Authors: H.W. Brands
By the 1880s the web of transport Stanford had envisioned was securely in place, and securely in the grip of Stanford and his partners. They set rates as they chose, unimpeded by any concerns of competition, of which there was none, and constrained only by a cool assessment of what the traffic would bear. One instance summarized the line’s approach. A new mine in Shasta County began to ship gold ore. The Central Pacific
initially charged $50 per carload from Redding to San Francisco. But when the mine thrived, the rate was raised to $73 per car, and then to $95. The mine owner traveled to San Francisco, to the headquarters of the railroad at Fourth and Townsend streets. Why the near-doubling of rates? he demanded. The official in charge of rates on that part of the road replied blandly, “You are sending down ore that would make a prince rich. We can’t pull high-grade ore on low-grade rates.” The miner declared that the value of the ore had nothing to do with the matter; tonnage was all that should count. Unmoved, the Central official nonetheless offered a compromise. If the miner would submit his account books to the railroad for scrutiny, the road would determine what he could afford to pay, and charge accordingly. The miner rejected the proposal out of hand; years later he was still livid. “For cheek as a business proposition,” he said, “I think this stands preeminent.”
But behind the cheek was raw power. The Central-Southern combination held the economy of California hostage. At a time when railroads throughout America inspired outrage in farmers and other shippers forced to pay their monopoly tariffs, the California colossus occupied a category all its own. Frank Norris devoted an entire novel to the malign influence of
The Octopus
; a scene from that novel—one of the most striking scenes from the entire genre of American naturalist fiction—summarized the sentiments of those within the monster’s grip. In Norris’s story, night had fallen over California’s Central Valley; Presley, a young poet come west in search of his muse, was soaking up the silence and the peace. Suddenly an apocalyptic presence split the night.
He had only time to jump back upon the embankment when, with a quivering of all the earth, a locomotive, single, unattached, shot by him with a roar, filling the air with the reek of hot oil, vomiting smoke and sparks; its enormous eye, cyclopean, red, throwing a glare far in advance, shooting by in a sudden crash of confused thunder; filling the night with the terrific clamour of its iron hoofs.
The locomotive raced on, its roar diminishing with distance until, as it entered a declivity in the roadbed, the sound ceased entirely.
But the moment the noise of the engine lapsed, Presley heard another sound: a confusion of heartrending pain. He hurried along the track to in vestigate, then drew up in shock at what the starlight revealed.
In some way, the herd of sheep—Vanamee’s herd—had found a breach in the wire fence by the right of way and had wandered out upon the tracks. A band had been crossing just at the moment of the engine’s passage. The pathos of it was beyond expression. It was a slaughter, a massacre of innocents. The iron monster had charged full into the midst, merciless, inexorable. To the right and left, all the width of the right of way, the little bodies had been flung; backs were snapped against the fence posts; brains knocked out. Caught in the barbs of the wire, wedged in, the bodies hung suspended. Under foot it was terrible. The black blood, winking in the starlight, seeped down into the clinkers between the ties with a prolonged sucking murmur.
Presley turned away, horror-struck, sick at heart, overwhelmed with a quick burst of irresistible compassion for this brute agony he could not relieve. The sweetness was gone from the evening, the sense of peace, of security, and placid contentment was stricken from the landscape….
He hurried on across the Los Muertos ranch, almost running, even putting his hands over his ears till he was out of hearing distance of that all but human distress. Not until he was beyond earshot did he pause, looking back, listening. The night had shut down again. For a moment the silence was profound, unbroken.
Then, faint and prolonged, across the levels of the ranch, he heard the engine whistling for Bonneville. Again and again, at rapid intervals in its flying course, it whistled for road crossings, for sharp curves, for trestles; ominous notes, hoarse, bellowing, ringing with the accents of menace and defiance; and abruptly Presley
saw again, in his imagination, the galloping monster, the terror of steel and steam, with its single eye, cyclopean, red, shooting from horizon to horizon; but saw it now as the symbol of a vast power, huge, terrible, flinging the echo of its thunder over all the reaches of the valley, leaving blood and destruction in its path; the leviathan, with tentacles of steel clutching into the soil, the soulless Force, the iron-hearted Power, the monster, the Colossus, the Octopus.
