THE GREAT FORTUNE AND ITS INHERITORS.
Five days after the death of Jay Gould, the contents of his will, or
at least the substance of it, were made public in the press. The will
itself remained under lock and key in the safe of ex-Judge John F.
Dillon, counsel for the executors.
“The original will,” said ex-Judge Dillon, in giving out the summary,
“is dated December 24, 1885, during the lifetime of Mr. Gould’s wife.
It made various provisions for her benefit which failed of effect by
reason of her death before the death of her husband. After and in
consequence of her death, Mr. Gould, on February 16, 1889, executed the
first codicil to his will, making such changes as became necessary. A
second and a third codicil were executed on November 21, 1892.
“Taking the wills and codicils together the summary I give you is
accurate and complete.”
The specific legacies came first. The three sisters, who with their
brother Abraham got $25,000 and an annuity of $2,000, were Mrs. Sarah
Northrup, Mrs. Anna G. Hough and Mrs. Elizabeth Palen. Mrs. Northrup
and her daughters received in addition the three lots of ground in
Camden, N. J., on which their dwelling is erected. The annuities were
to be paid in equal sums quarterly.
To his daughter Helen M. Gould he gave in fee-simple absolute the house
in which he lived, No. 579 Fifth avenue, and all of the furniture,
books, paintings, statuary, silver plate and household contents
therein. He also gave to his daughter Helen, until his youngest child
shall arrive at age, the use of his residence at Irvington, commonly
called Lyndhurst, free of taxes, and of all the furniture, books,
paintings and household contents therein, and also the sum of $6,000
per month. The will stated that this was done in the expectation that
his minor children, Anna and Frank J., as well as his son Howard, would
during the period provided for make their home with his daughter Helen.
The $500,000 to his namesake and grandson, Jay Gould, son of George J.
Gould, was to be held in trust by George J. Gould, with authority to
apply the same to the support and education of the child, and to pay
one-quarter of the same to him at the age of twenty-five, one-quarter
at the age of thirty and the remaining half at thirty-five, with power
to pay the same at earlier periods in the discretion of his father.
The bequest to his son George J. Gould was in substantially these words:
“My beloved son, George J. Gould, having developed a remarkable
business ability, and having for twelve years devoted himself entirely
to my business, and during the past five years taken entire charge of
all my difficult interests, I hereby fix the value of his services at
$5,000,000, payable as follows: Five hundred thousand dollars in cash,
less the amount advanced by me for the purchase of a house for him on
Fifth avenue, New York City; $500,000 in Missouri Pacific 6 per cent.
mortgage bonds; $500,000 in St. Louis, Iron Mountain and Southern
railway company consolidated 5 per cent. bonds; $500,000 in Missouri
Pacific railway trust 5 per cent. bonds; 10,000 shares of Manhattan
railway stock; 10,000 shares of Western Union stock, and 10,000 shares
of Missouri Pacific stock--all to be taken and treated as worth par.”
He appointed as executors and trustees of his will his sons George
J. Gould, Edwin Gould and Howard Gould, and his daughter Helen M.
Gould, with a provision that in case a vacancy should occur by death
or otherwise his son, Frank J. Gould was to be an executor and trustee
when he shall have reached the age of twenty-one years, and in case
of another vacancy he appointed his daughter Anna Gould, to fill such
vacancy when she shall have reached the age of twenty-one years, no
bonds to be required.
George J. Gould and Helen M. Gould were appointed guardians of Anna
Gould and Frank J. Gould during their minority.
All the rest of his estate was devised and bequeathed to the said
executors and trustees in trust; first, to divide the same into six
equal parts or shares and to hold and invest one of such shares for
each of his said children, George J. Gould, Edwin Gould, Howard Gould,
Frank J. Gould, Helen M. Gould and Anna Gould, with authority to
collect and receive, pay and apply the income thereof to each child
for life, with power to each to dispose of the same by will in favor of
issue, and in case of death without issue the share of the one so dying
to go to the surviving brothers and sisters and to the issue of any
deceased child, share and share alike, per stirpes, and not per capita.
He directed that these trusts should be kept separate and distinct, and
that the accounts thereof should be kept separately; that no deduction
should be made by reason of any gifts or advancements heretofore made
to or for any of his children.
In case of difference of opinion among the executors and trustees as to
holding and retaining securities or investments in managing the estate,
he directed that so long as there shall be five executors and trustees
the decision of four should be conclusive, and when four the decision
of three should be conclusive, with this further provision in the
codicil of November 21, 1892:
“The better to protect and conserve the values of my properties, it is
my desire, and I so direct and provide, that the shares of any railway
or other incorporated companies at any time held by my executors and
trustees or my said trustees, shall always be voted by them or by
their proxies at all corporate meetings as a unit; and in case my said
executors and trustees or my said trustees do not concur as to how such
stock shall be voted, then, in view of the fact that my son George J.
