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

Episode Date: January 10, 2023

What I learned from reading American Rascal: How Jay Gould Built Wall Street's Biggest Fortune by Greg Steinmetz.----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----[0:01] A series of spectacular financial triumphs had made Gould fabulously rich. At age thirty-six, he was the most notorious businessman in the country.[1:00] Vanderbilt told a newspaper that Gould was "the smartest man in America." Rockefeller, when asked who he thought had the best head for business, answered "Jay Gould" without pausing to think.They  recognized Gould as a master of his craft. No one disputed that he was an extraordinary problem solver, an unparalleled negotiator, an expert communicator, a lightning-fast thinker, and a masterful tactician with a staggering memory.[2:00] 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.[5:00] American Rascal shows the complex and quirky character of the nineteenth century's greatest robber baron. He was at once praised for his brilliance by Rockefeller and Vanderbilt and condemned for forever destroying American business values by Mark Twain. He lived a colorful life, trading jokes with Thomas Edison, figuring in Thomas Nast's best sketches, paying Boss Tweed's bail, and commuting to work in a 200-foot yacht.[6:00] I consider this part two in a two part series on Jay Gould. Make sure you listen to part 1: Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons by Edward J. Renehan Jr. (Founders #258)[9:00] He read whatever he could get his hands on. Jay was often nowhere to be found. He was off hiding somewhere with his books.[10:00] He would wake up at three to study by firelight.[10:00] My Life and Work by Henry Ford. (Founders #266)[12:35] “As you know. I’m not in the habit of backing out of what I undertake, and I shall write night and day until it is completed.”[13:00] Relentless and self-confident: Gould 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?[13:00] I am determined to use all my best energies to accomplish this life's highest possibilities.[22:00] The Almanack of Naval Ravikant: A Guide to Wealth and Happiness by Naval Ravikant and Eric Jorgenson. (Founders #191)[22:00] All I Want To Know Is Where I'm Going To Die So I'll Never Go There: Buffett & Munger – A Study in Simplicity and Uncommon, Common Sense by Peter Bevelin[26:00] Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue by Ryan Holiday. (Founders #31)[30:00] The good ones know more. — Ogilvy on Advertising by David Ogilvy (Founders #82)[37:00] The story of how Gould seized Erie shows his brilliance as a financial strategist, his deep understanding of law, a surprising grasp of human nature, and a mastery of political reality.[41:00] Tycoon's War: How Cornelius Vanderbilt Invaded a Country to Overthrow America's Most Famous Military Adventurer by Stephen Dando-Collins (Founders #55)[42:00] There isn't any secret. 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.[44:00] James J. Hill: Empire Builder of the Northwest by Michael P. Malone. (Founders #96)[52:00] Edison and Gould shared some traits. Both were born into poverty. Both thought about little beside their obsessions —inventions for Edison, money for Gould. Both worked all the time. Both had spent their childhoods reading anything that came their way.[53:00] Edison: A Biography by Matthew Josephson. (Founders #267)----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Jay Gold took time off from counting his money to have lunch at Delmonico's, the fanciest restaurant in town. While he was eating, a lawyer walked over to his table and punched him in the face. A series of spectacular financial triumphs had made Gold fabulously rich. Now at age 36, he was the most notorious businessman in the country. Like others who tried to claw back money from Gold, the lawyer was getting nowhere in court. The laws were too weak, enforcement too lax, and the judges too crooked. Gold had them in his pocket. This book seeks to explain Jay Gold and his underappreciated and aggressively maligned role in the country's transformative economic expansion of the 19th century. But it's just as much an exploration of Wall Street during its Wild West

era after the Civil War when, by the rough means on display at Delmonico's, the seeds of our current financial system were planted. Cornelius Vanderbilt, John D. Rockefeller, and Andrew Carnegie are not the focus of this book because they made their money in industry, 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. To the extent Jay Gold is remembered, it's for Black Friday, the day he blew up the gold market and paralyzed the financial system. Lawyers swamped him with lawsuits.

Prosecutors 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. Frustrated opponents turned to vigilante justice. One victim tossed Gold down a stairwell. Another one pulled a gun on him. His peers were more charitable. Vanderbilt told a newspaper that Gold was the smartest man in America. Rockefeller,

when asked who he thought had the best head for business, answered Jay Gold. They recognized Gold as a master of his craft. No one disputed that he was an extraordinary problem solver, an unparalleled negotiator, an expert communicator, a lightning fast thinker, and a masterful tactician with a staggering memory. He complemented his natural endowments with nerves of iron and a work ethic, even as a teenager, so strong that it damaged his health and quite possibly shortened his life. With his mix of brains and single-mindedness, he was suited to make the most of the moment. But why does he matter? There's an easy answer. While he made his money on Wall Street, he did as much as anyone through his work with the railroads to build the country.

