#285 Jay Gould (How Jay Gould Built Wall Street's Biggest Fortune)

0:00 Jull took time off from counting his money. To have lunch at Domico's. The fanciest restaurant in town. While he was eating, a lawyer walked over to his table. And punched him in the face.

0:10 A series of spectacular financial triumphs. Fabulously rich. Now at age thirty six He was the most notorious businessman in the country.

0:20 Like others who try to claw back money from gold. The lawyer was getting nowhere in court. The laws were too weak. Enforcement two lacks. And the judges too crooked.

0:29 Gold had them in his pocket. This book seeks to explain Jay Gold and his underappreciated An aggressively maligned role. In the country's transformative economic expansion of the nineteenth century. But it's just as much an exploration of Wall Street.

0:44 During its Wild West era. After the civil war When By the rough means on display at Del Monico's. The seeds of our current financial system.

0:53 Or planet. Cornelius Vanderbilt John D. Rockefeller and Andrew Carnegie. Are not the focus of this book. Because they made their money in industry.

1:03 Not in finance. Vanderbilt toiled in steamships and railroads, Rockefeller in oil, and Carnegie in steel. Only the lesser known figure of Jay Gold As rich as any of them. was foremost a creature of Wall Street.

1:16 To the extent Jay Gold is remembered, it's for Black Friday. The day he blew up the gold market. And paralyze the financial system. Lawyers swamped him with lawsuits. Prosecutors.

1:26 Hit him with subpoenas. And Congress hauled him in for hearings. This was as far as things got. Arrested three times. Jay Gold never spent a day in jail.

1:35 Frustrated opponents. Turn to vigilante justice. One victim tossed gold down a stairway. Another one pulled a gun on His peers

1:45 were more charitable. Varner Boot told a newspaper that goal was the smartest man in America. Rockefeller. When asked who he thought had the best head for business. Answer J Gold.

1:55 They recognize gold as a master of his craft. No one disputed. That he was an extraordinary problem solver. An unparalleled Negotiator.

2:03 An expert communicator. A lightning fast stinker. And a masterful tactician. With a staggering memory. He complimented his natural endowments.

2:12 With nerves of iron. And a work ethic. Even as a teenager, so strong. That it damaged his health. And quite possibly.

2:20 Shortened his life. With his mix Of brains and single mindedness. He was suited To make the most Of the moment.

2:28 But why does he matter? There's an easy answer. Well he made his money on Wall Street. He did as much as anyone. Through his work with the railroads to build

2:37 The country. Railroads changed America in the nineteenth century. Much as automobiles changed the country in the twentieth century. And the internet has changed the twenty first century.

2:47 And gold. knew how to play the game. That was an excerpt from the absolutely fantastic book that I read this week and the one I'm gonna talk to you about today. Which is American Rascal. How Jay Gold built Wall Street's biggest fortune.

2:59 And it was written by Greg Steinmetz. Okay, so I gotta start by reading the inside flaps of this book, the inside cover of this book,'cause it's absolutely fantastic it gives you an absolutely fantastic overview. Of the life and career of Jay Gold. And this is what it says. He was richer than Rockefeller and so bare knuckled that even Wall Street had to start making rules.

3:17 Had he put his name on a university or concert hall, he would undoubtedly be a household name today. The son of a poor farmer whose early life was marked by tragedy. Jay Gold saw money as a means to give his family a better life. Even if to do so. He had to pull a fast one.

3:34 On everyone else. After entering Wall Street at the age of twenty four, He quickly became notorious when in an attempt to corner the market on gold, He paralyzed the economy and nearly toppled President Ulysses S Grant.

3:47 The Black Friday market collapse of eighteen sixty nine remains among the darkest days in Wall Street history. Through clever financial maneuvers he gained control. Over one of every six miles of the country's rapidly expanding network of For railroad tracks. coming close to creating the first truly transcon transcontinental railroad

4:06 And making himself One of the richest men in America. Just gonna interrupt us real quick. He winds up dying from tuberculosis at fifty two years old. I think he had five I think he had six kids. He was so rich. So I use this calcul that's available online that'll that'll try to

4:19 tell you the value of a dollar in the past in like today's terms. It only goes back to I think nineteen thirteen. J died. twenty one years earlier in uh eighteen ninety two. When he died, he left his firstborn son fifteen million dollars.

4:32 And ev all the rest of his kids, I think the five other kids Ten million dollars. Having fifteen million dollars back in nineteen thirteen, so the value would be even more in eighteen ninety two. It'd be like giving your firstborn son uh about a half of almost five hundred million dollars and then giving your other five kids

4:48 Three hundred million dollars. Imagine how much more wealth he would likely build. If he actually lived to the same age as like a Rockefeller or a Vanderbilt. His illness actually took away maybe another two decades of him constantly building to as well. So it's just uh it's just a staggering amount of money.

5:03 So back to this, it says it made him one of the richest men in America. That's just an illustration of that. American Rascal shows the complex and quirky character This is one of my favorite This is one of my favorite paragraphs. to give you just a description of why we should spend so much time. This is my second podcast on on Jay. And I'll go into more details on that in a minute, but why we should spend so much time just studying

5:20 Just his very unique life and career. So it says American Rascal shows the complex and quirky character of the nineteenth century's greatest Robert Baron. He was at once praised for his brilliance by Rockefeller and Vanderbilt. And condemned for forever destroying the American business values by Mark Twain. He lived a colorful life. Trading jokes with Thomas Edison, figuring in Thomas Nast's best sketches.

5:39 Paying boss boss tweeds bail. And commuting to work. In a two hundred But Yeah.

5:48 He thrived in an expanding industrial economy in which authorities tolerated inside trader. And stock price manipulation because they believed regulation would stifle progress. But by taking these practices to new levels. He showed that unbridled capitalism was in fact dangerous for the American economy. This eye opening history explores how gold's audacious exploration

6:08 Or exploitation, excuse me. of economic freedom triggered the first public demands for financial reform. A call that still resonates today. So I'm gonna go into his early life to give you an idea of how the circumstances and the tragedy that he had to endure when he was young. uh really turned into this this concept that you and I have talked about over and over again. It's this PSD, which stands for Poor Smart Determined.

6:30 And after you're done listening to this, if you have not already listened to The very first episode I did on Jay Gold. It's episode two fifty eight, based on this fantastic book called The Dark Genius of Wall Street. There's going to be some overlap in the conversation you and I have today with That episode?

6:44 But I do think of them as a two part series, meaning that you sh if you're interested in Jay, you should listen to both of them. And so to me there's three traits that influence Jay's early life the most. That's poverty. early deaths and alcoholism. And so it says

6:58 On a January morning when Jay was four. His sisters were in school and their teacher dismissed them early. Mary, Jay's mother. was sick and wanted to see her children. Jay went with the girls to Mary's room, he pulled himself up to her bed. and kissed her lips. They were cold.

7:11 Mary was dead at age thirty five, a victim of typhoid fever. And this is one of the most chilling sentences in this entire book. Jay later said that the only thing he remembered about his mother was Were her cold lips. It is interesting to think about what what's imprinted on us when we're really small, when we're we're really young children.

