The Capital Of Capitalism

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When Fisk and Jay Gould got control of the Erie Railroad, Fisk had the company’s headquarters moved into the upper floors of an opera house at Eighth Avenue and Twenty-third Street. Music, laughter, and an occasional showgirl drifted up to lighten office routine. “Castle Erie,” as it was called, was also equipped with a printing press in the basement, since the “Prince of Erie” had already discovered it was a good thing to be able to print up convertible bonds at will. He had stood off an attempt by Commodore Vanderbilt to corner Erie by printing the bonds, converting them into stock, and throwing the stock on the market. The maneuver was successful, even though the Exchange threw out the stock afterward and adopted the “Erie Rule” requiring companies to register new stock before selling it.

Even George Templeton Strong, a New York lawyer who viewed his nineteenth-century contemporaries with a cynical eye, was fascinated by Fisk, whom he considered a “scientifically interesting scamp.” “Illiterate, vulgar, unprincipled, profligate, always making himself conspicuously ridiculous by some piece of flagrant ostentation, he was, nevertheless, freehanded with his stolen money, and possessed, moreover, a certain magnetism of geniality. …” Thus Strong wrote when Fisk died, shot by his mistress’ other boy friend.

Daniel Drew, a generation older than Fisk but a fellow plotter on the Street, had foibles of the opposite sort. He went around in clothes of the style he had worn when he was a cattle drover and carried a broken umbrella. “I got to be a millionaire before I knowed it, hardly,” he would say disarmingly. “Uncle Daniel” was an expert at the little tricks of deception that made things interesting in Wall Street. While pulling out his handkerchief he would let fall a scrap of paper with the name of some stock on it. Soon the news would be all over the Street. The lambs would rush in to buy or sell short according to the old man’s tip while he did just the opposite. Drew is supposed to have been responsible for the figurative use of the term “watered stock” because early in his career he used to keep his cattle thirsty while driving them to market, then letting themfill up with water just before they were weighed. On the Exchange “water” meant the same sort of artificial value in securities.

Jay Gould has come down in history as the incarnation of all the evils of the stock market. He did what other men did, but he did it bigger, outplaying others in the game of double-cross. Gould was made famous by his milking of the Erie Railroad in the 1860’s, an exploit carefully detailed for the public by Charles Francis Adams, Jr., in the North American Review , and for a notorious attempt to corner gold that ended on Black Friday, September 24, 1869. When he saw that the cornering attempt was doomed, Gould secretlysold his holdings, leaving hundreds of his followers to be ruined and bringing on a stock-market panic too.

Those were exploits of his youth. But Gould went on for another twenty years, building a railroad empire in the Southwest, capturing control of Western Union, confounding his enemies time and time again. Men like Russell Sage, Cyrus Field, and J. P. Morgan did not mind associating themselves with him. Henry Clews considered him a great executive. Yet somehow his caricature looms larger than life. Unlike many of the bulls and bears who were known as convivial good fellows even when ruining each other, Gould was never chummy. He appeared mean and conniving. So while few remember that E. H. Harriman once made ten million dollars by declaring an extraordinary dividend on two of his railways and delaying the public announcement so he and associates could load up on stock, or that Charlie Woerishofferand Addison Cammack, a fellow bear, took advantage of President Garfield’s assassination to stage a sensational raid on the market, Gould’s name still strikes such a discordant note that when in 1964 the National Trust for Historic Restoration wanted to open his baronial estate at Tarrytown, New York, as a museum, there was a public outcry. [See “The Realms of Gould,” A MERICAN H ERITAGE , April, 1970.]

Self-conscious about its history, the Exchange today likes to point out that many of the colorful market operators of the past were not actually members of the Exchange. Commodore Vanderbilt was not, nor were Drew, Fisk, and Gould, although they were partners at one time or another in brokerage firms. But in any case no big operator could have carried on his activities in his own name alone. Secrecy was important; several different brokers were used for camouflage. Of Charles Woerishoffer, who was an Exchange member, Henry Clews wrote: “The great bear had wonderful skill in putting other operators off the track of his operations by employing a large number of brokers, and by changing his brokers and his base of action so often that speculators were all at sea regarding what he was going to do.”