Railroads changed America in the 19th century, much as automobiles changed the country in the 20th century, and the internet has changed the 21st century. 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 going to talk to you about today, which is American Rascal, How Jay Gold Built Wall Street's Biggest Fortune, and it was written by Greg Steinmetz. Okay, so I got to start by reading the inside flaps of this book, the inside cover of this book, because 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.

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 on everyone else. After entering Wall Street at the age of 24, 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. The Black Friday market collapse of 1869

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 for railroad tracks, coming close to creating the first truly transcontinental railroad and making himself one of the richest men in America. Just going to interrupt this real quick. He winds

up dying from tuberculosis at 52 years old. I think he had five, I think he had six kids. He was so rich. So I use this calculator that's available online that'll try to tell you the value of a dollar in the past in like today's terms. It only goes back to, I think, 1913. Jay died 21 years earlier in 1892. When he died, he left his firstborn son $15 million and all the rest of his kids, I think the five other kids, $10 million. Having $15 million back in 1913, so the value would be even more in 1892, it'd be like giving your firstborn son about a half, almost $500 million, and then giving your other five kids $300 million. Imagine how much more wealth he would likely build

if he actually lived to the same age as like a Rockefeller or Vanderbilt. His illness actually took away maybe another two decades of him constantly building to his wealth. So it's just a staggering amount of money. 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 paragraphs to give you just a description of why we should spend so much time. This is my second podcast on Jay, and I'll go into more details on that in a minute, but why we should spend so much time just studying just his very unique life and career. So it says American Rascal shows the complex and quirky character of the 19th century's greatest robber 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, paying boss tweeds bail,

and commuting to work in a 200-foot yacht. 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 or exploitation, excuse me, of economic freedom triggered the first public demands for financial reform, a call that still resonates today. So I'm going to 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 really turned

into this concept that you and I have talked about over and over again. It's this PSD, which stands for Poor, Smart, Determined. 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 258 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, but I do think of them as a two-part series, meaning that 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, 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. Mary was dead at age 35, 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 were her cold lips. It is interesting to think about what's

imprinted on us when we're really small, when we're really young children, 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 outside of family and work. One of his habits, and one of his hobbies rather, was that he loved growing flowers. The beautiful home that he had on Fifth Avenue in Manhattan later in life had a fairly large garden. He winds up buying this massive estate. I think it's in upstate New York, somewhere outside of Manhattan.

And then he winds up building this massive greenhouse. And he 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 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. It says 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. Jay's sister, Nancy, who was only 11 years old, also fell 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 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. So Jay's older sisters are like, well, 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 in tears, completely crying. But even in an environment like this, we see that his personality traits he had, they develop young and they stuck with him throughout his entire life. He had an unbelievable work ethic and an incredibly long attention span. Later on, he meets like a young Thomas Edison because he's going to wind up buying Thomas Edison's,

one of Thomas Edison's first inventions, which is a way to send multiple messages across telegraph lines. And Thomas Edison thought Jay was just one of the weirdest people he ever met. He said one time in their meeting, Jay pulls out like a map. This is much later in the book, too. Pulls out a map and talks without stopping for three hours 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-20s. He's like, what is going on with this guy? So we see a little bit of that here. 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. Jay left home when he was 13, explaining that the local school was too easy.

He goes to try to gain admittance into a school that costs money, money he doesn't have. So it says 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 16, he would wake up at three in the morning to study by firelight. His area of interest was surveying, so land surveying. This is actually really important to one of his first successful businesses. He's going to start tannery. And it's actually his knowledge of surveying that gives him an advantage in that field. So keep this in mind for later.

He hated the drudgery of farming and believed that surveying, because his dad was a farmer, okay? This is going to 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 266, which is 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. And in Jay's case, he learned surveying. And so 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, then travel around the county and selling those maps. 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 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. 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 going to be like this his entire life. While other farm children mended fences and threshed hay, he filled his teenage years with deadlines, sales calls, and personnel decisions. He was consumed by work. He ate poorly and slept little.

