However, Pratt does seem to have employed Gould in writing some other things, such as speeches and important letters. As Gould’s sister Bettie would tell her daughter not long after Jay’s death: “The famous speech that Col. Pratt delivered before an Agricultural Society–if I remember rightly–in Kingston, was written by your Uncle Jay. The Col. paid him something for it. Everyone wondered at the time that he [Pratt] was equal to such a speech. All the papers quoted from it at the time and commented on the wisdom of the author.” Bettie remembered Jay reading the draft speech–on the topic of the horse as a beast of labor–aloud to herself and their father at the tin shop, and John Burr Gould making a few suggestions for additions “which [ Jay] made in the way of interlining, and then afterwards rewrote it. . . . Your uncle wrote other things for [Col. Pratt]–a number of them.”9 According to Jay’s friend Peter Van Amburgh, Pratt paid Gould a hundred dollars for the Kingston speech alone, this at a time when the average wage for an eight-hour day stood at one dollar.10
But Jay’s goal was not to be Pratt’s high-priced ghostwriter or secretary. He had been energized by George Northrop’s tales of tanning. He also knew that Pratt himself had invested in the Aldenville area of Pennsylvania as early as 1849. Working from this foundation, Gould sought to interest Pratt in starting yet another tannery operation. Jay said he believed there was promise in the as-yet untouched tracts of hemlock rumored to lurk between the Lehigh and Delaware Rivers in Pennsylvania’s Luzerne County. Not only did the content of those forests sound ideal, he told Pratt, but the recently constructed Delaware & Lackawanna Railroad also offered an advantageous and heretofore unavailable avenue for shipping raw pelts and finished sole leather in and out of the Pocono wilderness. (The importance of the Delaware & Lackawanna was not lost on Pratt, who in 1847 had personally subscribed $10,000 to subsidize the building of the Hudson River Railroad, by which he subsequently speeded his tanned leather to Manhattan.)
Commissioned by Pratt to investigate the possibilities, Gould traveled to the Poconos in early August. There he hiked through the woods for several days, carrying a compass and some surveying gear, until–jubilantly–he found what he was looking for. Gould took Pratt to the site a week later and showed the old man vast vistas dominated by hemlock and alder as far as the eye could see. Convinced, Pratt on the spot formed a 50-50 partnership with the enterprising young man who dreamed of great things.
They were an odd couple. Pratt was tall, old, and prosperous. Jay was short, young, and hungry. The contract between them no longer survives; its precise terms are unknown. But one can make reasonable assumptions. Pratt’s main contributions to the enterprise were to be his expertise and his capital, while Gould’s was to invest his youthful energy. In letters, Pratt made it clear that day-to-day responsibility for the operation–into which he would eventually sink as much as $120,000–was to be Jay’s and Jay’s alone. Pratt would be available for consultation and advice. He would answer all questions as to how to set up and manage the plant, acquire raw pelts, and market the finished leather. But Jay was the man who would have to make things happen on the ground.
Later that month, Gould bought property for the tannery on the banks of the Lehigh. He also struck deals with local landowners to take the bark from their trees. At the start of September he brought in some fifty workers and commenced clearing land. According to Gould’s own account, prepared for his senior partner, he personally chopped down the first tree and then supervised its slicing into boards for the tannery’s first structure: a blacksmith shop. Gould spent his initial night in the woods sleeping on a bed of hemlock boughs under the shelter of the blacksmith shop’s newly raised roof. Four days later, Jay and the crew finished constructing a dormitory–rude but large, and capable of accommodating everyone comfortably. By way of dedication, the rough band of laborers gave a round of cheers for their diminutive but popular boss, passing by acclamation a motion that the place thereafter be named Gouldsboro. Reporting this to Pratt, Jay hastily added, “Three hearty cheers were then proposed for the Hon. Zadock Pratt, the world renowned Great American Farmer, and a more hearty response I am certain this valley never before witnessed.”11
Privately, Jay, not yet twenty-one, must have been more than pleased. Great-grandfather More had settled Moresville. The Palens had their Palenville, and Pratt his Prattsville. How could the notion of Gouldsboro not have been satisfying to the boy who had always worked so hard, the boy–now a man–who was finally making some headway in the world?
