“I am a director in the Chicago and Northwestern road, Chicago and Rock Island, Delaware, Lackawanna and Western, New York and New England and a good many other small roads.”
Mr. Gould’s Southwestern system, of which he speaks in terms so glowing, was composed of the Missouri Pacific, that was the main stem, and grafted onto it was the Wabash, of which an account has already been given; the Missouri, Kansas and Texas; the St. Louis and Iron Mountain, and the Texas Pacific. The directors of all the roads were substantially the same, Mr. Gould being the president, and his son George, Russell Sage, A. L. Hopkins and others of his intimate associates being the directors. The most striking feature about the management of these roads is that while all the others were driven into bankruptcy, or to the verge of it, the Missouri Pacific was made a big dividend-paying property. Mr. Gould attributed this to the comparatively small indebtedness of the Missouri Pacific, making it, in his own language, “the snuggest property on the continent;” but his enemies attributed the fact to another reason, namely, Mr. Gould’s own management, by which he was alleged to have starved the other properties to feed the Missouri Pacific. His holdings of the latter’s stock were immense, while his pecuniary interest in the others was comparatively small; indeed, he held but a few hundred shares of Missouri, Kansas and Texas, though its president. His purpose was evidently to swell the earnings of the Missouri Pacific to such an extent that he could declare big dividends and sell his stock at high figures. He succeeded in pushing the price up to 112 in May, 1887, but it subsequently fell to 70¼ in March, 1888. The lack of public confidence in Gould’s railroad methods is strikingly exhibited in the fact that though Missouri Pacific paid 6 to 7 per cent. annual dividends, Gould found it almost impossible to keep the price at par except by the pegging process, while other equal dividend-payers brought from 110 to 130 in the market without manipulation. The same fact was also strikingly exhibited in Western Union, which paid dividends, but sold at from 70 to 80.
Finally the stockholders of the Missouri, Kansas and Texas became indignant at the destruction of their property. Much of the stock was held abroad and was only worth $13 to $15 per share of $100. They engaged E. Ellery Anderson, the same who had been a member of the Pacific Railroad Commission, and Simon Sterne, who had been the counsel for the Hepburn Committee, to represent them, and in connection with such Wall street men as W. L. Bull, shortly after elected president of the Stock Exchange, they hurled the Gould management from power. They publicly charged Mr. Gould with having used the road simply as a feeder to the Missouri Pacific. Mr. Gould succeeded, at least in part, with his plans in regard to Missouri Pacific, and is understood to have marketed a large block of his holdings in 1888. Shortly after that the road reduced its dividend and had to borrow money to pay it.
One of the most memorable events connected with Gould’s management of the Missouri Pacific was the great Knights of Labor strike in 1885, which disabled the road for a long time. An interesting feature of the strike was a Sunday conference at Mr. Gould’s house between him and General Master Workman Powderly, at which negotiations for a settlement were entered into. The foremost representatives of capital and labor thus met to settle vital questions at issue affecting the wealth of the capitalists and the livelihood of the workingmen. Mr. Gould said to the Senate Committee on Labor and Education:
“I have been all my life a laborer or an employer of laborers. Strikes come from various causes, but are principally brought about by the poorest and, therefore, the dissatisfied element. The best workers generally look forward to advancement in the ranks or save money enough to go into business on their own account. Though there may be few advanced positions to be filled, there is a large number of men trying to get them. They get better pay here than in any other country, and that is why they come here. My idea is that if capital and labor are let alone they will mutually regulate each other. People who think they can regulate all mankind and get wrong ideas which they believe to be panaceas for every ill, cause much trouble to both employers and employes by their interference.”
To the Congressional Committee which investigated the Missouri Pacific strike he said: “I am in favor of arbitration as an easy way of settling differences between corporations and their employes.”
CHAPTER XI.
GOULD AND THE TELEGRAPH MONOPOLY.
The manipulation of values and the methods of running the railroad and telegraph systems of the United States effect more nearly the personal interests of every individual than do any of the other great enterprises of the country. It is for that reason that Jay Gould’s actions in his railroad properties and his telegraph companies are such an important factor of interest in the events of his life.
Mr. Gould’s connection with the Western Union Telegraph Company began in the early part of 1881. For a number of years, with the aid of the American Union and the Atlantic and Pacific telegraph companies, which he controlled, he was able to advance and depress the stock of the Western Union at will. He was simply playing a great game with his larger rival and waiting the chance when he would take possession and unite all the lines.