7:29 That affects. the rest of our lives. This book doesn't talk about it as much. But in the dark genius of Wall Street it talks about that Jay had very few habits out of side of family and work. One of his habits and one of his hobbies, rather.

7:40 was that he loved growing flowers. The beautiful home that he had in on Fifth Avenue in in Manhattan later in life had a fairly large garden. He winds up buying this massive estate. I think I think it's uh in upstate New York. Somewhere outside of Manhattan. that and then he winds up building this this massive greenhouse and would spend a ton of his free time, the time that he's not working, growing new kinds of flowers. And the reason that stuck out to me is because

8:04 His mother spent an unbelievable amount of time developing her garden. Before she passed away. So then after his mother dies, his father remarries a number of times. Family tragedy did not end there. John Gold immediately remarried. His new wife died less than a year later. He married a third time. The woman died within two years.

8:20 Jay's sister Nancy, who was only eleven years old, also fell ill ill and died. That made four deaths in four years. So imagine going through that. You're eight years old, your mother died, your sister died, your two new stepmoms are dead. And to make it worse. His father

8:36 Winds up being an alcoholic. So says he took to drink John Gold could be cruel. Jay was once sent home from school for misbehaving. John locked him in the cellar. It gets even worse than that. So he locks him in the cellar, gets so drunk, forgets that he's in there.

8:50 So Jay's older sisters are like, Well where's like where's Jay? What happened to him? And his father couldn't remember that he put his son in there. Much later when his sisters finally found him in the cellar and let him out, he was just in he was uh in tears, completely crying. But even in an environment like this, we see that his traits his personality traits he had They developed young and they stuck with him throughout his entire life.

9:08 He had an unbelievable work ethic and an incredibly long attention span. Uh later on he meets like a young Thomas Edison because he's gonna wind up buying Thomas Edison's one of Thomas Edison's first inventions, which is a way to send multiple uh messages across telegraph lines. And Thomas Edison thought Jay was just one of the weirdest people we ever met. said one time in their meeting, Jay pulls out like a map. This is much later in the book, too. uh pulls out a map and uh talks without stopping for three hours

9:35 About his plans to expand his railroad. And I think at the time Thomas Edison's like, you know, this is way before he was famous. He's like in his mid twenties. Like, what is going on with this guy? So we see a little bit of that here. Uh Jay worked on math problems as long as it took to get an answer. He read whatever he could get his hands on. Jay was often nowhere to be found. He was off hiding somewhere with his books.

9:55 Jay left home when he was thirteen, explaining that the local school was too easy. He goes to try to gain gain admit admittance into a school that cost Money, money he doesn't have, so it says to pay to pay his tuition and board at his new school. He taught himself basic accounting and kept the books for a blacksmith. Two years later, so I think Jay at this point in the story, somewhere around sixteen. He would wake up at three in the morning.

10:15 To study by firelight. His area of interest was surveying, so land surveying. This comes this is actually really important to one of his first successful businesses. He's gonna start a tannery. And it's actually his knowledge of surveying that gives him an advantage in that field. So uh keep keep this in mind for later. Uh he hated the drudgery of farming. And believe that serving'cause his dad was a farmer, okay.

10:34 He this is gonna this is gonna parallel with a young Henry Ford, as a matter of fact. He hated the drudgery of farming and believed surveying was his way out. I actually went into more detail on this if you haven't listened to episode two sixty six, which is the on the second time I read Henry Ford's autobiography. Henry Ford, a young Henry Ford, hated the drudgery of farming, and he thought that machinery and mechanics Was his way out.

10:56 In in Jay's uh case He learned surveying and so as a m as a result of learning these skills He planned to travel around the county that he lives in. And actually create a map, use the surveying skills to create a map of the county he lives in and then travel around the county and selling. Those maps.

11:13 And this idea works and this is where he makes, you know, to him the first real money of his life. So it says with that Jay was in business. He uh walked the roads of Ulster County where he's living. And surveyed the whole thing. He sold the maps himself. He earned a few hundred dollars. That was the first money I made in business, he said.

11:28 He soon had a modest but thriving business. His shortcoming was his inability to slow down. Again, he's still young. He's a teenager. He's gonna be like this his entire life. Uh, while other farm children mended fences and threshed hay. He filled his teenage years with deadlines, sales calls, and per and personnel decisions. He was consumed by work, he ate poorly,

11:48 And slept little. He collapsed into bed with chills and stomach pains. The doctor diagnosed typhoid fever. So this is the first of many uh illnesses that he had throughout his life.

11:59 I I think I had typhoid fever fever twice. He had some kind of like uh bowel like infection and bow disease I think would reoccur as well. And then of course winds up getting tuberculosis later on and and dying from that. And so there's gonna be a few times when he's still t teenager, that he's relegated to bed.

12:14 We see that he's absolutely relentless. So he's bedridden and it says not that he was idle. He took the time to finish another piece of work. He wrote a history. Of his home county of Delaware. He sent it to a printer shop in Philadelphia.

12:26 That happened to burn down. From his notes. He rewrote the four hundred and twenty six page book. And this is what a young J

12:36 You know, this again, this is like I think seventeen, eighteen year old uh no, he's actually eighteen years old at this point, sorry. As you know, he said to a friend. I'm not in the habit of backing out of what I undertake. And I shall write night and day. Until it is completed.

12:50 So in addition to his relentlessness and his determination, we see that he has a lot of self belief even at at a very early age. He toyed with the idea of college. He visited Rutgers, Yale, Harvard, and Brown. He concluded college was an expensive indulgence. Why bother with college when he could teach himself from books, he said? He told a friend earlier in this that he that he knew

13:10 It was his destiny to become rich. We see More of a self belief here in his letter he's writing his friend. I am determined to use all my best energies. to accomplish this life's highest possibilities.

13:23 So this is really interesting. Something that you and I've talked about over and over again. If you do the best job possible on the opportunity that's right in front of you, it's going to unlock an opportunity in the future that you can't not possibly predict. He is doing the best job surveying as possible. This is going to lead him to meeting Zaddek Pratt. Static Pratt is one of the richest and most successful businessmen in the North East at this point.

13:41 That meeting is later on is going to start to have them start a tannery business together. Even though Pratt is, I think, forty five years older. Then Jay Gold. That in turn is going to lead Jay to realize that there's actually more money in the markets.

13:55 For the leather goods that the tannery is producing. then the actual manufacturing Of the leather goods. Himself. Which then gives them the idea, hey, I should stop what I'm doing here.

14:04 And go learn. The secret magic of stocks and bonds on Wall Street. So before we get there, I need to introduce you to Zadak Pratt. He is a character and you'll see what I mean here. Uh everybody knew Zadic Pratt. Pratt was an inspiration. He was born in seventeen ninety,

14:18 And he began his career traveling t town to town as a saddle maker. Then he ran a country store. He worked fourteen hour days, saved money by sleeping under the counter at night. He had his first big commercial success. Selling oars to the military for the war of eighteen twelve.

14:32 When he was doing that is when he discovered a perfect location for a tannery. From that mo from the moment he signed the deed for this new piece of land. His fortune was secure. Why is that? Uh, because leather was a big business. The country needed shoes, boots, machine belts, leather breeches, et cetera. And this part of the country.