He collapsed into bed with chills and stomach pains. The doctor diagnosed typhoid fever. So this is the first of many illnesses that he had throughout his life. I think he had typhoid fever twice. He had some kind of like bowel, like infection and bowel disease, I think would reoccur as well. And then of course winds up getting tuberculosis later on and dying from that. And so there's going to be a few times when he's still a teenager that he's relegated to bed. 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 that happened to burn down. From his notes, he rewrote the 426 page book. And this is what a young Jay Gold is writing to his friend. You know, this again, this is like, I think 17, 18 year old. No, he's actually 18 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. So in addition to his relentlessness and his determination, we see that he has a lot of self-belief, even 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 had told a friend earlier in this that he knew that it was his destiny to become rich. We see more of a self-belief here in this letter he's writing his friend. I am determined to use all my best energies to accomplish this life's highest possibilities. So this is really interesting, something that you and I've talked about over and over again. If you do the best job possible and the opportunity is right in front of you, it's going to unlock an opportunity in the future that you cannot possibly predict. He is doing the best job surveying as possible. This is going to lead him to meeting Zadok Pratt.

Zadok Pratt is one of the richest and most successful businessmen in the Northeast at this point. That meeting is later on is going to start, have them start a tannery business together, even though Pratt is, I think, 45 years older than Jay Gold. That in turn is going to lead Jay to realize that there's actually more money in the markets for the leather goods that the tannery is producing than the actual manufacturing of the leather goods himself, which then gives him the idea, hey, I should stop what I'm doing here and go learn the secret magic of stocks and bonds on Wall Street. So before we get there, I need to introduce you to Zadig Pratt. He is a character, and you'll see what I mean here.

Everybody knew Zadig Pratt. Pratt was an inspiration. He was born in 1790, and he began his career traveling town to town as a saddle maker. Then he ran a country store. He worked 14-hour days, saved money by sleeping under the counter at night. He had his first big commercial success selling ores to the military for the war of 1812. When he was doing that is when he discovered a perfect location for a tannery. From the moment he signed the deed for this new piece of land, his fortune was secure. Why is that? Because leather was a big business. The country needed

shoes, boots, machine belts, leather breeches, et cetera. And this part of the country where Zadig sets up shop, he winds up owning like, I don't know, 35, 40 of these tanneries. So he makes a lot of money doing this, but he had an advantage. He was in the right place at the right time with the right set of skills. The tanneries need this thing called tannic acid. Tannic acid is found in tree bark. 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 Zadok Pratt is living. This is very much a rough, almost like frontier-like industry. There's one sentence I have to read to you here that you're going to need to remember for later when Jay literally has a shootout. 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, Jay thought he had a massive advantage in life because he was sober. He talks about that over and over again. Let's go back to Pratt first. If Pratt had a business card, it might've 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. 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. The stuff I'm reading you is happening over multiple pages, by the way.

Pratt had a weakness, pride. Calling his little tanning community Prattsville was defensible. There were plenty of villages named after their founders. Nor was it unusual when he started a bank and called it Prattsville National. It got strange with the banknotes. For his bank, Pratt used a self-portrait. That's like you and I owning a bank, being able to distribute our own currency, And instead of putting like George Washington or Ben Franklin on it, we put our own face. He was this actually, I think, leads to part of why a younger somebody way younger, less experienced and had way less access to wealth actually winds up beating him in this competition.

Because Jay gets the upper hand, which we'll go into in one second. The idea of being prideful, though, and that is a weakness, continues on the next page. He commissioned a stone cutter to sculpt his likeness on the rocks overlooking Pratsville. 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 an author to ghostwrite his autobiography. In the autobiography, we learn 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 summer for big business. Thus, it was Pratt's obligation to assume the burden himself.

So that gives you a background into Jay's very first business partner. They wind up building a relationship. Jay's like, hey, I want to build a tannery. And he asked Pratt to back him. And so Jay's going to do all the work. Pratt is actually going to invest $120,000 into this business. 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 slowly but surely he's like, oh, this is where he realizes

where the real money in his industry was actually being made. So it says he had half interest in a profitable tanning operation. He was just 22 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 Fifth Avenue did to afford such luxuries, but he knew it wasn't tanning cow hides. And it's just remarkable how many times in these stories that you and I cover, we see something like this. A few years earlier, he had taken his first visit to Manhattan, couldn't believe the amount of wealth, walked around Fifth Avenue, was like, can you believe that the house is here? It's just amazing. A 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

commodities like leather goods. And where Jay's like, wait a minute, he does this actually really smart. Let me make sure I have this in here. Actually, you know what? What I'm thinking of is a quote. I just found it. It's actually from the previous book I covered back on 258, Dark Genius of Wall Street. So I'm going to read that to you in one second. It's going to describe what's happening here in the book as well. So it says he had noticed that leather prices were as mercurial as land prices and that powerful and sometimes hidden forces drove prices this idea of hidden forces driving prices of stocks usually in the case of jay up and down um it's 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

he had taught himself bookkeeping he 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 going to wind up meeting people that become really important to him buying out Pratt later on.

