Book Review – American Rascal Jay Gould By Greg Steinmetz

Jay Gould: A Rascal Or Shrewd Businessman?

It would be impossible today for one person to cause the collapse of the stock market, corner the gold market or just print stock shares in a large-cap corporation as needed.

Not that Jay Gould single-handedly did any of these things.

He had help.

150 years ago the rules of finance were much more fluid and there were men who could recognize opportunities and flourish. The media and public mistakenly perceived that Gould did all of the above and was solely responsible for wreaking financial havoc for his benefit alone.

Jay Gould (1836-1892) was a man who could and did orchestrate financial turmoil. Few know Gould’s name today, and for those who do, Gould usually conjures up visions along the lines of filmmaker Oliver Stone’s view of the evils of Wall Street where Gordon Gekko proclaims “greed is good”.

Greg Steinmetz’s briskly paced American Rascal How Jay Gould Built Wall Street’s Biggest Fortune (Simon and Schuster) 2022, will leave readers with a much more nuanced version of a man who was among the most hated people of his time, with trader James Keene, calling him, “the worst man on earth since the beginning of the Christian era.”

Regulated capitalism is under constant attack today. When Gould was practicing his version of Wall Street mastery, there was outrage at his maneuvers. But in the mid to late 1800s, finance oversight was lax, insider information was legal and rules could be changed to suit those who held power or wanted to wretch it away.

Steinmetz, previously a writer for The Wall Street Journal and now a partner in a money management firm, covers Gould’s life in highly readable chapters. Everything is clear to the reader without benefit of a finance degree to understand Gould’s sometimes complex deals.

Titans from the 19th century come alive with Gould’s battling with Cornelius Vanderbilt, and Gould’s partnering with his flamboyant counterpart Jim Fisk and the duplicitous Daniel Drew. Steinmetz’s compelling narrative puts everything in context to what social and monetary conditions were like at the time.

Gould definitely was a liar, a cheat and a robber baron, but without a hint of family scandal. He was a devoted husband and father. Even Gould’s many enemies would acknowledge that. Steinmetz’s view of Gould is balanced, showing Gould’s roles in market manipulation as being necessary in some cases and simply ruinous in others. This does not forgive Gould’s business transgressions, but after reading Steinmetz’s portrayal of this secretive man, it is impossible not to come away with some admiration for Gould’s brilliance, not just as a shrewd investor but his overarching understanding of commerce and production and wonder about his motivations besides providing for his family.

It may be strange to think this, but was there something lurking underneath Gould’s personal desires? Yes, he accumulates and consolidates wealth and power. But, does Gould believe or convince himself that in the end it all benefits the United States and its people?

Had Gould lived longer would he have eventually adopted the practice of philanthropy as did Carnegie, Rockefeller, Vanderbilt and some of the other Gilded Age magnates? It is definitely possible. As Steinmetz writes, “Had Jay Gould put his name on a university or concert hall, he would undoubtedly be a household name today.”

In his conclusion Steinmetz makes a point about financial scandals occurring today versus what was happening in Gould’s day and regulating markets.

“In response, [to today’s scandals] lawmakers are rewriting the rules to make sure such events ‘never happen again,’ Steinmetz writes.  “There will be more scandals in the years ahead followed by more rules to protect investors, protect consumers, and flatten the economic cycle. There will be more agencies, bureaus, and commissions to root out malfeasance. But short of a full attack on for-profit enterprise, the unscrupulous will still bribe politicians, welch on debts, and find ingenious ways to commit fraud.

They will betray loyalties, squeeze labor, ignore moralizers, and rationalize their actions. They will still die, fortunes intact, without having seen the inside of a jail cell.

As Gould’s experiences show, less government intervention could be part of a solution because there is no bigger punisher than the market. Would the financial crisis of 2008 have happened if mortgage traders, like latter-day Jay Goulds, faced annihilation for misplaced bets? Would the subsequent recovery, among the weakest in history have been more robust if the government had let the market find its level like it did after the gold fiasco?”

All valid questions in this timely, enjoyable biography and therefore highly recommended.

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