14:48 Where Zadak sets up shop. He winds up owning like, I don't know, thirty five, forty of these tanneries. She makes a lot of money doing this. But uh he had an advantage. He was in the right place at the right s uh time with the right set of skills. The tanneries need this thing called tannic acid. Tannic acid is found in tree bark.

15:03 Uh, and the tree that produces the most tannic acid is hemlock. And it just so happens that no place in America Had more hemlock. than the Catskills, which is where Zadic Pride is living. This is very much a rough, almost like frontier like

15:17 uh industry, there's a one sentence I have to read to you here that you're gonna need to remember for later when they when Jay literally has a shoot out. That's not hyperbolic. They literally go to war over the ownership of this tannery. So it says the Tanners themselves were rough drinking men. Remember that part about drinking too, which gives uh He Jay thought he had a a massive advantage in life because he was sober.

15:36 He talks about that over and over again. Uh let's go back to Pratt first. If Pratt had a business card, it might have said something like data scientist. He doubled his leather output by experimenting with different boiling times. Tannin concentrations and hide size. While recording every data point in a book.

15:50 He ran for Congress. He never missed a day on the House floor. He was eccentric. He liked playing soldier with real gunpowder, he reenacted famous battles. Pratt had a weakness. Pride. All the stuff I'm reading you is happening over multiple pages, by the way. Uh, Pratt had a weakness, pride calling his little tanning community Prattsville.

16:07 Was defensible. There were plenty of villages named after their founders. Nor was nor was it unusual when he started a bank and called it Pratt's film national. It got strange with the banknotes. For his bank

16:19 Pratt used a self portrait. That's like you and I owning a bank, being able to to distribute our own cor currency and instead of putting like George Washington or Ben Franklin on it. We put our own face. He's was this actually I think leads to part of why uh a younger somebody way younger Less experienced and

16:37 had way less access to wealth actually winds up beating'em. uh in this competition'cause Jay gets the the upper hand, which we'll go into in one second. Uh the the the idea of being prideful, though? And that is a weakness. Uh continues on the next page.

16:51 He commissioned a stone cutter to sculpt his likeless l his likeness. On the rocks overlooking Prattsville. They call this the Catskills version of Mount Rushmore again, instead of putting other people's faces on there, he puts his own again. He commissioned Uh an author

17:05 To ghostrate his autobiography. In the autobiography we learned that Pratt was the best marksman. The fastest runner and the strongest horseman around. We discover that lesser men have neither the skill nor the stumber for big business. Thus it was Pratt's obligation to assume the burden himself.

17:21 So that gives you a background into Jay's very first business partner. They wind up building a relationship. Jay's like, Hey, I wanna build a tannery and Uh he asked Pratt to to to back him. And so Jay's gonna do all the work. Pratt is actually going to uh invest a hundred and twenty thousand dollars into this business.

17:39 And so the same work ethic and attention to detail that Jay had when he was a teenager, now he's applying it to his business. The business does fantastically well. This goes on for a few years, but then uh slowly but surely he's like oh This is where he realizes where the real money in his industry was actually being made.

17:55 Uh, so it says he had half interest in a profitable tanning operation. He was just twenty two years old. He could see the day when he would be rich just like he had predicted. But he still felt unsatisfied. He had not forgotten the mansions in Manhattan. He wasn't sure what the people along Fift Avenue did to afford such luxuries.

18:10 But he knew it wasn't tanning cow hides. And it's just remarkable how how many times in these stories that you and I cover we see something like this. had taken his first visit to to Manhattan. Couldn't believe the amount of wealth.

18:22 walked around uh Fifth Avenue was like Can you believe The like the house is here. It's just amazing. Few years after that. he winds up living on and he winds up buying a place on Fifth Avenue and living there for many decades. And something he also found in Manhattan was this thing called the swamp. The swamp was where they actually traded like commodities.

18:39 Like uh leather goods. And he And where Jay's like, Wait a minute, it he does this actually really smart. Let me make sure I have this in here. Actually know what? What I'm thinking of is a quote I just found it. It's actually from

18:52 uh the previous book I covered back on two fifty eight Dark Genius of Wall Street. So I'm gonna read that to you in one second. It's gonna describe what's happening here in the book as well. So it says he had noticed at leather prices, whereas Mercurio As land prices and that powerful and sometimes hidden forces Drove prices. This idea of hidden forces

19:09 Driving prices of stocks usually in in in the case of J up and down. Um is something that's repeated throughout the book. It occurred to Jay that he could make even more money by understanding the forces that move prices. And then trading on that knowledge.

19:23 He had taught himself bookkeeping, he had taught himself surveying. Now he would teach him everything about leather, about how leather was bought and sold. And so that's when he starts spending more time down in the swamp, he's gonna wind up meeting people that that become really important to him buying out. Uh, Pratt later on. But I just want to go over why he was why he found this appealing.

19:40 Right. You always I'm always curious, like okay. Why did you choose that career over something else? And he said, What a place he thought, no crews to supervise. No steaming vats of boiling hides. No broken s broken steam engines.

19:52 Engines no odor so vile that it made the eyes water. The swamp was money making distilled to its essence. That's how he's gonna think about Wall Street. In the swamp. The value came. Not from making things, but by making decisions. Brains and information won the day.

20:09 This was the place for him. And so around this time he writes his father a letter. about what he's learning. Remember, he's away from home. And so this is actually from the dark an excerpt from the Dark Genius of Wall Street. And

20:21 the note out of myself when I read it the first time, uh that I think we'll explain this this why this paragraph so important. It says good question to ask. Uh, good question to ask yourself, who would you rather be? And so Jay says, I've come to realize that it is the merchants Who command the true power in this industry.

20:36 It means the people in the swamp, not the manufacturers. The Tanner appears to take the greatest share of capital But merely processes that capital. His expenses being extensive. He's describing where he's at right now. That's exactly what he's doing. He's the tanner. I'm bringing a lot of revenue, but I got a ton of expenses.

20:52 His risks are real and his labor heavy. He's gotta manage a lot more people. The shippers deal with the next largest sums, but again. They have extensive expenses and much work to do. The brokers, meanwhile Take what seems the smallest share, but it is in fact the largest.

21:08 Theirs is nearly pure profit made on the backs. Of the shipper and the tanner. Never their hands dirty. So he's like, Oh I'm on the wrong side of this transaction. I would much rather be, instead of being the tanner myself, I wanna be

21:23 The brokers. And then he's gonna take that idea and extend. He's like, Okay, well, I'm not just gonna trade leather. Like let me go learn about stocks and bonds. That that market is way larger than this one. So there is an entire crazy story about the shootout that happens after him and Pratt break up. And

21:40 Jay has a following up with his new partners and they literally have to like shoot around it. I'm gonna pull out like one I'm not gonna like I covered it in way more detail on episode two fifty eight. But there is an idea behind it I think is really uh valuable for you and I to discuss. But before I get there This is so I'm in trouble right now.

21:57 Sometimes this happens from time to time when I find a new book and I cannot stop reading it. I cannot put it down. Um my friend Eric Jorgensen who wrote the Almanac and Naval. which I think I covered on episode one ninety one. That book is absolutely excellent. There's a ton of ideas in that book that I'm using as I build founders. But anyways, I discovered this new book. I thought I had I had like a good idea of all the books on Charlie Munger and Warren Buffett.

