Apr 25, 2022 - Economy

Elon Musk and the ghost of Jay Gould

Photo illustration of a collage of Elon Musk, Jay Gould and political cartoons.

Photo illustration: Shoshana Gordon/Axios. Photos: Hulton Archive, Buyenlarge, Maja Hitij, Bettmann, Patrick Pleul/Picture Alliance via Getty Images

A powerful 1%-er launches a takeover bid for a seemingly irreplaceable communications network, igniting a panic over the power of the super-rich.

The intrigue: No, not Elon and Twitter. We're talking about the notorious Gilded Age financier Jay Gould — who for over a decade starting in 1881 single handedly controlled America's telegraph wires.

Why it matters: While nearly forgotten today, the Gould episode has remarkable parallels to Elon Musk's attempt to seize control of Twitter, putting the current era of American capitalism in stark relief.

  • Gould was a shrewd upstate New Yorker who had already made multiple fortunes — in the railroad industry and on Wall Street — when he set his eye on wresting control of Western Union. The company had a near monopoly over the U.S. telegraph system, controlling 90% of the technology now referred to as "the Victorian internet."

The similarities are eerie. Both men eschewed convention, pushed legal limits and weren't averse to trolling.

  • Gould earned the title "the most hated man in America" for his willingness to dissemble, bribe and manipulate in order to take control of and consolidate railroad lines.
  • While far more popular than Gould ever was, Musk has also bucked the corporate decorum that most executives cling to, picking fights with politicians and repeatedly tangling with the S.E.C.
  • As Richard John, professor of history and communications at Columbia University, puts it: "Powerful figures who are using their notoriety as an asset. That's a similarity between Musk and Gould."

Both Musk and Gould used fame and notoriety to move markets.

  • Mr. Gould's newspaper — he owned the New York World — drummed up bad news and helped send shares of certain stocks lower, before Gould snapped up the shares himself. Just such a campaign — a crusade against Western Union's monopoly power — aided Gould's effort to buy the company's stock on the cheap.
  • In recent years, Mr. Musk's tweets to his nearly 83 million-strong Twitter following have moved prices for stocks and cryptocurrencies almost at will. If he tweets about something favorably — Dogecoin being a prime example — it can result in gobsmacking gains.

Both Twitter and the telegraph are and were politically influential.

  • Western Union magnified its power through a partnership with yet another monopoly, the Associated Press. It carried AP news on its wires, giving it prime transmission positions. Controlling Western Union gave Gould an important role in the flow of information across the country — and this worried people at the time.
  • Likewise Twitter — dumb as it often is — is the de facto epicenter of American public debate. (President Trump showed that mastery over it can be a powerful political tool.)
  • Musk is already one of the largest voices on the service, and his bid to own it outright has some concerned it would simply be too much power for one man to have in a democracy.

What they're saying: "I think both Gould and Musk have a vision of money not just being money, but of being power," Ed Renehan, author of "Dark Genius of Wall Street," a Gould biography, tells Axios.

The bottom line: We shouldn't be surprised to see modern-day similarities to the late 19th century era of outsized business personalities — because we really are living in a second Gilded Age.

  • The parallel between Gould and Musk — to say nothing of Gates, Bezos, Zuckerberg, Brin, et al — highlights how the massive fortunes and inequality of the tech revolution mirror the late 19th century epoch, dominated as it was by industrialists and financiers known as "robber barons."

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