What I learned from reading Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons by Edward J. Renehan Jr.

He was raised on a farm and milked cows as a boy.

He was affable to every employee, from the head of the department to the humblest.

Self-control was 1 of his most profound attributes.

He was a quiet man, and when he spoke, his words were both few and carefully chosen.

He rarely boasted, but once speaking for himself and his fellow capitalists, he said, We have made this country rich.

We have created the earning power by developing the system.

When he died, the press said that he was the world's richest man.

It also called him the world's most hated man.

The man just described sounds like John D.

Gold died at the end of 1892 as Rockefeller was preparing to retire from business.

Their fortunes that year were about the same, around $100 million.

When an acquaintance asked Rockefeller who was the greatest businessman he had known, his answer came without hesitation.

He echoed the sentiment of Cornelius Vanderbilt, who had long ago tangled with Jay Gold and lost.

Vanderbilt said Gold was the smartest man in America.

Gold was perhaps the single most unsettling force ever to appear on the American industrial scene.

He thought in continental terms when few contemporaries saw beyond state boundaries.

He shook to his heels an industry already settled in its ways and set out to realize his dream of a transcontinental railroad.

Given the obstacles he faced, Gold's achievements were phenomenal.

He was an advanced thinker in the field of corporate finance, and he set precedents which were later followed by investment bankers and by state and federal governments.

Among wheelers and dealers of his day, he had no peer.

He was obsessed with piling up a fortune, no holds barred.

He mastered the details of running a railroad with embarrassing ease.

Labels do not imply judgments, but if such were to be made, gold must rank as the less honorable and less trustworthy, but the more brilliant of the 2.

For he was indeed the smartest man in America at least in the business world of his day.

That was not an excerpt from the book that I'm going to talk to you about today.

That was actually an excerpt from a book I covered a few podcasts back on episode 254 and it's John D.

Rockefeller, the founding fathers of the Rockefellers, written by David Freeman Hawk.

And I wanted to start there because I think it demonstrates how important understanding and studying J gold is is if you're reading a biography of Rockefeller and an entire chapter is Dedicated to another person And that made me want to read a biography of Jay Gold.

And the book that I'm gonna talk to you about today is The Dark Genius of Wall Street, The Misunderstood Life of Jay Gold, King of the Robber Barons.

And I actually found out about this book because the author is the 1 that sent it to me.

So I want to jump into what would have been the introduction to the podcast for this book and it's at the funeral of Jay Gold.

And actually before I start there let me go to the very back cover of the book because I thought this this paragraph was very interesting.

It talks about the thesis of the author it's like well there's a ton of biographies written about Jay Gold everyone basically says the same thing that he's evil he's unscrupulous he was the most hated man in his day and Edwards like well it's a more complicated if you actually dig into the research is actually a more complicated than that so it says though reviled for more than a century as Wall Street's greatest villain, Jay Gold was in fact its most original creative genius.

Gold was the most astute financial and business strategist of his time.

That goes back to the book I was quoting from at the beginning where it's like in his day he had no peer back to the back cover.

He was the undisputed master of the nation's railroads and telegraph systems at a time when these were the fastest growing new technologies of the age.

His failed scheme to corner the gold market in 1869 caused the Black Friday panic and it's also a reason why for the rest of his life he lives about like another 25 years after he actually caused this financial panic and that's what gave him this terrible reputation that still exists to this day.

He created new ways of manipulating markets, assembling capital, and swallowing his competitors.

Many of these methods are now standard practice.

That's just the first of many crazy sentences we're going to find in this book.

Others were unique to their circumstances and unrepeatable.

Some were among the first things prohibited by the SEC when it came into being in the 1930s.

That would be about 40 years after Gold died.

And so let's go to his funeral where 1 of his friends is there.

And it says Jesse said he found it ironic that Jay Gold was always cast as the demon in any telling of the nation's recent financial history.

If Jay was a sinner, asked Jesse exactly who were the saints.

He ran down a list of the contenders, starting with Cornelius Vanderbilt, the foul-mouthed and brutal old Commodore never claimed to have any agenda other than his own enrichment.

And what of Rockefeller, the avid, competition-crushing monopolist?

Jesse did not see Jay as any more or less criminal than most operators of his era.

I cannot say that Jay was, in his moral nature, much better, much worse, or much different than any other shrewd and sharp player of his generation.

I've known them all and I can tell you that he deserves no more notoriety than those against which and with which he played.

If he was exceptional it was as a strategist.

Time and time again, Wall Street never saw him coming.

And then it goes right into the heart of the conflict of his reputation that he was both a great CEO and a ruthless financial manipulator.

The case for gold as a successful long-term CEO is there to be made.

The highly imaginative, ruthless, and easy to vilify manipulator of security markets was also a detail-oriented owner of companies.