Gould has for years had the management of my said properties, and
is familiar with them and with other like properties, I direct and
provide that in such event his judgment shall control, and he is hereby
authorized and empowered to vote the said shares in person or by proxy
in such manner as his judgment shall dictate.”
There was the usual provision that the property of his daughters was
for their sole and separate use, free from any estate or control of
their husbands, and prohibiting all dispositions or changes by any of
the legatees by way of anticipation or otherwise.
There was a provision that if any of his children should marry without
the consent of a majority of the executors and trustees, then the share
allotted to such child should be reduced one-half and the other half
of such share should be transferred to such persons as under the laws
of the state of New York would take the same if the testator had died
intestate.
Who were the witnesses to the Gould will was not divulged by ex-Judge
Dillon; nor was it known who drew the will. Judge Dillon said that he
didn’t. It was thought probable that Gen. Swayne, who was formerly in
partnership with the judge, was the man, but he declined to say. There
were many who believed that Gould himself drew the will. A gentleman
who knew Mr. Gould very well said:
“From what I know of Mr. Gould, however, I believe he drew it himself.
He was naturally a very secretive man, and any important undertaking
he kept to himself as much as possible. He was an able lawyer, and
certainly had sufficient knowledge to have made the will.”
In spite of Mr. Gould’s great interests his executors found his affairs
in very trim shape. Something less than two years ago, in conversation
with Mr. Connor and Mr. Morosini, Mr. Gould remarked:
“If I should die to-night my affairs are in such shape that my
executors could straighten everything out in less than forty-eight
hours after my death.”
Many different estimates have been made of the amount of the fortune
of Jay Gould, but nothing has ever been told by him, nor did the will
reveal anything definite about it. Little difference does it make
whether it was $70,000,000 or $170,000,000, so long as it was the
greatest that ever one man accumulated in his lifetime.
Mr. Gould never intended that anybody should know while he was living,
and he saw that his wishes were carried out in the matter. Sixty
millions is the figure most frequently mentioned, but generally as a
minimum, with a round hundred millions as the other limit.
The New York _Tribune_ published the following estimate of his fortune
the morning after his death, and it is probably as accurate as any that
can be made without access to the will and the records themselves:
“There is considerable divergence in the opinions of men who are
acquainted with Mr. Gould’s affairs as to the value of the estate which
will fall to his heirs. Although his investments have been known to
be in certain distinct lines, the reticence of Mr. Gould with regard
to many of his transactions has left a considerable margin between
maximum and minimum estimates. The character of many of the securities
which are his is also so unsettled that there is room for an extreme
range of estimates. First in the list of his investments are Western
Union and Manhattan, and there is little doubt that his holdings in
these two properties aggregate from $35,000,000 to $40,000,000 market
value. Of Missouri Pacific stock he may have held from $9,000,000 to
$11,000,000, and at current prices the value of his holdings of this
property probably reached $5,000,000. The Missouri Pacific system is so
complicated with bond issues that it is difficult even for his friends
to make a trustworthy guess as to his possessions of the various issues
of bonds. Counting in the St. Louis and Iron Mountain issues, the
different bonds of the various lines embraced in the Missouri Pacific
system and the consolidated issues on the system were held by Mr. Gould
to the extent of $20,000,000 or more in market value. He was credited
with holding about 220,000 shares of Western Union stock and something
like 110,000 shares of Manhattan. At the recent Stock Exchange figures
the value of these two interests may be conservatively placed at
$36,000,000. Mr. Gould’s investments in Wabash are large, but their
market worth is not commensurate with the par value. It would be a
generous estimate to place these holdings at a value of $10,000,000.
The same amount may represent Mr. Gould’s holdings of the securities
of the Texas and Pacific railway. It is difficult to say how largely
he was interested in Union Pacific securities, but he was a holder of
about $2,000,000 collateral trust notes of the Union Pacific, taken as
security for money advances.
Mr. Gould was never known as a large investor in government bonds. He
is said, though, to have subscribed liberally to the debenture bonds
of the New York Central. A mass of miscellaneous securities must be
counted in the aggregate, including bonds of coal properties on the
line of the Missouri Pacific, southern ventures and a host of bonds and
stocks of varying degrees of worth and promise.