P
OWER COULD BE
physical in the age of gold; more often it was metaphysical. The metaphysics of gold—the dream of instant wealth—had, in the first instance, caused a quarter million people from all over the planet to abandon their ordinary pursuits and hurry to California, where they scratched and burrowed in the ground in a manner that must have been utterly inexplicable to any observer somehow unfamiliar with the priority humans place on the malleable yellow metal they retrieved from the diggings. Yet the metaphysics of gold extended far beyond those argonauts, to persons and classes who never thought of leaving their comfortable homes and offices, who shuddered at the very idea of the hardships the gold diggers endured.
Jay Gould was the master metaphysician of his day. There were those who suspected that his name had once been “Gold,” so cleverly did he manipulate the magic metal in the minds of his contemporaries. (Others reached the same conclusion from a different direction: that no one not named “Gold” or something similarly Jewish could display such a grasp of money.) As a young man, Gould had done some surveying work, but that was as close to a gold mine as he ever got. Yet for a moment in the autumn of 1869, he came within a whisker (of which he had an abundance, grown to conceal his mere thirty-three years) of controlling the gold supply of America, including a large part of what all those argonauts and their corporate successors had been digging out of the ground since 1848.
Gould’s partner in conspiracy was James Fisk. “Jubilee Jim” (also known as the “Barnum of Wall Street”) had joined Gould in a fight with
Cornelius Vanderbilt for control of the Erie Railroad; having sunk the Commodore, the two now took on the world. Their plan hinged on the historical and psychological fact that while the supply of gold at any given time was limited, the desire of humans for gold was essentially unlimited. Indeed, the desire was so great as to amount to a need: without gold, businesses would fail, governments would fall, men and women and children would be thrown hungry into the streets. In 1869 the need for gold was even greater than usual. Despite the flood of gold and silver from the West during the Civil War (and despite the arrest of Asbury Harpending), the federal government had been compelled to resort to paper money to cover the cost of defeating the rebellion. A dual money supply developed, consisting of paper for domestic commerce and gold for international trade. (American legal tender laws, which mandated acceptance of the greenbacks at home, didn’t apply overseas.) In turn a market developed where gold and greenbacks were traded, one for the other.
Gould and Fisk intended to corner the gold market—that is, to gain sufficient control of the gold supply to set its price where they chose. Commodities—cotton, tobacco, pork bellies—had occasionally been cornered before; likewise certain stock issues (including Erie shares, by which Gould and Fisk had defeated Vanderbilt). But to corner gold—the basis for the nation’s money supply, the
über
commodity that controlled all else—had never been attempted, perhaps never even contemplated. The sheer audacity of the scheme was what made Gould think it might work.
Gould’s plot would unfold in the Gold Room, located near the main stock exchange on Wall Street. Only lately opened, the Gold Room already had a reputation and a distinctive ambience. One regular described it as “a cavern full of dank and noisome vapors” where “the deadly carbonic acid was blended with the fumes of stale smoke and vinous breaths.” A journalist employed another metaphor: “Imagine a rat-pit in full blast, with twenty or thirty men ranged around the rat tragedy, each with a canine under his arm, yelling and howling at once.” At the center of the room, where the rats would have been, was a marble Cupid spouting water. “The artistic conception is not appropriate,” the newsman continued, switching his own metaphor. “Instead of a Cupid throwing a pearly fountain into the
air, there should have been a hungry Midas turning everything to gold and starving from sheer inability to eat.”
Gould didn’t frequent the Gold Room, leaving that to Fisk, whose boyish delight in display and tumult was as great as Gould’s aversion to them. Gould also employed a small army of brokers, each kept ignorant of the activities of the others, to buy up gold in many modest lots. By the time the world caught on that a single intelligence was coordinating the purchases and controlled the gold thus acquired, Gould would have accomplished the corner.
Such was the plan, which to Gould’s thinking had but one weakness: the largest stock of gold in the country rested in the vaults of the United States Treasury. Ordinarily this gold was kept off the market, as a reserve for the nation’s currency and to meet the government’s own needs. If it remained off the market, all would be well—for Gould. But if the government determined to intervene, by dumping its gold on the market, it could break any corner, no matter how cleverly conceived, concealed, and executed.
Gould took precautions to keep the government out of the market. He cut President Grant’s brother-in-law in on the scheme, paid the assistant federal treasurer in New York to forward information about the intentions of his department, and lobbied Grant himself about the importance of letting gold find its own level, without government intervention.