22:19 Uh I've discovered a new book from my friend Eric. about this and it says it's called All I Want to Know Is Where I'm Going to Die So I'll Never Go There. Buffet and Munger A study in simplicity and uncommon common sense. I started a reading last night. I don't I think I'm gonna be up late. Again tonight reading it.

22:35 And I'm glad I started reading it because Charlie Munger specifically, and Warren Buffett too, uh also, but really Munger is the one that the way he talks about that sticks out in my mind. He talks about the dangers of multitasking. It's almost a form of arrogance to think that You can do multiple different things at one time. that you can give compete with other smart driven people that are not multitasking. So

22:55 What does this mean? There's about to be this giant fight. between two partners, right? You have on one side Jay Gold Forty years younger. Way less experience, way less money than Zadak Pratt. But while Zadak Pratt is, you know, partially retired from business, he's got a million different business things to think about. He's doing these battles in the field, he's got kids, he's got family.

23:15 He's got all these other interests. He's got his bank. Jay just has one thing. The Tannery. So he thinks about it night and day. So I was re reading

23:24 I was reading the the Charlie Munger uh the book I just referenced, and Char when Charlie's talking about you know it's very arrogant. To think that you're gonna be able to compete with other smart and driven people and you're that he's essentially like saying, don't multitask. Me and Warren, we focus on what's in front of us. We're not trying to do fifty different things at one time. And he feels like this next generation that's like oh multitasking constantly is just gonna have way less uh way worse results than him and warned it.

23:46 And so when I was reading that, and that's not the first time I've been exposed to the idea by Munger. But I read that and then I read this part of the book where I'm at. I'm like, oh, that's a great illustration of this. Jay should not have won. this battle with a much more experienced and successful Entrepreneur, but that entrepreneur is distracted.

24:04 Jay's only thinking about this. So again, I think f s focus and extreme. Focus is a superpower. That is, in my opinion, almost going extinct in our modern world.

24:15 And then after I read this to you, I'm gonna tie this They're fighting over this as Pratt proposed buying uh Jay out for ten thousand dollars. The figure was laughable. 'Cause our at this point Pratt had already put up a hundred and twenty thousand.

24:31 The business is is successful, but it goes up and down with the market of you know hides. And so right now it's in a lull. And so Pratt's like No no, you know, we we're gonna we can resolve this disagreement. I'll just buy you for ten thousand dollars. And so it says uh when the economy recovered, leather prices would recover. Jay told Pratt to stuff it. He would take sixty thousand dollars for his stake and not a penny less.

24:51 Pratt turned. Jay's logic back to him. If Jay really thought that half uh share was worth sixty thousand dollars, Pratt would be willing to sell his own half share to J for that amount. This is important, right? So forget the ten is like okay.

25:05 Yeah, okay, I'm not gonna buy it off for ten thousand. You're saying it's worth a hundred and twenty thousand and that your half is worth sixty? Okay, cool. Give me sixty. Why would Prat do that? Prat did that because he's like, I know you don't have that money. Like I'm gonna be able to buy you out for sixty, you can't buy me out for sixty. This is gonna relate to the exact same thing. It's spooky how there's so many uh similar experiences. Wait till I I read you this part about Rockefeller in a minute from a different book.

25:26 So if g if Jay thought his share was worth sixty, Pratt would be willing to sell his share to Jay for that amount. Confident. That Jay could not conjure up the money, Pratt gave him ten days to decide. And what does Jay do? Jay doesn't just sit around. He goes down to the swamp. And he had built relationships with a bunch of these traders.

25:43 These people have a ton of money and he goes, Hey We have an o you have an opportunity, you know the value of hides, right? We have an opportunity to to buy out our partner for sixty thousand dollars. And so he winds up doing this deal with Louis, this guy named Charles Leop. He's gonna wind up.

25:57 going psychotic, he would like see visions, he'd be having dinner and think there's like elephants in the room and then he winds up unfortunately shooting himself right in front of his daughter. That that story's in the book. I'm not gonna cover it here. So it says uh Jay took Leop's money and paid Pratt a few years earlier. Jay had known nothing about tanning. Manufacturing and trading hides. Zadak Pratt, on the other hand, was a seasoned veteran.

26:17 He was one of the richest men in New York. But Pratt's pockets. Not Jay Golds were the ones pick that day. Pratt had invested one hundred and twenty thousand of cash in the tannery.

26:27 Gold had invested nothing but his labor. When the market recovered. J. Gold. Not Zadak Pratt. Stood to clean up.

26:36 Okay, so I'm gonna put this d book down for one second. I'm gonna pick up another book. There's an absolutely fantastic book. Written by Ryan Holiday. It's called Conspiracy. I cover this book way back. On episode thirty one. I actually should reread it. Because it giv it really gives you an insight into how Peter Teel thinks.

26:51 And I hate recommending episodes that far back because I'd only made thirty one podcasts at that point. I didn't know, you know I didn't have as much practice as I do now. But if you if you're interested, you can kinda go back and and um and listen to that episode. I'd also buy the book. I own when I really like a book, I own the physical copy of Conspiracy. I own the Kindle version and the Audible version, but I want to pull out this is Ryan Holiday writing about this anecdote.

27:14 That comes from Rockefeller, I think, is like twenty five in the story. Yeah, he's twenty five years old. Let me read the whole thing. It is Exactly, to me. The the parallel is striking.

27:25 Two this point in Rockefeller's life with about to read to, we're where we are in the the American Rascal book. It's remarkable. There's a story now, this is Ryan Halley writing. There's a story about a young John D Rockefeller who found himself stuck with bullying. Corrupt business partners. He wants to break with them, but he can't.

27:41 Because they control the votes. They are squeezing his business to death. They abuse him. They talk about forcing him out. What is he to do?

27:48 Quietly, Rockefeller lines up financing from another oil man And weights. See the parallel? Finally there's a confrontation. One of them tries to threaten him. You really want to break it up?

27:58 Yes, he calls their bluff. They go along knowing that the firm's assets will have to go to auction. They're sure they'll win. Rockefeller doesn't have that kind of money. He bids.

28:08 They bid. He bids. They bid. Rockefeller wins the auction. A few weeks later.

28:13 The papers announce his new partnership. Revealing who had backed his bid. And the news that Rockefeller is At twenty five years old. An owner of one of the largest refineries in the world.

28:24 This is like a like a ruthless Relentless. quote from Rockefeller here. On that day his partners woke on on that day his partners quote Woke up.

28:33 And saw for the first time That my mind had not been idle. while they were talking so big and loud. He would say later. They were shocked.

28:42 They'd seen their empire dismantled. And taken from them. by the young man they had dismissed. Rockefeller. Hante it.

