It was not in the Northwest corner that Smith was ruined, but in it he lost a very large sum, which found its way into Gould’s pockets. Smith was not slow in getting his revenge. The books of the late firm of Smith, Gould & Martin were in his possession, and he handed them over to Mr. Barlow, of the Erie, who quickly discovered in them the evidence on which to obtain an order of arrest for Gould and to establish a suit for the recovery of $12,803,059, the proceeds of bonds converted into stock to the extent of 407,347 shares, which were sold by Mr. Gould’s firm and the proceeds transferred to his pocket. That was the charge, and Gould was arrested and placed under very heavy bonds, which he furnished. Here Mr. Gould’s genius displayed itself. He actually entered into a big speculation based on his restitution of this plunder. Gen. Dix, it should be recorded, remained as president of Erie for only a few months, and was succeeded by President Watson, a man who owed his position mainly to Horace F. Clark, who, as has been seen, was in intimate business relations with Gould. Clark undertook to arrange a compromise between Watson and Gould, and all three evidently united to “rig” the stock market by the operation. One day it was reported that Gould intended to restore his plunder, and the price of Erie advanced with a bound. A day or two later a denial of the report would come, and down would go the price. This was repeated two or three times and Gould, of course, bought at the low figures and sold at the top, and the profits must have been big. Finally the restitution, so-called, was announced with a flourish of trumpets. On the face of the agreement Gould made over to Erie an immense amount of property and all suits were withdrawn and Gould released from all criminal responsibility. A clause in the agreement said that in making this transfer of property Gould expressly stipulated that it should not be considered as an admission of wrong-doing. The Opera House and adjoining buildings and other real estate, with the exception of Gould’s Fifth avenue mansion, were made over to the Erie, and, in addition, a mass of stocks of the par value of about $6,000,000. As a matter of fact most of these stocks were worthless. J. G. Guppy told the Hepburn Committee that he would not give $200,000 for the entire lot. Among the securities were $1,000,000 of United States Express stock to be issued, and which Gould guaranteed to be issued, but which, as a matter of fact, never was. When Hugh J. Jewett became receiver of Erie he discovered the utter sham of this alleged restitution. He told the Hepburn Committee: “Mr. Watson had made a settlement with Mr. Gould, in which he received in liquidation of this account, or such portion of it as he supposed he could recover, certain assets. When I came here I sought to realize on these assets. I found many of them totally worthless, and some which were of value were encumbered by existing liens.”