The possessions of Mr. Gould at Irvington-on-the-Hudson and his home
in this city may be estimated at $1,000,000. Far more than this amount
has been invested in the two properties, the decorations of the
Fifth avenue house and the extensive conservatory alone commanding
the expenditure of important sums. It is also said that Mr. Gould
owns considerable real estate in the West. He is understood to have
considerable property in St. Louis which is productive, and he is
believed to have made purchases of improved property in Chicago after
the World’s Fair enterprise became assured of success. But much of his
real estate investments in Texas and other parts of the Southwest, and
in Southern California, is of a nature that does not yield immediate
returns.
There is an agreement among several men who have means of estimating
Mr. Gould’s wealth that its aggregate value may be placed around
$100,000,000. A few estimates carry the value higher, while the
conservative view would put the sum at $80,000,000 or $90,000,000.
Russell Sage estimates his friend’s estate at $100,000,000, but
Washington E. Connor is said to have placed his estimate at a
considerably smaller figure. Another man, who has some knowledge of
Mr. Gould’s affairs, stated that Mr. Gould had an annual income of
$5,000,000, and that, considering the character of much of the property
held by Mr. Gould, it was safe to say that this income must be based
on a principal of $100,000,000 or more. Allowing for the difference
in estimates made by those persons who should know the facts, it is
believed that the following table presents to as close a degree as is
possible the current value of the Gould estate, and of its principal
constituents:
_Holdings._ _Estimated
Value._
Western Union stock $22,000,000
Manhattan stock 14,000,000
Missouri Pacific stock 5,000,000
Missouri Pacific system bonds 20,000,000
Union Pacific stock 5,000,000
Union Pacific bonds or notes 2,000,000
Wabash stock 3,000,000
Wabash bonds 5,000,000
Texas and Pacific stock 5,000,000
Texas and Pacific bonds 5,000,000
Other securities 10,000,000
Real estate, etc. 4,000,000
------------
Total $100,000,000
Estimates made by other newspapers and other financiers, however, who
have equally good authorities on which to base their opinions, vary all
the way from $50,000,000 to $150,000,000.
In calculating the amount of Mr. Gould’s estate, the first difficulty
met with lies in the fact that the records of his various companies
by no means tell the story of his holdings in their securities. More
even than many of his rivals, he has followed the policy of getting
along without going through the formality of letting the extent of his
ownership appear on the books of the companies. Besides, although he
reduced the number of his investments in the last few years--at least
the street says he did so--he had interests extending over a wide field.
In only one branch of investments did Mr. Gould do very little, and
that was in real estate. His possessions of real property were far
smaller than those of many men not one-tenth as wealthy. He had his
place at Irvington which represents $750,000 to $1,000,000, and his
Fifth avenue house, worth $300,000 to $400,000. Several years ago he
bought real estate in St. Louis, which the Missouri Pacific expected
to use for headquarters. He paid $150,000 for this piece of property,
which is supposed to be worth three times that amount now.
In spite of his policy of concentrating his holdings in his later
years, the list of companies in which Mr. Gould had large interests is
an imposing one. The principal corporations with which he was connected
at the last include the Missouri Pacific railroad, the St. Louis and
Iron Mountain, the International and Great Northern, Richmond Terminal,
the Texas Pacific, the Union Pacific, the Wabash, the St. Louis
Southwestern, the Manhattan Elevated road, the Pacific Mail Steamship
Company, and the Western Union Telegraph Company.
Moreover, these corporations cover scores of smaller and subordinate
companies. Through Missouri Pacific Mr. Gould was interested in
something like fifty companies, and the other great systems would run
the list of the subordinate concerns up into the hundreds. As president
of the Union Pacific, Charles Francis Adams once testified that he did
not know how many presidencies he held, and Mr. Gould would have had an
excuse several times better than Mr. Adams possessed for not having at
his finger ends the number of concerns with which he was connected. At
his office yesterday nobody would venture to say what the list would
foot up.
Mr. Gould was president of the Missouri Pacific, the Manhattan
Elevated, the Texas Pacific, the St. Louis and Iron Mountain, the
International and Great Northern, and a director in Richmond Terminal,
Western Union and Union Pacific. He is credited with a control of the
stock of the elevated road and a large amount of its bonds; with the
largest individual holding in Western Union stock, besides stocks and
bonds of its leased lines; a control of Missouri Pacific stock and
large amounts of its bonds, particularly the new issues of fives;
a large block of Wabash, the amount at times running up to 40,000
shares; an interest in Union Pacific, including, perhaps, 1,000,000 of
the collateral trust bonds; heavy investments in the other lines known
as Gould properties; a block of New York and Northern securities, and a
control, with Russell Sage, of the St. Louis Southwestern.