He was a workaholic who painstakingly consolidated dying railroads, transformed them into highly profitable mega lines, and then did the same thing in maximizing the profitability of the Western Union, skillfully steering all of his businesses through choppy economic seas in the 1880s.

And so they're describing at that point in Jay's life, he'd be in his 40s, because he dies at 56 in 1892.

And so I'm still in the preface of the book.

It actually goes into the way he was reported in the press is not at all accurate to how he was in person And I'll go into later on and I didn't realize this when I read this the first time much later in the book Jay did that on purpose his antagonist and business after having been burned by him provided a lot of information to a hungry press and they in turn dubbed him the devil of Wall Street.

It was easier and more nurturing to the pride of the wounded to suggest a pact with Satan than to admit that Jay was in fact the Michelangelo of Wall Street, a genius who crafted financial devices and strategies and who leveraged existing laws in stunningly original ways.

And then this sentence really describes why I think it's worth spending time studying him.

His success was profound, his productivity was astonishing, and his motivations and tactics were fascinating.

And I just wanna pull out 1 sentence for you that describes his personality, and this is actually repeated a lot.

This is the first time of many times in the book that you'll read that I read sentences that are just like this Jay had always believed that shrewd aptitude should be rewarded and its absence punished He despised fools He was definitely an elitist but not in the terms of oh did you go to a right school did you come from a rich family it's do you have a brain or not and so 1 of his best talents was identifying people whose mind far exceeded where they currently were in life and he'd recruit them and they'd work with him in many cases many decades.

So his dividing line in life you could think about this way it's like if you're smart you're with me if you're not I don't want anything to do with you.

Another personality trait that Jay shares with a lot of people that you and I said in this podcast He was always punctual.

I just read this fantastic line in this post on a personal on this guy's personal website and it reminded me that time is non-refundable.

And finally, 1 more thing before I get into his early life and his complicated relationship with his father.

Unlike most other self-made men, gold never traded on his humble background.

He said, the fact of my father's poverty is not worth 1 dime to me.

And we're only a few pages into the book, but it's already clear that with that statement and knowing everything else that you know about him He just knew he's like, okay, my father's poverty.

That's fine I just know that that's not gonna happen to me So let's go into Jay's father because I think it really sets a tone for his entire life It's gonna weird and it's gonna be kind of weird where I'm reading a biography of Jay Gold and I think about the legendary director Francis Ford Coppola but I'll tie it together and explain why this is so important.

So it says Jay Gold's father was a complicated and tragic figure.

So you could think of him right off the rip.

His father's like the anti-model, like a cautionary tale for Jay, okay.

John Burr Gold's tribal memory passed on by his parents told him that he came from substantial people all of these prosperous golds burns and all these other last names that are in his family who for generations had loomed so large in Connecticut history.

Okay, so what they're talking about is the fact that 2 or 3 generations above Jay's father, they were rich and prosperous, then the generation above, so that'd be Jay's grandfather, starts losing everything.

And so now, and where we are in this point in history, Jay's father is think about how crazy this had to be.

And yet in your mind when you were raised, you're raised on stories about how wealthy and powerful your ancestors are.

That has to be very difficult thing to deal with mentally yet John's own precarious position in life like that of his father Fell considerably short of the height scaled by his formidable ancestors His lot in life was not substantial and he knew it and That line in particular his lot in life was not substantial and he knew it.

That reminded me back on founders number 242, Francis Ford Coppola talks a lot about it.

In fact, in his biography, a main theme is the fact that Francis's intense drive to not be a failure came from the negativity that he was raised in in his house.

There's 2 lines in that book that really stick out and it says you can always understand the son by the story of his father.

The story of the father is embedded in the sun and then Coppola's own description of his father is devastating He said I'd spent a lifetime with a frustrated and often unemployed man who hated anybody Who was successful in that line that the story of the father is embedded in the son resonates with the book that I'm holding in my hand.

My friend Sam Hinkie just sent me a line that describes this phenomenon that appears over and over again on this podcast.

And it says all ambitious men want either to please their fathers or to punch them in the goddamn face.

And in Jay Gold's case, it's gonna be clear.

He is aware that he's most likely smarter than almost anybody else around him.

And so I don't think he ever thought that his life was going to end up like the same way as his father's is.

But you also see this in his actions because the minute he can, he runs away from the farm.

First is a description of his life and why he'd want to run away from this.

They're on they're living on a poor farm his wife his mother's name is Mary Mary made all the family's clothes The lion's share of their food came right off their homestead their furniture was handmade Tragically, she's gonna die.

He has to deal his sisters die his mother dies he's 4 when his mom dies and so he doesn't really have a memory of her remember this for later when his when we get to his obsession with flowers which a lot of people are going to find surprising considering how ruthless They said Jay was but his passions in life.