Chapter 8
OUR BEST FRIENDS TELL US OUR FAULTS
AT THE START OF THEIR ENTERPRISE, the relationship between Pratt and Gould was that of accomplished sage instructing and nurturing a grateful, even doting, student. Jay seems at first to have sincerely welcomed the steady stream of advice, instructions, and prompts that flowed from Prattsville. “I am much obliged to you for all your suggestions,” Jay gushed to Pratt on Christmas Eve. “I find them a good dictionary.”1
Gould was completely submissive when Pratt informed him that the pelts for tanning, and all of Pratt & Gould’s finished leather, were to be acquired and disposed of through the Manhattan brokerage of Corse & Pratt, a firm half owned by Pratt’s son George. And he acquiesced immediately when Pratt, a compulsive tinkerer always exploring new tools and approaches, decided the Gouldsboro plant should be the first in the nation to perfect a new tan-ning technique of which he’d recently read in a trade journal. The wet-spent tan-bark process called for the large chunks of wet refuse bark, normally discarded in traditional tanning, to be burned as fuel. Given this resource, the Gouldsboro tannery could, in theory, run on steam rather than waterpower, thus avoiding the seasonal annoyance and delay of an iced river. But first, an efficient method for burning had to be devised.
Jay and his men remained industrious throughout the winter. A second dormitory went up along with a barn, a wagon house, a post office, and four family homes. The last were built in anticipation of experienced senior tanners–men possessing arcane skills of which Jay was entirely ignorant–whom Pratt would recruit and send in time for the spring start-up. Most of the actual tanning facilities stood ready by February 1857, at which time the first hides arrived from Corse & Pratt. By March, several tanners were busy overseeing the laborers. At first called upon to be carpenters, now the men of Gouldsboro transformed into cogs of the tanning machine, each learning to harvest hemlock bark, prepare hides in sweat pits, and perform other skilled tasks.
Gould was little interested in these details. He preferred to occupy himself with logistics. In his detailed letters to Pratt, he itemized and explained his organization of the tannery’s inventory system and cash accounts. Interestingly, Jay also made certain to report several exercises outside the direct realm of business that mimicked Pratt’s numerous paternalistic ventures in Prattsville. As Gouldsboro grew over the months, and more and more wives and children arrived, Jay led a drive to raise money for a church and cemetery. He also built a school, hired a teacher at his own expense, and made it a requirement that all school-aged children enroll. “Pride in community,” he wrote Pratt, “will inspire and encourage our men to pride and excellence in work.”2
Problems, however, were on the horizon. The start-up phase of the operation, with all its construction, had of course consumed large amounts of capital. Jay regularly had to draw on Pratt for funds. No income whatsoever–let alone profit–could be anticipated until the tannery was operating at capacity. And capacity was to prove elusive for many months as the master tanners of Gouldsboro experimented and labored to refine the wet-spent tan-bark process. (In addition to delays associated with design implementation, the steam engine purchased for the Gouldsboro tannery failed shortly after delivery, as did its manufacturer before a replacement engine could be obtained.) “Although you know far more than any man in the country about these matters,” Gould wrote a bit testily to Pratt in October, his honorifics now tinged with just a hint of sarcasm, “I am inclined to think that my original
suggestion–building a water-wheel as a backup to the more modern plan–may have saved us time, expense and frustration.”3
While his staff dealt with the problems at Gouldsboro, Jay made frequent visits to the leather district of Manhattan, called the Swamp. This part of town–which ran down Spruce and Ferry Streets on the east side, just south of today’s City Hall–had once literally been a swamp: a mosquito-ridden quagmire to which early-seventeenth-century tanners retreated when citizens complained about the foul smells emanating from their shops. During the eighteenth and early nineteenth centuries, as New York became more of a city and tanning moved into the northern woodlands, the Swamp evolved into a row of storefronts and warehouses where buyers, sellers, and speculators dealt in raw pelts and tanned hides. “The Swamp,” Zadock Pratt wrote in 1853, “is to tanners what Wall Street is to financiers.”4 Here leather merchants such as Corse & Pratt kept their offices, as did importers of hides and exporters of leather. Brokers like George Pratt routinely visited the shipping firms, bargaining to get the best-quality hides for their clients at the most competitive prices. The same broker would in turn sell the tanner’s finished leather, negotiating the highest prices possible, all on a commission basis. Often the brokers would as well supply short-term financing to tanners, providing raw pelts on credit and then deducting the cost of those pelts plus interest, together with commissions for buying and selling, from the proceeds of leather sales.