But I just want to go over why he found this appealing. 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 steam 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 going to think about Wall Street. In the swamp, the value came not from making things but by making decisions brains and information won the day 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 the note out of myself when i read it the first time that I think will explain this, why this paragraph is so important. It says, good question to ask. 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.

It means the people on 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. His risks are real and his labor heavy. He's got to 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 is in fact the largest.

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 want to be the brokers. And then he's going to take that idea and extend it. He's like, okay, well, I'm not I want to be the brokers. And then he's going to take that idea and extend it. He's like, okay, well, I'm not just going to trade leather. Like, let me go learn about stocks and bonds. 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 Jay has a following out with his new partners and they literally have to like shoot around it. I'm going to pull out like one. I'm not going to like I covered it way more detail in episode 258. But there is an idea behind it that I think is really valuable for you and I to discuss. But before I get there, this is so I'm in trouble right now. Sometimes this happens from time to time when I find a new book and I cannot stop reading it. I cannot put it down. My friend Eric Jorgensen,

who wrote The Almanac of Naval, which I think I covered on episode 191. 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 like a good idea of all the books on Charlie Munger and Warren Buffett. 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. Buffett and Munger, A Study in Simplicity and Uncommon Common Sense. I started a reading last night. I don't, I think I'm going to be up late again tonight reading it. And I'm glad I started reading it because Charlie Munger specifically, and Warren Buffett too also, but really Munger is the one, the way he talks about this 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're going to compete with other smart, driven people that are not multitasking. So what does this mean? There's about to be this giant fight between two partners, right? You have on one side, Jay Gold, 40 years younger, way less experience, way less money than Zadig Pratt. But while Zadig Pratt is 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. 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 rereading, I was reading the Charlie Munger, the book I just referenced. And when Charlie's talking about, you know, it's very arrogant to think that you're going to be able to compete with other smart and driven people. And 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 50 different things at one time. And he feels like this next generation that's like multitasking constantly is just going just going to have way worse results than him and warrant it. And so when I was reading that, and that's not the first time I've been exposed to that 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. Jay's only thinking about this so again

i think focus and extreme extreme focus is a superpower that is in my opinion almost going extinct in our modern world and then after i read this to you i'm gonna tie this in with a story from a young john d rockefeller all right so it says they're fighting over this it says pratt proposed buying uh jay out for ten thousand dollars the figure was laughable because at this point, Pratt had already put up $120,000. The business is successful, but it goes up and down with the market of hides. And so right now it's in a lull. And so Pratt's like, no, no, we can resolve this disagreement. I'll just buy it for $10,000. And so it says when the economy recovered, leather prices would recover. Jay told Pratt to stuff it. He would take $60,000 for his stake and not a penny less. Pratt turned Jay's logic back to him. If Jay really thought that half

share was worth $60,000, Pratt would be willing to sell his own half share to Jay for that amount. This is important, right? So forget the 10. He's like, okay, yeah, okay. I'm not going to buy it out for 10,000. You're saying it's worth 120,000 and that your half is worth 60. Okay, cool. Give me 60. Why would Pratt do that? Pratt did that because he's like, I know you don't have that money. Like I'm going to be able to buy you out for 60. You can't buy me out for 60. This is going to relate to the exact same thing. It's spooky how there's so many similar experiences. Wait till I read you this part about Rockefeller in a minute from a different book. So it says, if Jay thought his share was worth 60, 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 10 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. These people have a ton of money and he goes, hey, we have an opportunity. You know the value of hides, right? We have an opportunity to buy out our partner for $60,000. And so he winds up doing this deal with Leeup, this guy

named Charles Leeup. He's going to wind up going psychotic. He would like see visions. He'd be having dinner and think there's like elephants in the room. And he winds up unfortunately shooting himself right in front of his daughter. That story's in the book. I'm not going to cover it here. So it says Jay took Leeup's money and paid Pratt. A few years earlier, Jay had known nothing about tanning, manufacturing, and trading hides. Zadig Pratt, on the other hand, was a seasoned veteran.

