CHAPTER XII.
GOULD AND THE MANHATTAN ELEVATED.
Jay Gould was not an originator of systems. Others with ideas secured charters, began railroads and other schemes, and then, when money was needed, Gould would step in and profit by their energies by purchase at low figures. This was never more forcibly illustrated than by his connection with the elevated railroad system of New York City.
He had nothing to do with their construction. In fact, Gould’s name is unidentified with any great public undertaking original with himself. Other men planned and built. He grabbed. He did, it is true, start a telegraph company, and put up poles and wires, but it was only as a part of his plan to capture a system already constructed. So the elevated roads—the measurable solution of the problem of rapid transit in the metropolis and an inestimable boon to the city—are not due to the foresight, pluck and energy of Gould. Other men were the pioneers, but they were driven to the wall and forgotten, while he plucked the fruits of their labors.
Gould, naturally enough, came into control of this great system, which carries 600,000 passengers every day, through a consolidation and the “watering” of stock. There were three elevated roads—the Metropolitan (formerly the “Gilbert,” named after its originator, Dr. Gilbert), of which S. H. Kneeland was president; the second, the New York, of which Cyrus W. Field was president and of which Samuel J. Tilden was once a heavy stockholder, and the third, the Manhattan, of which Jay Gould and Russell Sage were the owners. The Metropolitan and the New York were bona-fide companies, actually owning railroads and rolling stock, but the Manhattan was a “paper” company, having a nominal charter and an organization, but not one inch of road. Yet these three companies were consolidated on equal terms, and Gould, Sage and Field became the owners. Later the control narrowed down to Gould and Sage.
Sage, Field and Kneeland are remarkable characters in Wall street history, and their names are intimately identified with Gould’s—Sage and Field as associates, and Kneeland as an unpurchasable opponent. Russell Sage is one of the richest men of his generation. He came originally from Troy, where he ran a bank, and whose district he represented in Congress, before the war, for one or two terms. Then he entered Wall street. His great distinguishing trait was avarice. He worshipped the mighty dollar. Money-getting was his passion—not for the power and luxury which money can purchase, but for the mere pleasure of acquisition. He lived, it is true, on Fifth avenue, and gave somewhat to charity, but his habits were economical almost to the point of penuriousness, and once a dollar got into his hands it did not easily slip through them. It should be said of him, however, that he was as careful of other people’s money as of his own. This was the man who for many years was Gould’s most intimate business associate, a director in all his companies and a partner in all his schemes. Gould estimated Sage’s wealth at $50,000,000 and their combined capital was thus enormous. Sage was chiefly a money-lender in Wall street. He carried an immense amount of ready cash and was of incalculable aid to Gould in all his undertakings. It is indeed one of the traditions of the street that Sage saved Gould from ruin at a time when he was hotly pressed by James R. Keene and other bear operators. Field was a different kind of a man. He liked money but only as a means to an end, and he had not the heart or mind to roll up a colossal fortune in the way that Gould and Sage did, though he shared for a time in their enterprises. But at one time he was worth millions. Field’s passion was love of fame. His brothers all gained distinction in the professions; he sought and obtained distinction in commercial life. One of his brothers sat on the Supreme Bench of his country. Another was a leader of the New York Bar. A third was a noted clergyman, editor and traveler. Cyrus W. Field began his business life as a rag merchant, but with indomitable pluck, energy and foresight he finally succeeded in constructing the first Atlantic cable, and was honored both in London and New York. Mr. Field sought almost equal distinction in connection with the elevated railroads, whose great importance he comprehended, and he made a bid for popularity by insisting on a reduction of the fares from 10 to 5 cents against the wishes of Gould and Sage. Sage first became acquainted with Gould in Troy. Field first became identified with him in 1879, when he (Field) was president of the Wabash railroad, though we have seen him as a guest at the famous banquet given to President Grant on “Jim” Fisk’s steamboat in 1869.
Mr. Gould turned his attention to the elevated railroads in this city early in 1881. The Manhattan company was then in control of all the lines as lessee, and to Mr. Gould’s keen vision that company presented the appearance of being on the verge of financial disaster. The Manhattan company had issued $13,000,000 of stock—pure water—and had divided the same equally between the Metropolitan and the New York companies. There was much criticism of the action of the Manhattan corporation in issuing so large a quantity of stock which was wholly unrepresented by property. The attorney-general of this state, Hamilton Ward, obtained permission from Judge Donohue, May 18, 1881, to begin a suit for the dissolution of the Manhattan company’s charter and the appointment of a receiver. Other suits were begun about the same time to restrain the Manhattan company from paying any dividends on its stock. Of course these suits tended to depress Manhattan stock in the stock market.
Gould, Sage and Field agreed together to consolidate the three elevated railroad companies. They were, however, met by the determined opposition of President Kneeland, of the Metropolitan road. Nothing could induce him to waver in his opposition. His associates in the Metropolitan deserted him, and one by one they went over to Gould, but he stood firm to the very last, and his persistency caused a celebrated litigation, which proved so protracted and costly that Kneeland was finally defeated, though his spirit was unsubdued.
At that period Mr. Gould was the owner of the New York World, and for several months in 1881 that newspaper was greatly exercised over the bad management and “financial rottenness” of the Manhattan company. Scarcely a day would pass that the World did not contain an editorial or a news paragraph attacking Manhattan. The stock kept dropping two, three and five points at a time. With the beginning of July, 1887, suits were pending against the three elevated railroad companies in all of the state courts in which they could be brought. Mr. Gould became a stockholder in the Metropolitan company on the 1st of that month, 100 shares of stock having been transferred to him by Russell Sage. On July 8th, Mr. Gould, Mr. Connor, Mr. Navarro, and other friends of Mr. Gould were elected directors of the Metropolitan company. On the same day Attorney-General Ward entered an order discontinuing his suit against the Manhattan company in this judicial district. He immediately, however, applied to Judge Westbrook at Kingston, and obtained an order appointing ex-Judge John F. Dillon and Albert L. Hopkins receivers of the Manhattan company. A few days afterward Cyrus W. Field began a suit to take the New York company’s roads out of the hands of the Manhattan company, and later an application was made to the receivers to sue the New York and Manhattan companies for the $13,000,000 of stock issued without consideration. In the meantime the World kept up an incessant fire of criticism and denunciation of the Manhattan company. The price of the stock naturally kept dropping until it got as low as 16.
Early in October Mr. Gould went into the Manhattan company, and it was proclaimed that he and his friends had obtained control. They held more than 70,000 shares, nearly all of which they had been able to pick up in the stock market at prices ranging from 20 to 16 cents on the dollar. All of the timid original stockholders had been scared into sacrificing their holdings by the confusing cloud of litigation and the attacks of Mr. Gould’s newspaper.