Jay Gould, the Union Pacific Railroad and Value Creation
Financial History, No. 119, pp. 24-27, 39, Fall 2016
Posted: 16 Nov 2016
Date Written: November 15, 2016
No one in United States financial and business history is as misunderstood, and under-appreciated, as the late Jay Gould (1836-1892). There are a number of reasons for this, primary amongst them is that Gould earned a reputation as the most hated man in America. Two early episodes, the Erie Railroad war and Black Friday when he conceived an audacious scheme to corner the nation’s gold supply in 1869, did much to create the image of Gould as a ruthless, unprincipled Wall Street renegade who seemed always to skirt the letter of the law. However, there was much more to Jay Gould than this. Maury Klein’s biography demonstrates in detail how, following the famous Panic of 1873, Gould’s entry into the management of the then floundering Union Pacific Railroad (UP) marked the beginning of Gould’s emergence as a businessman and economic developer of the first rank. This article opens with a profile of Jay Gould, and then highlights the value he created at the UP. Significantly, the U.S. economy was both in a major depression and generally deflationary during most of the time that Gould controlled the UP. Next, practical insights into how Gould created value are presented and framed in a way applicable to modern-day corporate executives, Boards of Directors and investors.
Keywords: Jay Gould, Railroad History, Financial Strategy, Value Creation
JEL Classification: G32, L10, L21, L26, M10, M21
Suggested Citation: Suggested Citation