He was one of the richest men in New York. But Pratt's pockets, not Jay Gold's, were the ones picked that day. Pratt had invested $120 120 000 of cash in the tannery gold had invested nothing but his labor when the market recovered jay gold not zaddock pratt stood to clean up okay so i'm going to put this book down for one second i'm going to pick up another book there's an absolutely fantastic book written by ryan holiday it's called conspiracy i covered this book way back on episode 31. I actually should reread it because it really gives you an insight into how

Peter Thiel thinks. And I hate recommending episodes that far back because I'd only made 31 podcasts at that point. I didn't know, you know, I didn't have as much practice as I do now. But if you're interested, you can kind of go back 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 that comes from Rockefeller. I think it's like 25 in the story. Yeah, he's 25 years old.

Let me read the whole thing. It is exactly, to me, the parallel is striking to this point in Rockefeller's life, what I'm about to read to you, where we are in the American Rascal book. It's remarkable. There's a story, now this is Ryan Holiday 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 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? Quietly, Rockefeller lines up financing from another oil man and waits. See the parallel? Finally,

there's a confrontation. One of them tries to threaten him. You really want to break it up? 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. They bid. He bids. They bid.

Rockefeller wins the auction. A few weeks later, the papers announce his new partnership, revealing who had backed his bid, and the news that Rockefeller is, at 25 years old, an owner of one of the largest refineries in the world. This is like a ruthless, relentless quote from Rockefeller here. On that day, his partners woke up 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. They'd seen their empire dismantled and taken from them by the young man they had dismissed. Rockefeller had wanted it more. And so when I get to this part of the book, for Jay's tannery with some of his new

partners. What I want to point out is an important part that Jay was like a teetotaler. He saw 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 in whiskey. Jay paid his soldiers in cash and he made sure they were sober. And so later on, Jay talks about like he thought that gave him an advantage. And he said Jay was the son of an alcoholic and he was an advocate, advocate for sobriety. I 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, again, the story of the fathers embedded in the son. That's

an idea you and I cover over and over again. Jay was convinced that 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 best decision of his life. He's like, I'm getting out of this business and I'm going into the business that he winds up being arguably the best in the world at. I am trying to start 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 24 years old. And so I just want to tell you a little bit about how he approaches. He's going to 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 Ogilvy on Advertising, written by David Ogilvy. It was originally episode 82 of Founders. And if you haven't studied up on Ogilvy, I recommend you do. I actually discovered him because Warren Buffett calls Ogilvy multiple times, I think, in his Buffett shareholder letters. He said David Ogilvy was a genius. And so that line was my first introduction to Ogilvy, and then I tried to read every book on him. But Ogilvy has this thing that he would repeat throughout his career, and he says, the good ones no more. And I think Buffett would agree with that because when people say, hey, Buffett, how do I become like you? He's like, read 500 pages a day. And so we're going to see that Gold and Ogilvy and Buffett had this in common. I'm going to read from Ogilvy on advertising

real quick before I get into the beginning of how Jay prepared for his 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. Ogilvy made his fortune by building one of the most valuable 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 Ogilvy, how do I become you? Right.

This is what he did and what Buffett did and what Jay Gould did. 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 are assigned. If, for example, it is a gasoline account, read books on oil geology and the production of petroleum products. 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. And so that's the paragraph that popped my mind when I got to this paragraph. Jay Gold did not invest on hunches. He dug deep to discover whatever was noble, separating the nonsensical from the plausible. This in and of itself didn't make Gold special. Most investors would claim they did the same. The difference was Gold's diligence. He was more methodical, more voracious in search of insights, and more patient with minutia. These qualities served him well in the hard labor of surveying and tanning. They served him better in the brain labor of Wall Street.

And so one of his first big breaks comes a few years later. He's going to be 28 years old when he gets out of this investment. He realizes that the book started talking about railroads just as important as the internet is today, or automobiles were in the century previous. And so he's going to make obviously a lot of money in building up and also trading on railroads. He realizes there's this like small little Rutland and Washington rail line. And they had one way to make money and they would haul stone from quarries in Vermont.

And so the volume of stones taken out of the quarry, thus needing to be transported on, railroads went down. It would like really drop the price of the railroad bonds. And if you bought the bonds when they were cheap, you can convert it to stock. And if you had enough, and if you convert enough stock, you can actually take control of the railroad. That's exactly what Jay did. And then he decides, hey, I'm going to control it and then I'll just run it. And so he actually makes himself president of this railroad. Jay's a weird person to kind of 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 those different jobs at the same time. And this is a perfect example of that because he starts out as an investor. He's like, oh, no, I'll just operate it. And so then he spends a long time 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 the first big hit of his life. So it says he invested in his railroad track. He cut costs and pitched customers on the railroad services. He also pinched pennies. And so he does this for 18 months, but he realizes, hey, there's an opportunity cost here. There is a ceiling on how valuable this railroad could be.