It says it later in the book towards in the book But his passions were money-making reading walking Flowers and the enjoyment of nature and so he would love to take walks in nature constantly.

So his mother dies he's for his father needs a mother because he's got a lot of kids.

I don't even know how many they got like 7 or 5 or something like that.

So John marries again that summer and then that wife also dies later on that winter.

And so his older sister later in life is describing this part and she says, Jay had seen a great deal of trouble Before he had reached the age of 10 and so you could think of his early life as constant exposure To a life that he does not want and he'll do whatever he can to avoid it He was a serious child.

This is gonna there's a so much similarities between Rockefeller and Jay Gold.

Jay was a serious child, seemingly delicate until challenged, and possessed a somber maturity that bellied his youth.

They said the exact same thing about Rockefeller.

I knew him once to work at times for 3 weeks on a difficult problem.

He would never accept assistance in working out hard problems.

That is the first mention of something that is repeated maybe 5 or 10 times throughout the book, he would never accept assistance in working out hard problems.

Part of Jay's tenacity derived from the early realization that he hated farming.

It fell to him to perform many of the toughest chores about their homestead.

It added up to a simple-minded drudgery that Jay described as torture.

And even at this point in his life when he's about 13 years old he's obsessed with learning.

He tries to get his hands on any kind of information he possibly can.

And just like he would later in life he approaches learning with a single minded determination.

This is his teacher, 1 of the teachers that knew him when he was 14.

Oliver recalled the 14-year-old Jay as a deliberate student.

He was never rude and boisterous, didn't shout and didn't jump around.

And so there's a series of adjectives that are going to follow him throughout his life.

Persistent, deliberate in his study, disciplined.

Again, we're going to see another example that he did not like to ask for help and would just stick with the problem until it was solved.

Like his sister Sarah, Oliver noted Jay's stark independence and penchant for refusing help.

If he was sent to the blackboard to work out a sum, he would stay there the entire time rather than ask for a solution.

The depth and the zeal that Jay put into his studies cannot be overstated.

Wait till I get to this conversation that happens about, I want to say 20 years into the future between him and Thomas Edison, and you'll know exactly what I mean.

But at this point, Jay's still a teenager, we see that he picks up his first trade.

This is important because his first trade is going to lead to his first business.

And having this trade allows him to escape.

So in his spare time, he continued to pursue mathematics, specifically the sciences, engineering, and surveying.

He borrowed surveying tools and began to tutor himself in their use.

Jay told his sister that surveying represented his ticket out of town.

A month before his 16th birthday, so I was wrong, I thought he escaped when he was 17, he escaped when he was 15, about to turn 16, he made the move from the farm into the town.

He took off without just a mere $5 in his pocket.

This is something you and I have seen over and over again.

Henry Ford escaped the farm for the city.

Chungju Young, which is the first thing that I thought of when I got to this part, that's the founder of Hyundai, all the way back on Founders 117, I covered his autobiography, which to this day is probably the most inspiring autobiography I've ever read.

His story is just crazy, but if you remember that story or if you read the book or listen to the podcast, he tried to escape 4 times from his father, who was also a poor farmer.

He was in Korea, so he winds up escaping the fourth and final time to Seoul.

But there's just something about these poor, determined young boys, something inside of them that just tells them, I have to get out of here and I have to do it now, even with great risk.

It's not like They're leaving with a giant safety net and in Jay's case, he's got $5, but he's now got a trade and he's got a brain.

So he gets hired by this guy named Snyder Snyder and hires Jay and a couple other boys that are surveyors.

He's served hires him to survey and make a map.

The importance of maps and understanding terrain are central to understanding why Jay was so successful at what he did.

And I'll go into a lot more detail later.

But in this case, Snyder is going to wind up hiring him for a job he cannot pay them for.

Snyder finally admitted to Jay and Peter, which is another young surveyor, that he was yet again bankrupt and could not pay them, pay the money that he owed them.

And so Jay and Peter are like, OK, that's fine.

In lieu of their salaries, Jay and Peter took Snyder's rights to the map and then brought in another useful surveyor by the name of Oliver as a third partner.

Unlike his partners, Jay did not have any ready cash.

So then he hired himself out to his partners at a rate of $30 per month and at the time at the same time agreeing to a reduced share of the proceeds from the map.

So instead of them splitting it 3 ways, 33, 33, 33, they're going to both take 40.

And then his partners are describing Jay at this point in his life, which he He's like this his entire life till he dies.

Jay Gold was all business in those days as he is now.

So that's his partner describing him 4 decades after the fact.

Why, even at mealtimes, he was always talking maps.

And my thought, remember, the book starts out saying Jay was a workaholic, right?

They were describing him, you know, the 50, 40-year-old Jay, the Jay that was running railroads.

But he had those traits even when the opportunity was so much smaller than a transcontinental railroad.

