CHAPTER XVIII.

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.