Jay Gould, twenty-one in 1857, invests five thousand dollars in the leather business and begins speculating in railroad stocks.

Born on a dairy farm in Roxbury, New York, Gould had studied at the Hobart Academy, but left at age sixteen to work for his father in the hardware business.

He continued to devote himself to private study, emphasizing surveying and mathematics.

Gould later went to work in the lumber and tanning business in western New York, then became involved with banking in Stroudsburg, Pennsylvania.

He had published the History of Delaware County, New York in 1856.

 

Daniel Drew is popularly credited with introducing what would be called "watered stock" to the New York financial district, to describe company shares that were issued by false means such as counterfeit certificates or shares issued that were not authorized, resulting in a dilution of ownership; the term supposedly came from his time in the cattle business, when he would have his cattle drink water before selling them, to increase their weight temporarily.

The tactic will be used in the Erie War of 1866-1868 to block Vanderbilt from getting ownership of Erie.

In 1857, Drew had become a member of the board of directors of the Erie Railway and had used his position to manipulate the firm's stock price.

In 1864, Drew had once again struggled with Vanderbilt, speculating on the stock of the New York and Harlem Railroad.

Drew had been selling the stock short, but Vanderbilt and his associates had bought every share he sold, ultimately causing the stock price to rise from 90 to 285 in five months.

Drew loses $500,000.

Born in Carmel, New York, Drew had been poorly educated.

His father had died when Daniel was fifteen years old.

Drew had enlisted and drilled, but because he enlisted too late, never fought in the War of 1812.

After the war, he had started a successful cattle-driving business, marrying married Roxanna Mead in 1823.

In 1834, he had entered the steamship business, competing unsuccessfully with Cornelius Vanderbilt but running numerous profitable lines outside of New York.

He had founded the brokerage firm of Drew, Robinson & Company in 1844, which dissolved a decade later with the deaths of his partners, after which he had continued to work in the brokerage business as an independent operator.

Jay Gould's father-in-law is credited with introducing the younger man to the railroad industry, when he suggested that Gould help him save his investment in the Rutland and Washington Railroad.

Gould had quickly acquired a majority of the company's bonds at 10 cents on the dollar.

Jason Gould was born in Roxbury, New York, the son of Mary More (1798–1841) and John Burr Gould (1792–1866).

His father was of British ancestry and his mother was of Scottish ancestry.

Gould's maternal grandfather Alexander T. More was a businessman, and his great-grandfather John More was a Scottish immigrant who founded the town of Moresville, New York.

Known as Jay, young Gould had studied at local schools and the Hobart Academy, where his principal was credited as getting him a job working as a bookkeeper for a blacksmith.

A year later, the blacksmith had offered him half interest in the blacksmith shop, which he had sold to his father during the early part of 1854.

Gould had devoted himself to private study, emphasizing surveying and mathematics.

In 1854, Gould had surveyed and created maps of the Ulster County, New York area.

In 1856, he had published History of Delaware County, and Border Wars of New York, which he had spent several years writing.

In 1856, Gould had entered a partnership with Zadock Pratt to create a tanning business in Pennsylvania in what would become Gouldsboro.

Eventually, he had bought out Pratt, who retired.

In 1856, Gould had entered another partnership with Charles Mortimer Leupp, a son-in-law of Gideon Lee, and one of the leading leather merchants in the United States at the time.

Leupp and Gould had been a successful partnership until the Panic of 1857.

Leupp had lost all his money, while Gould had taken advantage of the opportunity of the depreciation of property value and bought up former partnership properties for himself.

After the death of Charles Leupp, the Gouldsboro Tannery became a disputed property.

Charles Leupp's brother-in-law, David W. Lee, who was also a partner in Leupp and Gould, took armed control of the tannery, believing that Gould had cheated the Leupp and Lee families in the collapse of the business.

Eventually, Gould took physical possession, but was later forced to sell his share of the company to Lee's brother.

In 1863, he had married Helen Day Miller, with whom he will have six children.

Jim Fisk has aided Daniel Drew, who had become treasurer of the Erie Railway, in the struggle against Cornelius Vanderbilt for control of the railroad from 1866 to 1868.

To get revenge, Vanderbilt had tried to corner Erie stock, which led to the so-called Erie War, bringing him into direct conflict with Jay Gould and Fisk, who had just joined Drew on the Erie board.

New York state law restricts the number of shares a company can issue

However, Fisk and Gould have become involved with Tammany Hall, the New York City political ring, and Boss Tweed had arranged, through bribes, for legislation that had legitimized fake Erie stock certificates that Gould and Fisk had issued in large quantities

Vanderbilt, unaware of the increase in outstanding shares, had kept buying the “watered” Erie stock and sustained heavy losses

Eventually conceding control of the railroad to the trio, Vanderbilt had lost more than seven million dollars in his failed attempt, although Gould will later return most of the money after Vanderbilt uses the leverage of a lawsuit to get his losses back

Vanderbilt and Gould become public enemies

Gould will never get the better of Vanderbilt in any other important business matter, but he will often embarrass Vanderbilt, who uncharacteristically lashes out at Gould in public

By contrast, Vanderbilt will befriend his other foes after their fights ended, including Drew

Boss Tweed, in return for his role, receives a large block of stock and is made a director of the company.

James Fisk was born in the hamlet of Pownal, Vermont, in the township of Bennington on April Fool's Day.

After a brief period in school, he had run away in 1850 and joined Van Amberg's Mammoth Circus & Menagerie.

Later, he became a hotel waiter, and finally adopted the business of his father, a peddler.