So I need to get out now and find a better opportunity. This is eventually going to lead him to going to war with Cornelius Vanderbilt. So it says the Rutland in Washington had Western Vermont to itself. 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. That convinced him that this railroad was not a keeper. 18 months after buying it, he got out earning a bundle. His $5,000 investment, an investment that others on Wall Street thought was a loser, brought him $100,000, which would be equal to $2.5 million

in today's dollars. And he is 28 years old. And so for the rest of his life he's going to have other businesses he's going to do a million trades he's going to get involved in telegraph industry but the rest of his life he thought railroads was the the greatest outlet for his what he realized was like he had essentially on uncontrollable ambition or like basically on there's no limit to his ambition so 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 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 excuse me now i have my road to walk 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. Divine inspiration I cannot say. But my road is laid out before me in the plainest of ways.

And so at 28, he does not know that he only has 24 years left, that he's going to die at 52, but he does know that he's found his life's work, the one that he's going to dedicate almost every waking hour to from now until he dies. I do want to touch on aspects outside of his work just real quick. His hobbies were essentially family. He spent a lot of time at home.

Him and his wife were a homebody. He spent a lot of time with his kids when he wasn't working. I obviously told you about he had a love for flowers and then reading. And I think the book goes later on into like his, he stuck to a pretty strict schedule every day. So it says he and Ellie, his wife, preferred simplicity and domestic pleasures. They were not social. Jay stuck to business and minimized his interactions outside the office. 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 he 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 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 that goes on between Jay Gold, Daniel Drew, Jim Fiss, 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 story, meaning the war for the Erie Railroad, the story of how Jay seized Erie shows his brilliance as a financial strategist, his deep understanding of law, a surprising grasp of human nature, and a mastery of political reality. And so the one thing that jumps out when now 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 tactics they used, was that if he had a goal in mind, which in his case is I need to control the

area of railroad, like Rockefeller before him, or I guess at the same time because they were operating at the same time, he wouldn't just 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 360 degrees. And they're just relentless by poking any kind of weakness they feel will get them what they want. And so even though I can't really understand everything that he does, I think the value I get from understanding is like, oh, oh, the way I think about the goals I want to accomplish and the problems I want to solve, it's unbelievably pedestrian compared to the way Jay or Rockefeller approach their own goals. And so what I hope to do is learn from their examples. Like whatever goal you have, spend an unbelievable amount of time analyzing all the different ways, the possible ways that you can actually achieve and make a reality what you want to make real.

And so it's happening. There's a bunch of board members and they're all fighting against each other for control. Cornelius Vanderbilt, his idea is like, hey, I'm just going to buy up. He bribes a judge to make sure that they cannot issue more stocks. And so Vanderbilt thinks that the share count is fixed as a result of this injunction. So he's just buying up more and more. When they mentioned that Jay had a deep understanding of law and a mastery of political reality, one of the reasons they said is because his close reading of the law realizes that this injunction only stops the board, the Erie board, from issuing more stock,

but it doesn't stop the Erie executive committee from issuing more stock. And so I want to read this part to you. I just want to really pull out like how confident Jay was in his ability. At this point, he's in his 30s, has a little bit of money, but he's literally going up against intentionally the richest and most well-known and successful businessman of his day in Vanderbilt. Vanderbilt's, you know, 30, what, 40 years older, maybe. And so it says, Jay noticed that Barnard's injunction, that's the judge that Vanderbilt paid off, against new share issuance and joined the Erie board and only the board. What if another entity, say Erie's executive committee, issued the stock instead of the board? Jay's lawyers liked the

idea and they followed up by finding a judge who signed an order expressly empowering the executive committee to issue shares. Why is that important? Vanderbilt believed that the share count 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, they wind up taking them for like $7 million. That goes on for a lot. Remember, this is like, 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 thumbed its nose at the judge's order

and issued more shares. Vanderbilt stopped buying. If the supplies of shares was infinite, there was no point. So Jay Gold, Jim Fisk, and Daniel Drew, 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 seven million dollars as they toasted a messenger came with news judge barnard had cited them for contempt the sheriff was on his way to erie headquarters to put them in handcuffs and 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 lam from New York authorities, you could just go to New Jersey and there was no extradition requirement between the

two states. I go over this entire story in episode 258, The Dark Genius of Wall Street. But there's like this 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 like the state legislature in New York. There's a bunch of like open bribery that occurs on both sides. But eventually Vanderbilt makes them give them back every single dollar. And it was in the interest of Jay and Daniel and Jim to settle with Vanderbilt because I read this book called Tycoon's War.

