Black Friday (1869)
Encyclopedia
Black Friday, September 24, 1869 also known as the Fisk/Gould scandal, was a financial panic in the United States caused by two speculators’ efforts to corner the gold market on the New York Gold Exchange
. It was one of several scandals that rocked the presidency of Ulysses S. Grant
. During the reconstruction era after the American Civil War
, the United States government issued a large amount of money that was backed by nothing but credit. After the war ended, people commonly believed that the U.S. Government would buy back the “greenbacks” with gold. In 1869, a group of speculators, headed by James Fisk
and Jay Gould
, sought to profit off this by cornering the gold market. Gould and Fisk first recruited Grant’s brother-in-law, a financier named Abel Corbin
. They used Corbin to get close to Grant in social situations, where they would argue against government sale of gold, and Corbin would support their arguments. Corbin convinced Grant to appoint General Daniel Butterfield
as assistant Treasurer
of the United States. Butterfield agreed to tip the men off when the government intended to sell gold.
In the late summer of 1869, Gould began buying large amounts of gold. This caused prices to rise and stocks to plummet. After Grant realized what had happened, the federal government sold $4 million in gold. On September 20, 1869, Gould and Fisk started hoarding gold, driving the price higher. On September 24 the premium on a gold Double Eagle
(representing 0.9675 troy ounces (30.1 g) of gold bullion at $20) was 30 percent higher than when Grant took office. But when the government gold hit the market, the premium plummeted within minutes. Investors scrambled to sell their holdings, and many of them, including Corbin, were ruined. Fisk and Gould escaped significant financial harm.
Subsequent Congressional
investigation was chaired by James A. Garfield. The investigation was alleged on the one hand to have been limited because Virginia Corbin and First Lady
Julia Grant
were not permitted to testify. Garfield's biographer, Alan Peskin, however, maintains the investigation was quite thorough. Butterfield resigned from the U.S. Treasury. Henry Adams, who believed that President Ulysses S. Grant
had tolerated, encouraged, and perhaps even participated in corruption and swindles, attacked Grant in an 1870 article entitled The New York Gold Conspiracy.
Although Grant was not directly involved in the scandal
, his personal association with Gould and Fisk gave clout to their attempt to manipulate the gold market. Also, Grant's order to release gold in response to gold's rising price was itself a manipulation of the market. Grant had personally declined to listen to Gould's ambitious plan to corner the gold market, since the scheme was not announced publicly, but he could not be trusted. Gould had promoted the plan to Grant as a means to help farmers sell a bountiful 1869 wheat crop to Europe.
A highly fictionalized account of Fisk's life, culminating in a dramatic presentation of the gold corner, was shown in the 1937 film The Toast of New York
.
New York Gold Exchange
The New York Gold Exchange was an exchange formed near the beginning of the Civil War for the purpose of creating an open market for transactions involving gold and the government-created paper currency, the greenback...
. It was one of several scandals that rocked the presidency of Ulysses S. Grant
Ulysses S. Grant
Ulysses S. Grant was the 18th President of the United States as well as military commander during the Civil War and post-war Reconstruction periods. Under Grant's command, the Union Army defeated the Confederate military and ended the Confederate States of America...
. During the reconstruction era after the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, the United States government issued a large amount of money that was backed by nothing but credit. After the war ended, people commonly believed that the U.S. Government would buy back the “greenbacks” with gold. In 1869, a group of speculators, headed by James Fisk
James Fisk (financier)
James Fisk, Jr. —known variously as "Big Jim," "Diamond Jim," and "Jubilee Jim"—was an American stock broker and corporate executive.-Early life and career:...
and Jay Gould
Jay Gould
Jason "Jay" Gould was a leading American railroad developer and speculator. He has long been vilified as an archetypal robber baron, whose successes made him the ninth richest American in history. Condé Nast Portfolio ranked Gould as the 8th worst American CEO of all time...