In Wall street the Gould will was accepted with something akin to a
vote of thanks. The satisfaction was in the fact that there was to
be no partition sale, with the flinging upon the market of such a
batch of easily affected stocks as Jay Gould had gathered. Even a
partition of the securities in the will would have made many owners and
possibly clashing of interests, where now one hand would cast the vote
represented by this enormous aggregate of stocks. This voting power
would rest absolutely and individually with George, and would make him
even more than his father a power in Wall street, at least for a time.
Just now he is getting open praise even far beyond what appears in the
will of his great business ability. Some who know him by his acts say
that his weak points are his combative obstinacy and his penuriousness.
Stories upon stories are told of his miserly disposition, but they
come in large part from roysterers who looked upon the eldest son of
Gould as under some sort of obligation to put up the cash for their
festivities when out in company. George did nothing of the sort, but
had a sharp account for each penny expended, and kept himself posted in
prices of things from the highest to the lowest grade. He has not his
father’s slow-moving anger so easily set aside for future use when an
enemy was to be crushed. Instead, the young man is apt to flare up and
show his hand to his own detriment.
When it comes to the fighting to hold his own against competition,
which will be necessary in all of the properties left by the
multi-millionaire, George will be met by a warfare entirely different
from that directed against Gould senior. The fact that all the
wealth, so to speak, is left in one pile, simplifies the war for its
possession, and from this time on George Gould will be one of the best
watched, best courted and very soon best hated men in America. His
training has been a very narrow one. He has not studied finance in any
large school. Schooling of any sort has been distasteful to him, and
while not positively illiterate, he has no taste for books even on
financial questions, but has a tremendous head for figures and loves
plenty of bustle in his work.
The lack of charitable bequests did not surprise Wall street, but
there was no dearth of comment on the matrimonial board into which
four of the children have been constituted, with the two Mrs. Goulds
as _ex-officio_ advisory members. Bets were offered that if the other
members of the household attempted to act as a committee of the
whole when an engagement was to be announced, that in some shape the
intervention of lawyers would be necessary, and all the possibilities
of this selection of bride and bridegroom by arbitration were
discussed. As it stands now, an obstinate love match without family
consent may cost Howard or Frank, or Helen or Anna, a round sum of
nearly $8,000,000, and put this amount into the other five pockets of
the present sextette.
The death of Jay Gould leaves vacant the presidency of the Missouri
Pacific railway, the Texas Pacific, the International and Great
Northern and Manhattan Railway Company. George J. Gould, it is
expected, will take his father’s place in these companies. In the
Western Union company no position becomes vacant, except that of a
membership of the board of directors.
George Gould is president of the Pacific Mail Steamship Company. He
is first vice-president of the Manhattan railroad and of the Texas
Pacific. He is second vice-president of the Missouri Pacific and the
St. Louis and Iron Mountain road. He is a vice-president of the Western
Union Telegraph Company, and a member of the executive committee
of its board of directors. He is a director in the Wabash and the
International and Great Northern. He is a member of the Stock Exchange.
Edwin Gould, the second son, has a shorter list of offices. He is
president of the St. Louis Southwestern, a director in Western Union
and a member of the executive committee, and a director in the
Manhattan and Missouri Pacific railroad companies. He has done some
very successful work in finance, and has been counted a very shrewd
operator from the beginning of his business career. The story is told
of him that when he was starting out in money-making his father
decided to test his mettle, and was highly delighted when the youth
came out of the conflict with flying colors. Edwin Gould is a member of
the Consolidated Exchange.
Howard Gould, the third son, is getting his first experience in
business. He has been given as a start a seat in the directorate of the
International and Great Northern Railroad Company.
Considerable interest attaches to the liability of the Gould estate for
the payment of an inheritance tax. While the terms of the will are of
course not known, and the question of public bequests is not settled,
the Wall street idea is that such bequests, if they exist, are not
likely to cut into the total to any appreciable extent. Under the laws
of 1892 property bequeathed to Mr. Gould’s children will be liable to a
tax of 1 per cent. Section 2 of chapter 399 says:
“When the property or any beneficial interest therein passes,
by any such transfer, to or for the use of any father, mother,
husband, wife, child, brother, sister, wife or widow of a son, or
the husband of a daughter, or any child or children adopted as such
in conformity with the laws of this state, or to any person to whom
any such decedent, grantor, donor, or vendor for not less than ten
years prior to such transfer stood in the mutually-acknowledged
relation of a parent, or to any lineal descendant of such decedent
grantor, donor, or vendor born in lawful wedlock, such transfer
shall not be taxable under this act unless it is personal property
to the value of $10,000 or more, in which case it shall be taxable
under this act at the rate of 1 per centum upon the clear market
value of such property.”
