Civil War gold hoax
Encyclopedia
The Civil War Gold Hoax was an 1864 hoax
perpetrated by two US
journalists to exploit the financial situation during the American Civil War
.
On May 18, 1864, two New York City
newspapers, the New York World
and the New York Journal of Commerce, published a story that President Abraham Lincoln
had issued a proclamation of conscription
of 400,000 more men into the Union army. At the time, there were fierce battles taking place between Union and Confederate troops in Virginia and the public took it to mean that the war was not going well for the Union. Share prices fell on the New York Stock Exchange
when investors began to buy gold
, and its value increased 10%.
During the day a number of people -- one of them former Union commander General George McClellan
-- became suspicious of the fact that the proclamation had been published in just two newspapers, and went to the offices of the Journal to determine the source. Editors of the paper showed them an Associated Press
dispatch they had received early in the morning.
Before noon, the Associated Press issued a statement that the dispatch had not come from them, and at 12.30 p.m. the State Department in Washington DC sent a telegram to verify that the proclamation was "an absolute forgery". By then, however, the stock market had already been affected.
Further investigation revealed that the dispatches had been delivered by a young courier just after the night editors had gone home. The timing had been perfect: the night foreman had had to make a decision as to whether to include the proclamation in the next day's paper or not. Night foremen in various other newspapers had tried to verify the message, and when they found out that not every paper had received the message, they decided to delay it pending further proof. Only foremen for the World and Journal of Commerce had added it.
President Lincoln was enraged when he heard about the case: he gave an order to close the two papers down and had their editors arrested for suspicion of complicity. Soldiers seized the two offices and, for some reason, the office of the Independent Telegraph Line. Lincoln eventually had the editors released.
Detectives tracked down the culprits. They found the messengers and questioned them. On May 21 they arrested Francis Mallison
, a reporter for the Brooklyn Eagle
who informed on his city editor Joseph Howard, Jr., who was also arrested. Howard came quietly and confessed.
Howard had bought gold on margin
May 17, and started the ruse because he knew that any news of a prolongation of the war would cause a rise in the price of gold when investors wanted to transfer their savings elsewhere. He had forged the two AP dispatches, and sent them to various city newspapers in an appropriate time. The next day, during the furor, he had sold his investment and profited immensely.
Howard spent only three months in prison and was released on August 22, 1864. With perfect irony, at that time Lincoln had to issue a call for 500,000 more soldiers.
Hoax
A hoax is a deliberately fabricated falsehood made to masquerade as truth. It is distinguishable from errors in observation or judgment, or rumors, urban legends, pseudosciences or April Fools' Day events that are passed along in good faith by believers or as jokes.-Definition:The British...
perpetrated by two US
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
journalists to exploit the financial situation during 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...
.
On May 18, 1864, two New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
newspapers, the New York World
New York World
The New York World was a newspaper published in New York City from 1860 until 1931. The paper played a major role in the history of American newspapers...
and the New York Journal of Commerce, published a story that President Abraham Lincoln
Abraham Lincoln
Abraham Lincoln was the 16th President of the United States, serving from March 1861 until his assassination in April 1865. He successfully led his country through a great constitutional, military and moral crisis – the American Civil War – preserving the Union, while ending slavery, and...
had issued a proclamation of conscription
Conscription
Conscription is the compulsory enlistment of people in some sort of national service, most often military service. Conscription dates back to antiquity and continues in some countries to the present day under various names...
of 400,000 more men into the Union army. At the time, there were fierce battles taking place between Union and Confederate troops in Virginia and the public took it to mean that the war was not going well for the Union. Share prices fell on the New York Stock Exchange
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
when investors began to buy gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
, and its value increased 10%.
During the day a number of people -- one of them former Union commander General George McClellan
George B. McClellan
George Brinton McClellan was a major general during the American Civil War. He organized the famous Army of the Potomac and served briefly as the general-in-chief of the Union Army. Early in the war, McClellan played an important role in raising a well-trained and organized army for the Union...
-- became suspicious of the fact that the proclamation had been published in just two newspapers, and went to the offices of the Journal to determine the source. Editors of the paper showed them an Associated Press
Associated Press
The Associated Press is an American news agency. The AP is a cooperative owned by its contributing newspapers, radio and television stations in the United States, which both contribute stories to the AP and use material written by its staff journalists...
dispatch they had received early in the morning.
Before noon, the Associated Press issued a statement that the dispatch had not come from them, and at 12.30 p.m. the State Department in Washington DC sent a telegram to verify that the proclamation was "an absolute forgery". By then, however, the stock market had already been affected.
Further investigation revealed that the dispatches had been delivered by a young courier just after the night editors had gone home. The timing had been perfect: the night foreman had had to make a decision as to whether to include the proclamation in the next day's paper or not. Night foremen in various other newspapers had tried to verify the message, and when they found out that not every paper had received the message, they decided to delay it pending further proof. Only foremen for the World and Journal of Commerce had added it.
President Lincoln was enraged when he heard about the case: he gave an order to close the two papers down and had their editors arrested for suspicion of complicity. Soldiers seized the two offices and, for some reason, the office of the Independent Telegraph Line. Lincoln eventually had the editors released.
Detectives tracked down the culprits. They found the messengers and questioned them. On May 21 they arrested Francis Mallison
Francis Mallison
Francis Avery Mallison was an American journalist, editor and public servant. A longtime reporter for the Brooklyn Eagle, known under his pen name Francis O'Pake, he and then city editor Joseph Howard, Jr...
, a reporter for the Brooklyn Eagle
Brooklyn Eagle
The Brooklyn Daily Bulletin began publishing when the original Eagle folded in 1955. In 1996 it merged with a newly revived Brooklyn Daily Eagle, and now publishes a morning paper five days a week under the Brooklyn Daily Eagle name...
who informed on his city editor Joseph Howard, Jr., who was also arrested. Howard came quietly and confessed.
Howard had bought gold on margin
Margin (finance)
In finance, a margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty...
May 17, and started the ruse because he knew that any news of a prolongation of the war would cause a rise in the price of gold when investors wanted to transfer their savings elsewhere. He had forged the two AP dispatches, and sent them to various city newspapers in an appropriate time. The next day, during the furor, he had sold his investment and profited immensely.
Howard spent only three months in prison and was released on August 22, 1864. With perfect irony, at that time Lincoln had to issue a call for 500,000 more soldiers.