“I’ve come to realize that it is the merchants,” an observant Gould wrote his father during the summer of 1857, “who command the true power in this industry. The tanner appears to take the greatest share of capital, but merely processes that capital, his expenses being extensive, his risk real, and his labor heavy. The shippers deal with the next largest sums, but again have extensive expenses and much work to do. The brokers, meanwhile, take what seems the smallest share but is in fact the largest. Theirs is nearly pure profit made on the backs of the shippers and the tanner, never their hands dirtied.”5 Writing to Hamilton Burhans in September, Jay confided that he went “with George Pratt on his rounds, interested to learn the ways of the leather district. I’m not sure Mr. Pratt enjoys my shadow, but I feel the need to understand these processes. I want to gain a grasp of the bartering, and to meet the men of the trade. I have learned much of buying hides–too much–and look forward hopefully to one day having some leather to sell, should the beasts of steam permit.”6
It was a rough year for the young man to start in the trade. During the summer and autumn of 1857, a financial panic swept the country, ending ten years of boom times in the wake of the Mexican-American War. The immediate event that touched off the Panic was the August failure of the New York branch of the Ohio Life Insurance and Trust Company, a major financial force that collapsed following massive embezzlement. On the heels of this disaster, numerous British investors removed large sums from American banks (this withdrawal raising questions about the banks’ overall soundness). At the same time, a fall in grain prices hurt rural economies, and a pileup of manufactured goods in warehouses led to massive layoffs. With the fall of shipping revenues, several railroads failed, as did a score of western land speculations associated with the rail infrastructure. Thousands of investors faced ruin. General confidence received another shake in September when 30,000 pounds of gold being transported from the San Francisco mint to eastern banks went down with the SS Central America, causing some speculators to call into question the government’s ability to back paper currency with specie. The situation had grown so bad by October that authorities called a bank holiday throughout New England and New York State. Nearly a thousand Manhattan merchants declared themselves bankrupt before the end of December, reporting losses totaling $120 million for that city alone.
Recovery would not come for a year and a half, and the full impact of the Panic would not dissipate until the start of the Civil War. In the meantime, a few shrewd customers found profits amid the ruin. Moses Taylor, president of City Bank, devoured railroad stocks frantically and also used depressed prices as an opportunity to grab control of New York City’s largest gas company. Leonard Jerome, future grandfather of Winston Churchill, became a millionaire almost overnight simply by shorting dozens of stocks in the midst of the disaster. And “Commodore” Cornelius Vanderbilt moved in on several financially troubled rail lines (among them the New York & Harlem) with ferocious swiftness, beginning the process by which he would, within ten years, become a dominant force in American railroading.
While vultures on Wall Street feasted, the Panic reached out in October to take a direct swipe at Gould. During the second week of that month a rumor circulated that Pratt & Gould had suspended operations. Writing to Pratt, Gould described how several suppliers had dunned him for immediate payment of all money owed: “Everybody seems frightened to death. I could have managed to have got along very well had not this report got abroad, & as we have a note due on the 27th . . . I did not sleep a wink last night for fear we cannot meat [sic] it.”7 Ironically, it was into this troubled environment, with prices for everything (including such commodities as leather) falling steadily, that the first tanned hides finally came out of Gouldsboro. Two months later, in December, Jay and his tanners finally got the very last of the bugs out of the wet-spent tan-bark process. Thereafter Pratt & Gould was fully functional, if not yet profitable. Depressed leather prices meant it would take Pratt far longer to get into the black than he had originally planned.
In early 1858, a variety of pressures conspired to disrupt the relationship between Jay Gould and Zadock Pratt. Gould could hardly be blamed for either the slow start of the wet-spent tan-bark method or for the Panic of 1857, but Pratt nevertheless began to reconsider his young protégé. Simultaneously, as Gould learned more and more about the business and became increasingly confident of his own instincts, he began consulting Pratt less often and deferring to him less willingly. A new tension entered the relationship.