, sought to profit off this by cornering the gold market. Gould and Fisk first recruited Grant’s brother-in-law, a financier named Abel Corbin
Abel Corbin
Abel Rathbone Corbin was an American financier and the husband of Virginia Grant, sister of President Ulysses S. Grant. He was involved in the Black Friday stock market crash of September 24, 1869....
. They used Corbin to get close to Grant in social situations, where they would argue against government sale of gold, and Corbin would support their arguments. Corbin convinced Grant to appoint General Daniel Butterfield
Daniel Butterfield
Daniel Adams Butterfield was a New York businessman, a Union General in the American Civil War, and Assistant U.S. Treasurer in New York. He is credited with composing the bugle call Taps and was involved in the Black Friday gold scandal in the Grant administration...
as assistant Treasurer
Treasurer
A treasurer is the person responsible for running the treasury of an organization. The adjective for a treasurer is normally "tresorial". The adjective "treasurial" normally means pertaining to a treasury, rather than the treasurer.-Government:...
of the United States. Butterfield agreed to tip the men off when the government intended to sell gold.
In the late summer of 1869, Gould began buying large amounts of gold. This caused prices to rise and stocks to plummet. After Grant realized what had happened, the federal government sold $4 million in gold. On September 20, 1869, Gould and Fisk started hoarding gold, driving the price higher. On September 24 the premium on a gold Double Eagle
Double Eagle
A Double Eagle is a gold coin of the United States with a denomination of $20. . The coins are made from a 90% gold and 10% copper alloy....
(representing 0.9675 troy ounces (30.1 g) of gold bullion at $20) was 30 percent higher than when Grant took office. But when the government gold hit the market, the premium plummeted within minutes. Investors scrambled to sell their holdings, and many of them, including Corbin, were ruined. Fisk and Gould escaped significant financial harm.
Subsequent Congressional
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
investigation was chaired by James A. Garfield. The investigation was alleged on the one hand to have been limited because Virginia Corbin and First Lady
First Lady of the United States
First Lady of the United States is the title of the hostess of the White House. Because this position is traditionally filled by the wife of the president of the United States, the title is most often applied to the wife of a sitting president. The current first lady is Michelle Obama.-Current:The...
Julia Grant
Julia Grant
Julia Boggs Dent-Grant , was the wife of the 18th President of the United States, Ulysses S. Grant, and was First Lady of the United States from 1869 to 1877.-Background:...
were not permitted to testify. Garfield's biographer, Alan Peskin, however, maintains the investigation was quite thorough. Butterfield resigned from the U.S. Treasury. Henry Adams, who believed that President Ulysses S. Grant
Ulysses S. Grant
Ulysses S. Grant was the 18th President of the United States as well as military commander during the Civil War and post-war Reconstruction periods. Under Grant's command, the Union Army defeated the Confederate military and ended the Confederate States of America...
had tolerated, encouraged, and perhaps even participated in corruption and swindles, attacked Grant in an 1870 article entitled The New York Gold Conspiracy.
Although Grant was not directly involved in the scandal
Scandal
A scandal is a widely publicized allegation or set of allegations that damages the reputation of an institution, individual or creed...
, his personal association with Gould and Fisk gave clout to their attempt to manipulate the gold market. Also, Grant's order to release gold in response to gold's rising price was itself a manipulation of the market. Grant had personally declined to listen to Gould's ambitious plan to corner the gold market, since the scheme was not announced publicly, but he could not be trusted. Gould had promoted the plan to Grant as a means to help farmers sell a bountiful 1869 wheat crop to Europe.
A highly fictionalized account of Fisk's life, culminating in a dramatic presentation of the gold corner, was shown in the 1937 film The Toast of New York
The Toast of New York
The Toast of New York is a 1937 American biopic starring Edward Arnold, Cary Grant, Frances Farmer, and Jack Oakie. The film is a fictionalized account of the lives of financiers James Fisk and Edward S. Stokes...
.