28:50 And so when I get to this part of the book, I think of Jay Gold I think of Rockefeller and I think of Charlie Munger saying Do not multitask. So I'm fast forwarding way ahead in the story after this battle, this literal battle for Jace Tannery with

29:04 Some of his new partners What I want to point out is an important part that that Jay was uh like a teeth. Like he he saw the What alcohol did to his father and he didn't want anything to do with it. The other side in the war for the Tannery was drunk. They were actually paid

29:20 In whiskey. Jay paid his soldiers in cash. Any meet your They were sober. And so later on Jay talks about like he thought that gave him an advantage and he said

29:29 Jay was the son of an alcoholic and he was an advocate, advocate for sporading mean. This would not be the last time that he preached sobriety. This is something repeated over and over and over again. It's really important to understanding. Uh again, the the story of the fathers embedded in the son. That's an idea you and I cover over and over again. Uh, Jay was convinced the big money wasn't in the wilds of Pennsylvania, it was on a narrow street in New York. And so this is where he makes the the best decision of his life. He's like, I'm getting out of this business and I'm going into

29:54 the business that he winds up being maybe arguably the best in the world at. Uh I am trying to store myself in the smoky world of stocks and bonds, he said. There are magician skills to be learned on Wall Street. And I mean to learn He's twenty four years old. And so I just want to tell you a little bit about how he approaches he's gonna set himself up as a stockbroker and a private investor. I'm actually going to quote from one of my favorite books, a book I need to reread, frankly, soon and make another podcast on. It is Ogby on Advertising.

30:21 Written by David Ogie. It was originally episode eighty two of Founders. And if you haven't studied up on Ogre V, I recommend you do. Um actually discovered him because Warren Buffett uh calls Og the

30:32 Multiple times I think in his in uh Buffett Cherho letters, he said David Ogie was a genius. And so that line was my first introduction to Ogre, and then I try to read every book on'em but Ogy has this thing that he would he would repeat throughout his career and he says the good ones no more. And I think Buffett would agree with that because when you know people would say, Hey Buffett, like how do I become like you? He's like read five hundred pages a day.

30:51 And so we're gonna see that Gold and Ogilvy and Buffett had this in common. I'm gonna read from Ogilvy on advertising real quick before I get into the beginning. of how Jay prepared uh for his c early career. On Wall Street. David says, Set yourself up to becoming the best informed person in the agency on the account to which you're assigned. Ogy bu made his fortune. But building one of the most valuable

31:11 uh advertising agencies in the world, an advertising agency that is still in existence many years after he died. So he's giving advice for young people that want to do it, essentially saying, Hey David Ogie, how do I become you? Right? This is what he did. And what Buffett did and what Jay Gould did and p nearly almost everybody that you and I have studied. Set yourself up to become the best informed person in the agency on the account to which you're assigned. If for example it is a gasolina cap. Read books on oil geology and the production of petroleum products.

31:36 Read the trade journals in the field. Spend Saturday mornings in service stations, talking to motorists. Visit your clients refineries and research laboratories. At the end of the first year You will know more about the oil business than your boss. And you'll be ready to succeed him.

31:52 And so that's the paragraph that popped my mind when I got to this paragraph. J. Dougold did not invest on hunches. He dug deep to discover whatever was noble. Separating the nonsensical from the plausible. This in and itself didn't make gold special. Most investors would claim they did the same.

32:07 The difference. was Gold's diligence. He was more methodical. More voracious in search of insights. And

32:15 More patient with minutiae. These qualities served him well and that In the Hard labor. Of surveying and tanning.

32:23 They served him better. In the brain labor. O Wall Street. And so one of his first big breaks comes a few years later. He's gonna be twenty eight years old when he gets out of this investment. He realizes that um

32:34 the the book started talking about, you know, railroads so it was just as important as the internet is today. our automobiles were in the century previous. And so he's gonna make obviously a lot of money. in building up and also trading on railroads, he realizes it's just like small little Rutland and Washington rail line. And they had

32:52 one way to make money and they w they would hold Hall Stone. From quarry's In Vermont. And so the volume of stones taken out of the quarry

33:01 Thus needing to be transported on Railroads went down. It would Like really drop the price. Of the remote bonds. And if you bought the bonds when they were cheap, you can convert it to stock. And if you had enough uh and if you convert enough stock, you can actually take control.

33:15 Oh, the railroad. That's exactly what Jay did. And then he s decides, hey, um, I'm gonna control it and then I'll just run it. And so he actually makes himself president of this railroad. Jay's a weird um person to kinda classify because in some degree he was an operator, but he was also an investor and he would go back and forth between those two and sometimes do them uh those different jobs at the same time.

33:36 And this is a perfect example of that,'cause he starts out as an investor. He's like, Oh no, I I'll just operate it. And so then he spends a long time uh away from his family. He's constantly traveling. He'd just come back to New York, I think, on the weekends. And he starts building this up, trying to increase the value through his labor. And then he's eventually going to sell. and have like the first big hit of his life. So it says he invested in in his railroad track, he cut costs and pitch

33:57 And pitched customers on the railroad services. He also pinched pennies. And so he does this for eighteen, but he realizes, hey Uh, there's an opportunity cost here. There is a a ceiling on how valuable this railroad could be. So I need to get out now and find a better opportunity. This is eventually gonna lead him to going to war with Cornelius Vanderbilt. So it says uh the Rutland in Washington had western Vermont to itself.

34:16 Once it reached New York, it ran into a challenge that gold battled the rest of his career. Too many railroads. And not enough freight. was not a keeper. Eighteen months after buying it, he got out earning a bundle. His five thousand dollar investment.

34:31 An investment that others on Wall Street thought was a loser. brought him a hundred thousand dollars. Which would be equal to two point five million dollars in today's dollars, and he is twenty eight years old. And so for the rest of his life, he's gonna have other businesses, he's gonna do a million trades. Uh, he's gonna get involved in telegraph industry, but the rest of his life he thought railroads.

34:52 was the the greatest outlet for his what he real realized was like he had essentially un uncontrollable ambition or like basically un there's no limit to his ambition. So he he winds up realizing that, you know, he's got this this burning desire. this drive inside of him, so he winds up writing a letter to his friend.

35:11 Where he comes to turn turn where it says he confronts his ambition and his drive to succeed. And he says, Now that I'm in this place it is a puzzlement to me. How I endured before. Everything prior seems to have been boxing in the dark. Scrapping without reason. Now I have my railroad or now I have my road to walk.

35:27 And my reason for walking it. Now the pieces fit. And this thing ambition is no longer blind but divine. A true and noble and necessary path. I see things very, very clearly. I feel inspired with an artist's conception.

35:40 Divine inspiration I cannot say. But my road is laid out before me in the plainest of ways. And so at twenty eight, he does not know that he only has twenty four years left, that he's gonna die at fifty two. But he does know that he's found his life's work, the one that he's going to dedicate al almost every waking hour to

35:59 From now until he dies. I didn't want to touch on aspects outside of his uh work just real quick. His hobbies were essentially like family. He spent a lot of time at home. He him and his wife were a homebody. Spent a lot of time with uh his kids when he wasn't working.

36:12 I obviously told you about it, he w had a love for flowers and then reading. And I think the book goes later on into like his he's stuck to a pretty strict schedule. Uh, every day. So it says he and Allie, his wife, preferred simplicity and domestic pleasures. They were not social. Jay stuck to business and minimized his interactions outside the office.

36:29 Around this time his father dies, and this is what he says, his hard drinking father John died. Jay rarely spoke about his father. Maybe it was out of anger over the alcoholism or the childhood punishments. Including being locked in the cellar, which I told you about earlier. When asked about his father, Jay fell back on trite expressions. As if to say more.