At 1 time, Jay owns like, I wanna say like 1 9th, anywhere from 1, I've read different things, but anywhere from 1 9th to 1 15th of all the the miles of railways in the in the United States which is remarkable considering where he is right now in the story.

Well, even at meal times, he was always talking maps.

He was a worker and my father used to say, look at this gold, isn't he a driver?

3 months later, when they finished the map, the partner settled up and Jay walked away with $500 as his share of the proceeds.

And so his friends at the time, and many of these friends, he kept for his entire life, which the author also brings up the point of it was like, oh, he hated people.

He's like, well, you're not paying attention.

Like he had These like poor farmer boys, in many cases, never moved away from where they grew up.

Jay would go back and visit them, and they would maintain relationships for his entire life.

So I think what the author's doing, which is really beneficial, is just saying, hey, people are complicated.

If you wanna paint somebody with a broad brush, you're just accepting inaccuracies.

That may simplify the way you think about them, but it's a very incomplete picture of a human being.

But they're talking about, even at this time, they're like, oh, this dude is, he's not normal.

So it says Jay stated to his friend remember he's at this point 16 I think Jay stated to his friend that it was his belief that happiness consisted not in indulgence But in self-denial he would routinely shun drink just as he did tobacco Games or the habit of swearing and he would also constantly just like Rockefeller Mention at a young age, Rockefeller stopped doing this when he was older, so did Jay, that I'm determined, my destiny is to be wealthy.

I am determined to use all of my best energies to accomplish this life's highest possibilities, he said.

I am determined to use all of my best energies to accomplish this life's highest possibilities.

When he was a teenager, in addition to teaching himself surveying, he also taught, learned how to do bookkeeping.

So he's going back and forth, just looking for all kinds of opportunities.

His father owns like this small, like he traded his farm for like this tin store.

These books revealed his father's dismal finances.

Despite all of this, Jay remained optimistic for himself in the long run.

And he said so much to his friend Crosby 1 night.

Jay announced suddenly, Crosby, I'm going to be rich.

I've seen enough to realize what can be accomplished and I tell you I am going to be rich and his answer to Crosby's follow-up question is actually really smart when Crosby asked by what method would gold become rich J answered.

And so his first step is like, well, I just made 500 bucks creating a map.

There's clearly demand in this area for my surveying skills.

Why don't I just do instead of getting hired by Snyder and Snyder going bankrupt and not paying me why don't I just open my own business and the way he moves for being a 17th time the way he moves for being 17 is unbelievable Jay's immediate plan was to undertake his own survey and map of Albany County He had just turned 17 and he sent out letters to prominent men of the county soliciting their subscriptions He then hired 2 assistants whom he instructed in the rudiments of surveying He personally went door-to-door in every township selling advance orders for the finished map He also advertised in the local newspaper to sell even more.

And then look what he does here, which is really, really smart.

He solicited another contemporary, this guy named Simon, who was the publisher and editor of the local newspaper to help promote the map.

A few months earlier, when Simon was seeking to broaden his subscriber base, Jay had sent him $5 as a way to contribute to the cause.

And then a few months later, he asked Simon, he's like, the supervisors ought to encourage the use of maps in the schools in this county.

By buying maps, remember that's exactly what he's making and what he's gonna sell, for each of the school districts.

And he asked Simon, he says, I want you to give me an editorial to this effect.

You must model the editorial over to suit yourself, but it must be as strong as it can be made and come directly from you.

And so think about what's happening there.

Effectively, it is an ad for the product that Jay is making disguised as an editorial.

Because 1 of the things that stuck out for me from James Dyson's autobiography, I think I covered it back on Founders 200, was he said something that was fascinating in how he was able to grow.

At the time, Dyson, he had 1 product, he was selling vacuums, it was only in 1 country, in England, and yet he was able to grow faster than any other vacuum manufacturer in history.

And he talked about that because he relied not on advertising, but on editorials.

And he said that 1 decent editorial counts for 1, 000 advertisements And so that's why he directed his his time and resources and resources He had then was not a lot to getting editorials as opposed to just doing ads himself So while Jay is running this map business and doing everything else, he's like, okay, he's not the kind of person ever does 1 thing at a time.

He's I I'm the book was there were so many times in this book and I mentioned this on the Rockefeller podcast when they talk about all The like the partnership the secret partnership between Rockefeller and gold and how I had read that chapter twice and still didn't understand it.

There's a lot of that in the book because he's just so complex.

He's got so many things going at once and they all kind of like feed into each other.

But even as a young man, he's like, I'm not just going to focus on my surveying business.

There's all this these these contracts, these lucrative contracts, because they're building roads for the first time in this part of the country.

And so Jay gets a contract to build a small road that's linked that's linking these 2 towns.

But there's also other people suing to stop the development.

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#258 Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons