mr. Gould’s history, as well as that of the Erie and Black Friday periods, is based on sworn testimony. But first, it is but fair that Mr. Gould’s own account of his connection with Union Pacific, as stated in his testimony before the Senate Committee on Labor and Education, should be given. Having omitted all mention of Erie Mr. Gould said:
GOULD BEFORE THE CONGRESSIONAL COMMITTEE.
“I then went into the Union Pacific road. I met Horace Clark and Augustus Schell out West, and they gave me so good an account of the road that I concluded I would buy in it. I telegraphed to New York an order to buy at a certain price. When Mr. Clark got home he was taken ill, and as soon as his brokers learned that his illness was to be fatal, they sold out his stock. That broke the market and filled orders which I had sent at a price lower than I ever expected. When I got home I found myself the owner of a large amount of this property, and at once inquired into its condition. I learned that it was saddled with a large floating debt, and that there were ten million dollars of bonds coming due within a month. It was in rather a blue condition. The directors were consulting who should be the receiver. I made up my mind that I would carry it through, and I told them that if they would furnish half of the money to pay the debt, I would furnish the other half. The stock went down to 15. It was a large loss, but still I kept right on buying, so when the turn came there did not seem to be any top to it. It went up to 75, and I immediately went to work to bring the road up. I went out over it, started coal mines, and to the surprise of everybody it soon began to pay dividends and has never passed a dividend since.
“Well,” continued Mr. Gould, “when this road began to be a financial success and developed other ways there arose quite a clamor, and it was said to be Jay Gould’s road, as though it were a dangerous thing to have one man control a road. I thought that it was better to bow to public opinion, so I took the opportunity when I could to place the stock in the hands of investors. In the course of a very few months, instead of owning control of the road I was entirely out of it, and the stock was 20 per cent. higher than I had sold it for. Instead of being thirty or forty stockholders, there were between six and seven thousand, representing the savings of widows and orphans. There were also a great many lady stockholders. That was about four years ago, after Congress enacted very harsh legislation, after they had broken the bargain they had made to get the road through in its early stages.”
“You refer to the Thurman act?” asked the chairman.