36:45 Would prove overwhelming. He would say he walked a hard road. He drank from a bitter cup. So then the next few chapters go into great detail about this war for the Erie Railroad.

36:57 that goes on between Jay Gold, Daniel Drew, Jim Fisk, Cornelius Vanderbilt. It is unbelievably complex. I think most people still don't understand it to this day, but this one sentence I think really highlights why Jay was unusual. It says this this story, meaning the the the war for the Air Railroad Uh, the story of how Jay seized Erie shows his brilliance as a financial strategist, his deep understanding of law.

37:21 A surpris grasp of human nature and a mastery of political reality. And so the one thing that jumps out when now that I've read about this multiple times, I still don't understand it completely. But the lesson I take away from it, more important than the actual like tactics they used was that If he had a goal in mind Which in his case is l I need to control the area railroad.

37:41 Like Rockefeller before him, or I guess at the same time,'cause they were operating at the same time. There would be he wouldn't just attack it from one angle. It's almost like they look at the problems and what they're trying to do from like three hundred and sixty degrees. And they're just relentless by poking any kind of weakness that they feel will get them what they want. And so even though I can't really understand everything he does, I think the value I get from understanding is like oh

38:02 He th the way I think about the pr uh the goals I want to accomplish and the problems I'm gonna solve. It's unbelievably pedestrian compared to the way Jay or Rockefeller approached their uncles. And so what I hope to do is learn from their example is like whatever goal you have spent an unbelievable amount of time analysing all the different ways the the possible ways that you can

38:22 What and and make a reality. What you want to make real. And so what's happening, there's a bunch of board members. And they're all fighting against each other for control. Cornelius Vanderbilt Yeah, his idea is like hey I'm just gonna buy up he

38:33 He does uh he bribes a judge. to make sure that they cannot issue more stocks and so Vanderbolt thinks that the share count is fixed. as a result of this injunction. So he's just buying up more and more. when they s mentioned that that Jay had a deep understanding of law and a mastery of political reality.

38:50 One of the reasons they said is because his close reading of the law realizes that this injunction only stops The board, the eerie board. From issuing more stock? But it doesn't stop the Erie Executive Committee from issuing more stock? And so I'm gonna read this part to you.

39:04 I just want to really pull out Like how confident Jay was in his ability. At this point he's in uh he's in his thirties. has a little bit of money, but he's literally going up against

39:15 Intentionally. the richest and most well known and successful businessmen of his day in in Vanderbilt. Vanderbilt's you know, thirty, what, forty years older maybe? And so it says uh Jay noticed that Barnard's injunction injunction, that's the judge that Vanderbilt paid off. uh against new share issuance.

39:31 uh and join the eerie board and only the board. What if another entity, say Ares Executive Committee, issued the stock instead of the board? Jay's lawyers like the idea and they followed up by finding a judge who signed an order ex expressly empowering the executive committee to issue shares. Why is that important? Vanderbil believed that the share count was f was fixed, so he kept buying. And Vanderbilt didn't know that the stocks he's buying were issued by his enemies, right? The other people on the board. And so that money went they wind up taking them for like seven million dollars.

39:59 That goes on for a lot. Remember, this is like m I'm telling you stuff that happens over multiple chapters. Vanderbilt became suspicious when he noticed that his buying wasn't affecting the share price. The prices should have skyrocketed. Then it hit him. Erie had dunned its nose at the judge's order and issued more shares. Vanderbilt stopped buying. If the supplies of shares was infinite

40:16 There was no point. So Jay Gold, Jim Fisk, and Dana Drew, they're Over the they they couldn't believe this, like this is amazing. They don't realize that Vanderbilt always has a counter move. The executive committee had reason to celebrate. They had just tricked America's richest man. Into giving the treasury.

40:31 Seven milyen dollars. As they toasted A messenger came with news. Judge Barnard had cited them for contempt.

40:38 The sheriff was on his way to Erie headquarters. To put them in handcuffs. And so this is when Jay and his partners have to actually escape. It was hilarious at the time. Like if you had to be on the lamb from New York authorities. You could just go to New Jersey and there was no extradition requirement between the two states.

40:56 I go over this entire story in uh episode two fifty eight, The Dark Genius of Wall Street. But there's like the standoff between both sides, between Vanderbilt and Jay. And they go to Albany that like there's so many there's like a bunch of uh like the the state legislature in New York. There's a bunch of like bribe like open bribery bribery that occurs. On both sides.

41:13 But eventually Vanderbilt makes them Give'em back every single dollar. And it was in the interest of Jay and Daniel and Jim to to settle. Uh, with Vanderbilt because I read this book called Tycoon's War. The subtitle of the book is How Cornelius Vanderbilt Invaded a Country to Overflow

41:29 Overthrow America's most famous military adventure. The story's remarkable. It's unbelievable. It's episode fifty five. I'm actually gonna reread the book soon. But the the reason that you didn't want to cross Vanderbilt is because he didn't believe in like just using the law. Like he would use that if he had to. But he literally would pay if you if you cross him in business, he would try to have you killed. That's act that happens in this book where when they were hiding in in New Jersey, Vanderbil went and put a bounty

41:52 on Daniel Drew's head. So that is not a person. that you want to be taking seven million dollars from. And so then the book spends several chapter going into detail about what Jay is most notorious for. He tried to corner unsuccessfully the uh the gold market.

42:06 These actions result in this Gigantic financial collapse. And so I go into more detail. on episode two fifty eight. Again, I think of this as like a two part series, so I don't want to just make the same podcast again. There's more detail on episode two fifty eight.

42:18 But I do want to pull out something that was interesting. This is After dealing with all the fallout, this is something that was new to me where Jay Like a a tactic that Jay would use. And so it says the biggest winner was Jay's lawyer.

42:30 He defended Jay in more than a hundred cases. Following Jay's order to stall. His lawyer dragged out the proceedings. It took a decade. To clear the docket.

42:40 There isn't any secret, Jay once said. I avoid bad luck. By being patient. Whenever I'm obliged to get into a fight I always wait and let the other fellow

42:51 Get tired first. And the reason that was interesting to me is because that's a litigation after he tried to corner the gold market. The litigation that took place for his tannery. that where they had that shoot out. That lasted like another five

43:04 I think five to ten years as well. And by the time that he went up settling with his partner who ends up selling his interest in the tannery for you know, nominal fee. He had ten years of five to ten years of wealth accumulation, so by the time that came due, he was already

43:18 So wealthy. That it was just an insignificant amount. And so we see him using the same tactic here, maybe a decade later. He's like I avoid bad luck by being patient. Whenever I'm obliged to get into a fight, I always wait. And let the other fellow get tired first.

43:32 And so there's a series of booms and busts and a lot of speculations in railroad stocks throughout this book. Goes on for mul multiple decades. A lot of this was drawn because European investors thought they just heard American Railroad and thought, Oh, this is like a sure bet. But what I found so interesting about this paragraph it it really is talking about the difference between good and bad businesses and the this definitely still applies to this day.

43:52 Contrary to what stockbrokers told them, it turned out that not all American railroads were winners. And it actually mattered. Whether tracks terminated in New York City or Jersey. It mattered whether a railroad had mountains of debt. It mattered if the railroad was run by a builder like Cornelius Vanderbilt.