The gradual rise in price that accompanied the brokers’ buying piqued the appetite of gold bears, who didn’t know why the price was rising and who now wagered on its fall. Selling short, they did their best—through rumor, intimidation, and all the other techniques of the speculative art— to bring the price down. When they failed, and their financial lives began to pass before their eyes, their wailing and gnashing of teeth filled the Gold Room. Gould, in his office at the Opera House (a setting that suited partner Fisk far better than Gould), smiled behind his beard and unconsciously tore paper into tiny pieces, as he did whenever a complex operation was afoot.
Like a mountain that grows steeper near the summit, this operation grew more treacherous the closer it came to success. Each tick upward of
the brass indicator in the center of the Gold Room signaled—to Gould, though not to the hundreds who watched it climb—that he was that much nearer to achieving his coup; but each tick also signaled that the remaining gold would be that much more expensive. And each tick tolled the doom of more of the bears, who clawed desperately to maintain their grip on the steepening slope.
Discretion—common sense, even—counseled a low profile for the purchasers. But Fisk didn’t know the meaning of discretion (and probably couldn’t spell it either), and he insisted on taking center stage. He waded into the Gold Room, flashing diamonds from his fingers, cuffs, and shirtfront, blowing smoke from his fat cigar, and demanding all the gold anyone would sell, at almost any price they’d sell it. The bears were in agony, and Fisk in his element. “As the roar of battle and the scream of the victims resounded through the New Street,” a reporter declared, “it seemed as though human nature were undergoing torments worse than any Dante ever witnessed in hell.”
And then, with victory in sight, Gould received the report he had been dreading. Grant’s brother-in-law had lost his nerve and was demanding to get out, which told Gould that the government was about to enter the market. Coolly double-crossing Fisk, whom he left to continue to buy, Gould silently began selling. Fisk came back to the Opera House at the close of trading on September 23, more boastful and ebullient than ever, convinced that the corner was at hand, with all the wealth and power control of the gold supply would entail. Gould knew better but kept quiet, the deepening pile of shredded paper about his desk being the only sign of the delicacy of his position.
The next day—September 24, 1869—was the most turbulent in the history of Wall Street till then, and perhaps the most turbulent ever. All morning the price of gold continued to mount; all morning the remaining bears howled in agony. Amid the carnage, Fisk bellowed to buy, gloating in the bears’ pain and counting his monopoly profits. But shortly after noon, the telegraph from Washington brought word that the Treasury would sell gold. At once the price collapsed, flabbergasting Fisk and the bulls, and resurrecting those bears that retained a spark of life.
Now it was the bulls that wanted blood—the blood of Fisk and Gould. The two barricaded themselves in the Opera House, shielded by thugs kept in reserve for precisely such emergencies. And it was wise they did, for those who had been betting on gold were now bent on mayhem. One observer asserted that if the conspirators had been caught in public, “the chances were that the lamp-post near by would have very soon been decorated with a breathless body.”
The derangement of the gold market spilled over into the broader stock market as banks and brokerages collapsed under the weight of their gold losses; the entire fiasco earned the name “Black Friday” and became a symbol of the corrupt speculation that characterized the new age. Gould survived to speculate anew, albeit never in such spectacular fashion. Fisk, who astonishingly held no grudge against Gould—“It was each man drag out his own corpse,” he explained—lived to die at the pistol of a rival in love.
S
AM CLEMENS KNEW
all about the sordid quest for wealth in the age of gold (although he preferred the label “Gilded Age,” a title better suited to his, and coauthor Charles Dudley Warner’s, satirical purposes in their novel by that name), for he had caught the fever in Virginia City. George Hearst’s Ophir proved but the first of a chain of mines that exploited the Comstock Lode and made their owners fabulously wealthy. The heart of the Comstock was an ore body known as the Big Bonanza. Where the quartz veins of California’s Mother Lode measured a few feet wide to perhaps a score, the Big Bonanza was hundreds of feet wide to more than a thousand. And it was rich almost beyond belief, paying up to $10,000 per ton. With thirteen cubic feet of ore to the ton, a cubic yard of ore could fetch $20,000. To be sure, the average yield was lower, but even at a mere hundreds of dollars per yard it made men giddy to think about it.