The subtitle of the book is How Cornelius Vanderbilt Invaded a Country to Overthrow America's Most Famous Military Adventure. The story is remarkable. It's unbelievable. It's episode 55. I'm actually going to reread the book soon. But the reason that you didn't want to cross Vanderbilt is because he didn't believe in just using the law. He would use that if he had to, but he literally would pay. If you cross him in business, he would try to have you killed. That happens in this book where when they were hiding in New Jersey, Vanderbilt went and put a bounty on Daniel Drew's head. So that is not a person that you want to be taking $7 million from. And so then the book spends several chapters going into detail about what Jay is most notorious for. He tried to corner unsuccessfully the gold

market. These actions result in this gigantic financial collapse. And so I go into more detail on episode 258. 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 in episode 258, 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 tactic that Jay would use. And so it says, the biggest winner was Jay's lawyer. He defended Jay in more than 100 cases. Following Jay's order to stall,

his lawyer dragged out the proceedings. It took a decade to clear the docket. 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 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, where they had that shootout, that lasted like another five, I think five to 10 years as well. And by the time that he winds up settling with his partner, winds up selling his interest in the tannery for, you know, a nominal fee, he had 10 years, five to 10 years of wealth accumulation. So by the time that came due, he was already 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. And so there's a series of booms and busts and a lot of speculations in railroad stocks throughout this book. It goes on for 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 really is talking about the difference between good and bad businesses. And this definitely still applies to this day. 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 City. It mattered

whether a railroad had mountains of debt. It mattered if the railroad was run by a builder like Cornelius Vanderbilt or a speculative director bent on manipulating the stock price, robbing the corporate treasury and awarding corporate contracts to himself and his friends. That's a large history of the railroad industry is that second, the latter there. It's like, oh, 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 essentially raiding their own stock price. In fact, if you want to learn about the greatest, what is arguably the greatest 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 Northwest.

I found that book because that's another book I found from Warren Buffett and Charlie Munger. They always talk about operators throughout history that they admire and the books they read about them. And so he was actually, I think, the only person that ever built a profitable railroad without going bankrupt. 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, before he leaves, I think this is in the 1870s. I got to 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 Erie 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 Gould's Wikipedia page under Lord Golden Golden, it's only two paragraphs. And somebody sent me a message. They're like, oh, this would make an amazing movie. So let me, this is why they said that. So it says in 1873, Jay Gould attempted to take control of the area railroad by recruiting foreign investments from Lord Gordon Gordon, who was supposedly a cousin of the wealthy Campbell clan 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 in other books that they said it was 500,000, but still a lot of money. He bribed Gordon Gordon with a million dollars in stock, but Gordon Gordon was an imposter and

cashed the stock immediately. Jay Gould sued him and the case went to trial in March 1873. 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. 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, Jay Gould attempted to kidnap Gordon Gordon with the helps of his associates and a future member of Congress.

Future members of Congress. So you got Lauren Fletcher, John Gifflian, and Eugene Wilson, all future members of Congress, are trying to kidnap this guy. 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 U.S. Canadian authorities put them in prison and refused the bail. And this led to an international incident between the United States and Canada. Governor of 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 Minnesotans 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 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 throughout his entire life. In many cases, these books, when you're reading about the business history in the 1800s and early 1900s. It's just 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 the reason they didn't like Jay is because they actually lost to him. So it says it was well known that Jay had outfoxed the Commodore, the Commodore Vanderbilt, and it talks about the fights they have with the Erie,

but then it says this hilarious sentence. There was also a little episode with the cows. 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 Jay Gold is currently in control of and the one that Vanderbilt was 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 where you want to go where jay always actually reacted the last time taking this is like jay always reacted to the game on the field 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 I think to me, because he couldn't have

predicted this change, it shows the level of intelligence that he had. 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 across New York State for the token amount of a dollar a carload. So before that, they were both trying to gain business from the other by constantly reducing 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. Instead, Jay and Fisk, that was his partner, who also gets murdered by his ex-lover's new lover. There's more of that in episode 258. But it says,

instead, Jay Gold and Fisk made a profit by buying cows in Chicago 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, he nearly lost it. So a 21-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. What they would do is they would transmit the change in price over the telegraph. And so he sees like this massive 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 the telephone pole, just observing, you know, what one of the

most insane days in finance history. And 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 Gould's paths are actually going to cross many years later when Edison was 27 years old. It says Edison was 27 years old. The light bulb, the phonograph, and the movie camera were years away. For now, he had to vent away to pay his mortgage. And so at this point in Edison's career, he's just a freelance inventor. The invention that he is working on is actually the quadruplex. This is the one that Jay's going to purchase from him.