44:07 or a speculative director. Bent on manipulating the stock price. Robbing the corporate treasury and awarding corporate contracts to himself and his friends. So that's a the large h history of the railroad industry is that second, the the ladder there. It's like oh they're they're really not trying to build a great product or a great service or a great railroad. They're speculative directors and they're just

44:25 In fact, if you want to learn about the greatest, what is arguably the greatest uh railroad builder in American history. It's this guy named James J. Hill. I actually covered the book, his biography back on episode number 96. It's called James J. Hill. Empire builder of the North West.

44:43 I found that book. Because And that's another book I found from Warren Buffett and Charlie Munger. They talked about they always talk about like you know, operators throughout history that they admire.

44:53 uh and the books they read about them. And so uh he was he was actually I think the only person that ever built a Profitable railroad. Going bankrupt.

45:03 And so eventually Jay is actually going to leave. Some would say get kicked out. of the Erie Railroad. Before he gets kicked out though, or before he leaves I think this is in the eighteen seventies.

45:13 I gotta read something because There's this thing called the Lord Gordon Gordon affair. And it's actually a mistake that Jay makes. He's trying to gain control of the area and he winds up getting taken advantage of. By a scam artist? And so the book talks about it, but I actually think the entry on Jay Gold's Wikipedia page under Lord Golden Golden.

45:30 It's only two paragraphs. And somebody sent me a message like Oh, this would make an amazing movie. So let me this is why they said that. So it says in eighteen seventy three. Jay Gold attempted to take control of the area railroad by recruiting foreign investments.

45:43 From Lord Gordon Gordon. Who was supposed to be a cousin of wealthy Uh the wealthy Campbell who was buying land for immigrants. He bribed Jay bribed Gordon Gordon. With a million dollars in stock. So this is a million dollars in stock. I've also read another book that said it's five hundred thousand, but still a lot of money.

45:59 Uh he bribed Gordon Gordon with a million dollars of stock, but Gordon Gordon was an imposter and cashed the stock immediately. Uh, Jay Gold sued him and the case went to trial. in March uh eighteen seventy three. In court, Gordon Gordon gave the names of the Europeans whom he claimed to represent. And he was granted bail. This is a big mistake.

46:15 And he was granted bail while the references were checked. He immediately fled to Canada. Where he convinced authorities that the charges were false. This is now the second paragraph and this is Wild. Having failed to convince Canadian authorities to hand over Gordon Gordon,

46:29 Jay Gold attempted to kidnap Gordon Gordon. With the helps of his associates and a future member of Congress. uh future members of Congress. So you got Lauren Fletcher, John Gif Gifflian and Eugene Wilson, all future members of Congress are. Or trying to kidnap this guy.

46:43 The group captured him successfully. But they were stopped and arrested by the mounted police. This is in Canada, before they could return to the US. Canadian authorities put them in prison and refused the bail. And this led to an international incident between the United States and Canada.

46:57 Governor Minnesota. Horace Austin. demanded their return when he learned that they had been denied bail. And he put the local militia on full readiness. Thousands of Minnesoteans.

47:09 Volunteered for an invasion of Canada. After negotiations the Canadian authorities released them on bail Gordon Gordon was eventually ordered to be deported, but committed suicide. Before the order could be carried out. So when the author starts the book saying, Hey, this is really a book about Jay, but it's also about the wild, wild west

47:27 Period of Wall Street. That is just two paragraphs. In You know, one of A million different machinations and ideas and trades that Jay experienced through his entire life.

47:37 In many cases, these books when you're reading about the like business history in the eighteen hundreds. And early nineteen hundreds. It's just that's stranger than fiction. And then they spend more time into why Even when Vanderbilt called Jay the smartest person in America, he didn't like him. And a lot of people didn't like Jay and a lot of reason they didn't like Jay is'cause they actually lost to him. So says it was well known.

47:55 That Jay had out foxed the Commodore. Commodore Vanderbilt. And it talks about like the fights they have with the Erie, but then it says this hilarious sentence. There was also a little episode With the cows.

48:06 And so the author does a great job in one paragraph. summarizing this war, this rate war that's going on between the railroad that that Jay Gold um is currently in control of and the one that Vanderbilt was in st in uh in control of. But the reason I think about this is because sometimes you can get like a myopic and really focused on like where you're going or or where you want to go. Where Jay always actually reacted the lesson taking from this is like Jay always reacted to the game on the field.

48:32 He was in the middle of a rate war, right? He was trying to bleed the Commodore. So instead of continuing a rate war. He actually reacts to a change in the game. Which presented an opportunity for profit. And I think to me, because he couldn't have predicted this change, like he It shows uh the level of intelligence that he had.

48:49 So it says there was a little episode with the cows. Back when Jay ran the Erie Railroad, Vanderbilt slashed New York Central's rates and offered to move cattle. Окрас Ньюорк Стай. For the token amount So before that they were both

49:03 Trying to gain business from the other by constantly reducing the Rates and trying to bleed the other person, okay? Erie was pinched for cash. Vanderbilt was certain the move would bury the railroad and take Jay Gold down with it.

49:15 Instead Jay and Fisk, that was his partner. Uh who also gets murdered. By uh his ex lover's new lover. Uh there's more of that in episode two fifty eight.

49:25 But it says uh instead gold and uh Jay Gold and uh and Fisk made a profit By buying cows in Chicago and And shipping them to market at Vanderbilt's bargain rates. When the old commodore found out that he was carrying the cattle of his enemies at great expense to himself

49:43 He nearly lost it. So a twenty one year old Thomas Edison happened to be at the gold exchange. The day. that Jay Gold tried to corner the gold market. He's actually at the telegraph He was a telegraph operator.

49:56 Um, what they would do is they would transmit the change in price over the telegraph. And so he sees like this this massive uh financial scandal. And panic happened. I think in the other book I read The Dark Genius of Wall Street, he's like hanging out on a telephone pole. just observing, you know, what it uh one of the most insane days in finance history.

50:14 And he's he's observing as a like a almost like a disinterested spectator because he was so poor he didn't have any money to invest. And so Edison and Jay Gold's uh paths are actually gonna cross many years later when Edison was twenty seven years old. It says Edison was twenty seven years old. The light bulb, the phonograph, And the movie camera camera. We're years away.

50:32 For now, he had to vent away to pay his mortgage. And so this point in Essence Clear he's just a freelance inventor, the inventor the invention that he is working on is actually the quadruplex. This is the one that Jay's going to Uh purchased from him. But I really want to get into like Edison's perspective on Jay Goal. I thought that was interesting. Before I get there.

50:50 something you and I've talked about over and over again, a good way to discover future opportunities. Is you can actually discover Opportunities in Industries adjacent To your own.

50:58 Up until this point Jay has been Focus on the railroad industry. So it says Jay was keenly interested in the telegraph business now. Telegraphs went hand in hand with railroading. Telegraph companies strung their lines alongside the railroad tracks. And so he starts looking into

51:13 uh the monopoly of the the the telegraph monopoly of the day, Western Union and Jay cannot believe how much money they make. Western Union was a money machine. Uh J Gold coveted it. I'd rather be the president of Western Union than the president of the United States, he said. However, it was simply Western Union was simply too big and powerful.