The next section makes the tax a lien upon the property until it is
paid. The tax is to be collected by the controller of the county.
Payment within six months gives a discount of 5 per cent.; if it is
not made in eighteen months a penalty of 10 per cent. is provided. The
controller’s fee is 5 per cent. on the first $50,000 of the tax, 3 per
cent. on the second $50,000, and 1 per cent. on the rest. The balance
of the tax is to be paid into the State Treasury.
A tax of 1 per cent. on the estate should yield from $650,000 to
$1,000,000, according to which of the limits on the estimate approaches
the real valuation. The controller accordingly would figure on a fee of
from $8,000 to $13,000.
It was said at the corporation counsel’s office that if it shall be
proved that Mr. Gould has left his personal property, especially his
railroad interests, in hands of trustees for a term of years, the
interest to go to his children, the fact that the estate is in the
hands of trustees cannot prevent the state from levying and collecting
the inheritance tax.
Said one of the assistant corporation counsels: “If Mr. Gould could
by the terms of his will, by deed or gift or otherwise, make such a
disposition of his estate as to render the law in such cases nugatory,
his children and heirs to the remotest generation, when they came to
devise their property, could do the same thing, and the estate would
thus be perpetually barred of its rights. I believe that the personal
estate that Mr. Gould has left for the benefit of his children, no
matter in what form, is taxable at 1 per cent. All property left out
of lineal descent would be taxed at 5 per cent. on its clear market
value.”
In spite of Jay Gould’s many millions, he was down on the tax-lists for
very modest amounts. He seems to have had as much ability in keeping
down his taxes as in piling up his millions. Despite his immense
accumulations, he paid taxes on only $500,000 in personal property. The
real estate on which he paid directly was confined to the Grand Opera
House, of which he was the owner, and to his home on Fifth avenue. At
one time he also paid the taxes on his son’s home on East Forty-seventh
street, but after that formally passed out of his possession he was, of
course, relieved from paying any further taxes on that property.
Notwithstanding the very conservative estimate placed upon the value
of his personal holdings, Mr. Gould tried, a few years ago, to escape
paying any personal taxes at all in this city. He urged the familiar
plea of outside residence, and because he paid personal taxes in
Westchester county on his belongings at his country home at Irvington,
insisted that he was being unfairly treated in being compelled to pay
even on that supposititious $500,000 of personal property in this
city. He did not press the matter, however, and continued to allow his
personal property to be placed on the tax-list at $500,000.
Commissioner Baker, of the tax department, said that it was impossible
to tell just what Mr. Gould’s holdings in real estate in New York
really amounted to.
“Real estate,” Mr. Baker explained, “is entered on the books of the
tax department by number only. The only way to get any idea there as
to the ownership of a piece of property is to see who paid the taxes
on it. According to this test, the real estate on which Mr. Gould paid
taxes in New York is confined to his residence. The Manhattan Railroad
Company is a large holder of real estate, but the company pays its own
taxes, of course, and the only place Mr. Gould’s name appears on the
tax department books is in relation to his residence and the admitted
$500,000 of personal property.”
Ex-Tax Commissioner Coleman added the opera house property to the list
that Mr. Gould paid on personally.
“The peculiarity of the matter,” said Mr. Coleman, “is that Gould was
never really in business in New York City. His wealth was very largely
in stocks that had no particular value by themselves and that were not
even on the market. He made his money by taking hold of almost bankrupt
companies, getting control of the common stock that had no particular
value beyond its voting power, and then by manipulating things to his
own interest.
“Besides, his various railroad stocks, like the Union Pacific, Wabash,
Texas and Kansas Pacific, were not assessable. The bonds that were
assessable were generally those of roads that had been reorganized
and reorganized till any estimate of value became a pure matter of
guesswork. Then he could come in and swear down the valuations.”
The tax commissioners are compelled to take any man’s affidavit as to
the value of his personal property, and, as Commissioner Baker put
it, “Where it’s a question of dollars and cents, we find every man’s
conscience becomes rather pliable.”
Mr. Gould seems not to have cared to pass as an exception to so
well-established a rule, and hence the modest estimate he placed on his
earthly possessions for the purposes of the tax collector. As a result
of this trustful feature of the assessment laws, $25,000 a year is said
to be an ample estimate for the entire amount of annual taxes Mr. Gould
paid on his variously estimated millions.