But I really want to get into like Edison's perspective on Jay Gold. I thought that was interesting. Before I get there, 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. Up until this point, Jay has been focused on the railroad industry. So it says, Jay was keenly interested in the telegraph business. Now, telegraphs went hand 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 the monopoly of the telegraph monopoly of the day, Western Union, and Jay cannot believe how much money they make. Western Union was a money machine. Jay Gold coveted it. I'd rather be the president of Western Union than the president of the United States, he said. However, Western Union was simply too big and powerful, but maybe he could shake it down. Core to this scheme was Edison's latest invention. And so the quadruplex allows you to send up to four messages at once. So essentially just

increases the amount of communications that existing lines could have. And so he's going to buy this invention and the patents from it, start a company, and then 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 Edison just telling us like what it was like to know and interact with Jay Gould. So it says Edison and G Gold shared some traits. Both thought about little besides their obsessions, inventions for Edison and money for Gold. Both worked all the time. Both had spent their childhoods reading anything that came their way. As an employee of

Gold's, Edison came to appreciate what Jim Fisk had later had previously, Gold's peculiarities. During one encounter, Gold unfurled maps and talked about rail lines. Gold spoke for three hours before exhausting himself. Edison found Gold strange and unsettling. 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 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. 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 267, he called the wars between the robber barons strange financial warfare. 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 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. Jay Gold was aware of how Rockefeller was using coercion to grab every oil refinery he could. Jay longed to lead a similar process in railroads. He said consolidation will prove both essential and inevitable. What was needed was unchallenged market domination. And in this story, it's just unbelievable how to turn a $500 kidnapping into $500,000. 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. This is insane. A cabal of crafty traders seized the moment. They grabbed one of the messengers and dressed one of their own to take his place to gather information on Jay's trades. For four days, they saw Jay'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 $500 to stay in a hotel and keep quiet. The schemers bought Western Union at $80 and sold it at $120, pocketing $500,000. And so then the book talks about how he spent most of his time, his schedule, the last decade of his life. And it said, he was a homebody whose routine left

no time for diversion. He woke up at 7.30, ate breakfast at 8, wrote letters until 9.30. He had lunch at noon. He ate very little. He drank lots of coffee. He stayed downtown until 4.30 when he came home for dinner to have dinner with his family. After dinner, he headed to the Fifth Avenue Hotel to talk markets with stockbrokers who traded there after hours. Then he read in his library until it was time for bed at 11. He spent Sunday in the office as if it were a regular day. When he was at home and needed air, he pruned his flowers. And so he said, 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 Jay's life is not only he was married for, I think, 24 or 26 years. His wife, 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 transcontinental system 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. 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. His dreams for the Union Pacific were better suited for a young man than one who knew that his And so he winds up passing away at 52 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 Gould's legacy should be. In a 1986 biography, University of Rhode Island professor Maury Klein suggested Gould 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. Wharton professor Julius Grudinsky, who in 1957 completed the first serious analysis of Jay Gould took pains to credit Gold's contributions. His aggressive track building lowered freight rates. His success as a railroad investor attracted speculative capital into a vital industry when other sources fled the field. But after examining every transaction of his career, poring over every scrap of correspondence, considering every

accusation of victims, and compiling spreadsheets to measure his investments, Grudinsky couldn't pull the trigger on a definitive judgment about his subject. His conclusion was unsatisfying. He had his virtues, and he had his faults, he wrote. 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 Gould. He lied, he cheated, he stole. But he was so good at what he did, so intelligent in the execution,

and such a clean, kind, and industrious family man, that tries 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. If you buy the book using the link that's in the show notes of 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 episodes anymore, but instead I'm doing long form AMA, ask me anything questions. So subscribers to Founders Premium actually are AMA ask me anything questions. So subscribers to Founders Premium actually are able to ask me questions directly. 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? 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 going to start a new podcast, interviewing founders and practice habits, I'm going to be doing two of these a month. I'm going to probably record the next one probably tomorrow. So if you're interested in listening to them and then contributing by asking questions, 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 285 books down, 1,000 to go. And I'll talk to you again soon.