51:30 But maybe he could shake it down. Core to this scheme. was Edison's latest invention. And so the quadruplex allows you to spend uh up to four messages at once.

51:39 So essentially just increases the amount of communications that existing lines can have. And so he's going to buy this invention and the patents from it. start a company and then eventu eventually build that up with the sole purpose of getting bought out by Western Union, which he was successful in doing so. But the part I found most interesting is over like the next three or four pages. It's Addison just telling you.

51:58 us like what it was like to No. And interact with Jay Goal. Uh so it says Edison and Gold shared some traits, both thought about little besides their obsessions. Inventions for Edison and money for gold.

52:11 Both worked all the time. Both had spent their childhoods reading anything that came their way. As an employee of Golds, Edison came to appreci what Jim Fisk had later had called previously. Gold's peculiarities. During one encounter

52:26 Gold unfurled maps and talked about rail lines. Gold spoke. For three hours. Before exhausting himself. Edison found gold strange and unsettling.

52:38 Gold had a peculiar eye, Edison later wrote. There was a strain of insanity somewhere. Edison offered another assessment. He certainly had one trait that all men must have who want to succeed. He collected every kind of information that

52:53 And statistics about his schemes. And had all the data. Edison said. He excused Jay Gold's greed. This is what Edison said about that.

53:02 His conscience seemed to be atrophied. But that may be due to the fact that he was contending with men who never had any to be atrophied to begin with. In that other book, The Dark Genius of Wall Street, or it might have been the Thomas Edison biography that I covered on episode two sixty seven, he called the wars between the robber barons strange financial warfare.

53:23 Something else that I found interesting was something that Jay was working on for a long time. In fact he was still working on it when he died. was this idea of building and controlling the w the country's first transcontinental railroad. And I thought it was interesting how he compared what he wanted to do with what he saw Rockefeller doing in oil. Uh, Jull was aware of how Rockefeller was using coercion to grab every oil refinery he could. J Long to lead a similar process in railroads.

53:47 Consul he said, consolidation will prove both essential and inevitable. What was needed was unchallenged market domination. And then this story is just unbelievable how to turn a five hundred dollar kidnapping into five hundred thousand dollars. A storm struck New York and disabled Gold's private telegraph. The blackout forced Gold to contract with the messenger service to deliver his trading orders. By hand.

54:09 This is insane. A cabal of crafty traders sees the moment. They grab one of the messengers and dress one of their own. to take his place to gather information on Jay's trades. For four days.

54:22 They saw J's every order. For Western Union shares. Guessing he was trying to take it over. They bought all the Western Union stock they could. And paid the kidnapped messenger five hundred dollars.

54:33 To stay in a hotel and keep quiet. The schemers bought Western Union at eighty. And sold it at a hundred and twenty. Pocketing five hundred thousand dollars. And so then the book talks about how he spent

54:47 Most of his time, his schedule, the last decade of his life. And it said he was a home body whose routine left no time for diversion. He woke up at seven thirty, ate breakfast at eight. Wrote letters until nine thirty. He had lunch at noon.

54:59 He ate very little. He drank lots of coffee. He stayed downtown until four thirty. when he came home for dinner to have dinner with his family. After dinner he headed to the Fifth Avenue hotel.

55:10 To talk markets with stockbrokers who traded there after hours. Then he read in his library until it was time for bed at eleven. He spent Sunday in the office As if it were a regular day. When he was at home and needed air

55:23 He pruned his flowers. And so he said, I have the disadvantage of not being social. My tastes lie in a different direction. When business hours are over, I go home and spend the remainder of my day with my wife, my children, and my books. Every man has a natural inclination of his own.

55:40 Mine or domestic. They are not calculated. To make me particularly popular on Wall Street. And I cannot help that. And one of the really sad parts about Day Jay's life is not only he was married for I think twenty four or twenty six years,

55:53 His wife un unfortunately dies. I think she has two strokes. And she dies young, a few years before he dies young. And yet even though he's in diminished health, he's still chasing after this lifelong dream he had. So it says he declared that he'd combine the Union Pacific Railroad with his other railroads to create the seamless transcon transcontinental system.

56:11 That had been his dream. When the press asked why at his age he'd want to do something so challenging, he said he couldn't help it. The vision of an end to end rail link between the East Coast and California was too beautiful to let go. Although he had once left the Union Pacific out of necessity. He never stopped loving it.

56:27 There's nothing strange or mysterious about it, he said. I knew it very well when I was a child. And I have merely returned to my first love. I think we will have good times in the future. And unfortunately his health forbid that.

56:39 His dreams for the Union Pacific were better suited for a young man. Than one who knew that his time was up. In his feebled state, it took all his strength. To get out of bed. The railroad drifted.

56:52 In the absence of leadership. And so he winds up passing away at fifty two years old from tuberculosis. And leaving behind his six children. And then the book closes with why it's so hard. to nail down what Jay Gold's

57:04 Legacy should be. In a nineteen eighty six biography. University of Rhode Island Professor Mauri Klein suggested gold be judged by his entirety rather than on his business activity alone. His record as an upstanding family man should be figured into the equation. Warden professor Julius Gradinsky, who in nineteen fifty seven completed the first serious analysis of J Gold.

57:23 Gold contributions. His aggressive track building lowered freight rates. His success as a railroad investor attracted speculative capital. Into a vital industry.

57:34 When other sources fled the field. But after examining every transaction of his career. Pouring over every scrap of correspondence. Considering every accusation of victims. And compiling spreadsheets to measure his investments.

57:47 Gradinski couldn't pull the trigger. on a definitive judgment about a subject. His conclusion was unsatisfying. He had his virtues. And he had his faults, he wrote.

57:57 The worst thing about these fellows Is that they're so good. And in their work at least, so intelligent. You can't hate them properly. That's the thing about gold.

58:07 He lied. He cheated, he stole. But he was so good at what he did. So intelligent in the execution. And such a clean

58:16 Kind and industrious family man. That try as you might You can't hate him properly. And that is where I'll leave it. There's so many more stories. In the book. Highly recommend reading it.

58:27 If you buy the book using the link that's in the show notes to your podcast player, you'll be supporting the podcast at the same time. And if you want more founders, highly recommend you signing up for Founders Premium. I'm no longer doing these short daily uh episodes anymore. But instead I'm doing long form AMA Ask Me Anything questions. So subscribers to Founders Premium actually are able to ask me questions directly.

58:47 And then I record my answers. in these form of these long form AMA Episodes. I published my first AMA episode probably about a week ago. with answers to questions like, Hey, if I could only read five books for my life over and over again, what would they be?

59:00 Who are the best strategists out of the people that I've read about? Why is the show growing so much? And if I had any insight into growing a podcast. If I'm gonna start a new podcast interviewing founders. And practice habits. I'm gonna be doing two of these a month. I'm gonna probably record the new the next one probably tomorrow. So if you're interested in listening to them and then contributing by asking questions.

59:19 You can subscribe with the link that's in the show notes. on your podcast player, it is also available at founderspodcast.com. That is two hundred and eighty five books down. One thousand ago? And I'll talk to you again soon.

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