American Rascal : How Jay Gould Built Wall Street's Biggest Fortune by Greg Steinmetz.

On April 5, 1882, Theodore Roosevelt stood in the New York State Assembly and demanded an investigation.

The indignant 23-year-old accused a clique of ''swindlers,'' ''wealthy stock gamblers,'' men whose financial dishonesty is a matter of common notoriety,'' of corruptly monopolizing New York City's elevated railroads. The plot's mastermind, he implied, was Jay Gould.

Three cheers for the bad guy. The villain seizes control of the story, scheming, lying and betraying to get what he wants. And Jay Gould, the subject of Greg Steinmetz's concise new biography, '' American Rascal, '' makes an excellent villain.

AND JAY GOULD, the subject of Greg Steinmetz's concise new biography, 

'' American Rascal, '' makes an excellent villain. Endlessly resourceful, utterly self-interested, he authored ''the blackest pages in the history of American railways,'' to quote his obituary in The St. Louis Post Dispatch.

Cartoonists drew him as a black-hearded spider, laying traps in the web of rails and wires that wrapped the country.

But here's the strange thing : Roosvelt denounced Gould primarily for his use of a '' fraudulent corporation, '' the Manhattan Elevated Railroad.

Why did he call it fraudulent? It was a holding company. It issued stock without building anything. Today, of course, holding companies are common. Corporations that build nothing are worth billions.

In the chasm between his morality and ours, we find what's really interesting about Gould's buccaneering.

The controversies surrounding him crystallized the debate over the nature of a financial order that we now take for granted. The rise of the corporation in the 19th century introduced an unprecedented degree of abstraction to economic life.

As Americans puzzled out this invisible universe of artificial beings and intangible assets, they developed some fears we still share, but they had other concerns that seem counterintuitive. Strange as their arguments sound, they reveal the origins of our world.

When Gould was born - prematurely, Steinmetz notes - on a farm in upstate New York in 1836, Americans saw corporations as a form of government intervention. 

States chartered them with special acts, one by one, to induce investors to build facilities for economic development : turnpikes, bridges, canals, railways, banks. Jacksonian Democrats complained that this was a giveaway to a favoured few, granting '' special privileges '' like limited liability, sometimes even monopoly rights.

By the time Gould left the farm to become a store clerk, surveyor, then tannery entrepreneur, general incorporations laws had made corporations more common, but most were small and closely held. Before the Civil War, the New York Stock Exchange traded shares and bonds one at a time. After lunch, the brokers ran through the entire list again.

'' There are magician skills to be learned on Wall Street, and I mean to learn them,'' Steinmetz quotes Gould as writing. As Southern states seceded, the magician apprentice arrived in New York, propelled by a passion for wealth.

That sent him toward railroads. Created to solve the problems of transportation in a vast republic, they brought bigness to the corporation. Their hunger for capital forced them issue large quantities of publicly traded bonds and stocks.

Gould grasped how they created a financial market big enough to make a trader rich, yet small enough to be manipulated. In 1867, he maneuvered onto the board of Erie Railroad, one of the four U.S. lines that crossed the Applachians, connecting the Atlantic coast to the interior.

He befriended another director named Jame Fisk, his flamboyant opposite. Fisk was part clown, part lion tamer and all impressario, hiding his intelligence behind flash as Gould masked his beneath a reserved manner.

In 1868, the pair crafted outrageous machinations to defeat an attempt by Cornelius Vanderbilt to corner Erie stock.

They illegally printed huge quantities of new shares, fled to New Jersey just ahead of the police, and finally Gould bribed the New York State Legislature en masse to legalize their stock issue. Vanderbilt accepted repayment of his losses and gave up.

There's no formula for biography. Authors all bring their own interests, their own questions, their own craft to the keyboard.

But every biography must must convince the reader of its truth, or it is another kind of writing entirely. DeVoto spoke to this necessity. Figures like Fisk and Gould deserve examination, he wrote, but ''in biography that must be hard-minded, ..... factual and documented to the last comma.''

Finance may drift into the ether, but not studies of financiers.


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