Pratt’s formerly encouraging letters now took on a dictatorial style, with Pratt roundly criticizing Gould’s management and bookkeeping. Gould, however disenchanted he had grown with Pratt’s judgment, remained at the financial mercy of his mercurial and increasingly hard-to-please partner, and he responded accordingly to the old man’s criticisms. “I am under many obligations for your good advice & useful suggestions,” he wrote shortly before Christmas in 1857. “There is an old saying in my scrapbook, ‘that it is our best friends that tell us our faults.’ . . . I often read over your letters rainy days and always I think I learn something new from their persual [sic].”8 But he was also becoming his own man. Early in the spring of 1858, in a move he knew Pratt would not like, the twenty-two-year-old Gould broke off relations with Corse & Pratt. His new association with one of the Swamp’s largest and most influential brokerage houses, that of Charles M. Leupp & Company, allowed him to acquire hides and sell leather on better terms than those offered by Corse & Pratt.9
At this juncture the amount of business awarded to Leupp, and lost by Corse & Pratt, was hardly small. Despite what the dissatisfied Pratt continued to classify as Gould’s bungled management, the Gouldsboro tannery was destined to produce no less than 60,000 sides in 1858, a number rivaling the output of Pratt’s old Prattsville operation in its best year. In a September letter addressed to Pratt as “Dear sir” rather than the “Dear friend” to whom Gould had written so often previously, the junior partner happily–and perhaps a bit smugly–informed the colonel that hides were going through the tannery at a rate of 300 sides per day. On the strength of these figures, a grim Pratt–satisfied with the plant’s output, but not with his per-side return nor with the gathering independence of his young partner–continued to advance funds as needed, while also pondering his options.
Zadock Pratt, in his later years, hardly ever spoke of his partnership with Jay Gould. In The Chronological Biography of the Hon. Zadock Pratt–a mistitled 1868 volume that is far more autobiography than biography–Pratt filled page after page wit
h the names of dozens of partners and tannery enterprises. Nowhere did he mention Gould, Gouldsboro, or Pratt & Gould. ( Jay himself commented on the dissolution of Pratt & Gould only once, during Senate testimony many years later, when he summarized the event in one flat sentence: “We carried on the business for a while, and then I bought Mr. Pratt out.”10) That Pratt came away from the partnership feeling ill used can be verified by letters he wrote after the fact, and by the bitter reminiscences of his daughter, Julia Pratt Ingersoll. That Gould robbed and defrauded a guileless and easily bamboozled Pratt–as so many previous biographers have suggested–cannot be proved with the existing documents and seems, when all the facts are considered, highly unlikely.11 The popular folklore of the Pratt & Gould dissolution was first recounted in a potboiler biography published just weeks after Gould’s death. It was then mindlessly parroted in numerous books, most recently in Charles R. Geisst’s Wall Street: A History (1997), in which Geisst states categorically that “Gould had been discovered cooking the books at the tannery . . . and siphoning off funds for some use unknown to his elder partner.”12
The detail of the legend that Geisst and so many other writers have confused with history goes as follows. According to the story, throughout 1858 Gould consistently diverted funds from the Pratt & Gould accounts. As the tale has it, he used some of Pratt’s money to speculate in Lehigh Valley lands and to open his own bank in Stroudsburg, where he subsequently deposited even more Pratt & Gould capital for siphoning into additional side ventures. As Robert I. Warshow put it, “The tannery was doing a rushing business, and was always at capacity. Profits, however, were very small. Then Pratt came on one of his rare visits, and went over the books [which he found to contain] very original bookkeeping.” Elsewhere Warshow added, “Gould . . . had started a private bank in Stroudsburg, and . . . Pratt had caught him using the firm’s funds in its operation.”13 According to Richard O’Connor, who evidently enjoyed a certain telepathy with the dead, “Pratt realized that for the first time in his life he had come across a completely amoral specimen of humanity, a creature as remorseless as a weasel loose in a hen roost.”14 For these reasons, according to the accepted story, a disgusted Pratt announced to Gould during the Christmas season in 1858 that he wished to close their partnership.
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