He applied what he learned in the circus to his peddling and grew his father's business.

He then became a salesman for Jordan Marsh, a Boston dry goods firm.

A failure as a salesman, he had been sent to Washington, D.C., in 1861 to sell textiles to the government.

By his shrewd dealing in army contracts during the Civil War, and, by some accounts, cotton smuggling across enemy lines—in which he had enlisted the help of his father—he had accumulated considerable wealth, which he soon lost in speculation.

In 1864, Fisk had become a stockbroker in New York, and was employed by Daniel Drew as a buyer.

Russell Sage, who begins an investment association with Jay Gould, had begun as a trader and wholesale grocer in Troy and served two terms in Congress from 1853 to 1858 before moving to New York City in 1863.

Jim Fisk and Jay Gould carry financial buccaneering to extremes: their program includes an open alliance with Boss Tweed, the wholesale bribery of legislatures, and the buying of judges.

In August 1869, Gould and Fisk had begun to buy gold in an attempt to corner the market, hoping that the increase in the price of gold would increase the price of wheat such that western farmers would sell, causing a great amount of shipping of bread stuffs eastward, increasing freight business for the Erie railroad.

During this time, Gould uses contacts with President Ulysses S. Grant's brother-in-law, Abel Corbin, to try to influence the president and his Secretary General Horace Porter.

These speculations in gold culminate in the panic of Black Friday, on September 24, 1869, when the US Treasury, in response, releases its gold on the US market.

The sudden glut causes the price of gold to plummet—the premium over face value on a gold Double Eagle falls from 62% to 35%—and collapses the entire stock market.

The gold corner establishes Gould's reputation in the press as an all-powerful figure who could drive the market up and down at will.

Though many investors are ruined, Fisk and Gould escape significant financial harm.

Gould had made a nominal profit from this operation, but will lose it in the subsequent lawsuits.

Jim Fisk and Jay Gould betray Daniel Drew in 1870, manipulating the stock price of the Erie Railroad and causing him to lose one and a half million dollars. (Fisk will be killed in January 1872 by a jealous rival over a mistress and Gould himself will later be swindled out of one million dollars worth of Erie railroad stock and will never control the Erie Railway).

The New York City Comptroller resigns shortly thereafter, appointing Andrew Haswell Green, an associate of Samuel J. Tilden's, as his replacement.

Green loosens the purse strings again, allowing city departments not under Tammany control to borrow money to operate.

Green and Tilden have the city's records closely examined, and discover money that had gone directly from city contractors into Tweed's pocket.

The following day, they have Tweed arrested.

Jay Gould, like Tweed, had become the subject of political cartoons by Thomas Nast in 1869.

In October 1871, when Tweed is held on one million dollars bail, Gould is the chief bondsman.

Tweed had been released on one million dollars bail, and Tammany had set to work to recover its position through the ballot box.

Tweed is reelected to the state senate in November 1871, due to his personal popularity and largess in his district, but in general Tammany has not done well, and the members of the Tweed Ring begin to flee the jurisdiction, many going overseas.

Tweed is re-arrested, forced to resign his city positions, and is replaced as Tammany's leader.

Once again, he is released on bail—eight million dollars this time—but Tweed's supporters, such as Jay Gould, feel the repercussions of his fall from power.

Public indignation over Gould’s role in the Black Friday panic will force him to resign as director of the Erie in 1872.

American railroad track miles has more than doubled in the twenty-five years after the American Civil War changing the face of America forever.

American railroads allow products made in the East to be shipped to the expanding West less expensively than in previous years.

This allows for an economy of scale—larger, more efficient factories.

The agricultural heartland of America is no longer confined to a market of single day's trip by wagon.

Railroad and railroad construction have become one of the largest industries during this era.

By 1881, one out of thirty-two people in the United States is either employed by a railroad or engaged in railroad construction.

Starting about 1877, two great railroad developers, William H. Vanderbilt and Jay Gould, had begun competing for the railroad traffic along the south shore of the Great Lakes.

By 1878, William Vanderbilt had gained a monopoly on rail traffic between Buffalo, New York; Cleveland, Ohio; Detroit, Michigan; and Chicago, because he owns the only railroad linking these cities—the Lake Shore and Michigan Southern Railway.

In addition, he is the richest man in America at this time.

By 1881, Gould, who is considered the most ruthless financial operator in America, controls about fifteen percent of all U.S. railroad mileage, most of it west of the Mississippi River.

Gould's major railroad east of the Mississippi River is the three hundred and thirty-five-mile- (five hundred and thirty-nine kilometer-) Wabash, St. Louis and Pacific Railway (Wabash).

The Wabash mainline runs from St. Louis, Missouri to Toledo, Ohio where it is forced to deliver its railroad traffic to Vanderbilt's Lake Shore Railroad for delivery to the eastern United States.

Gould and Vanderbilt together oversee all east-west rail traffic in the mid-west.

The Seney Syndicate, owners of a three hundred and fifty mile-mile (five hundred and sixty kilometer) railroad, the Lake Erie and Western Railroad, are interested in tapping new sources of revenue.

The stage is set for the creation of the New York, Chicago and St. Louis Railroad.

The Seney Syndicate, headed by George I. Seney, had met at Seney's New York bank and organized the New York, Chicago and St. Louis Railway Company on February 3, 1881.

The original proposal for the NYC&StL is a three hundred and forty-mile (five hundred and fifty kilometer) railroad west from Cleveland, Ohio to Chicago, Illinois with a three hundred and twenty-five-mile (five hundred and twenty-five kilometer) branch to St. Louis, Missouri.