Black Friday (1869)

Gould and Fisk hoped that befriending the President would get them privy information about the government's gold policy—and even prevent the sale of gold—and thereby manipulate the market.

To finance the Civil War and Reconstruction, the federal government had assumed a large national debt, escalating from $64 million in 1860 to $2.8 billion by the end of the Andrew Johnson administration, when Grant was elected president in 1868.

[1] The problem was further compounded when the federal government issued paper money during the Civil War, known as "greenbacks", which were not redeemable in gold.

To accomplish this, he ordered his assistant treasurer to begin selling gold from the Treasury and buying up wartime bonds in April 1869.

Boutwell's treasury policy of reducing the national debt kept the money supply level and the gold price artificially low.

[1] In 1869, Jay Gould, a director of the Erie Railroad, sought to corner the gold market with the connivance of Abel Corbin, a financier with a shady past who was President Grant's brother-in-law.

[5] James Fisk, another director who had made his fortune as a cotton smuggler during the Civil War,[6] controlled the Erie Railroad in conjunction with Gould.

Both Corbin and Gould lobbied successfully for Butterfield's appointment as the assistant treasurer,[7] through whom Boutwell gave orders to sell Treasury Department gold.

[10] Not accustomed to having such offers turned down, Gould went ahead and made the purchase and opened a brokerage account in Porter's name regardless.

In similar fashion, Corbin approached Grant's wife Julia and attempted to entice her into accepting half interest in $250,000 in bonds, but she turned that offer down.

Both Grant and Boutwell strongly felt that the nation's wartime debt had to be paid to assure the credibility of the United States in the eyes of the European banks.

Boutwell later wrote that only outsiders unaware of the finer designs of his dealings thought "the President was taking any part in the operations of the treasury concerning the price of gold".

Grant, meanwhile, was unaware that his appearances in the company of Gould and Fisk sent a message to Wall Street that he supported raising the gold price.

To reduce the temptation of illicit dealing, Boutwell, at Butterfield's recommendation, publicly announced his orders by telegraphing the news to the Associated Press.

He continued this practice at an accelerated rate while Grant, having closely followed Boutwell's dealings, began to express reservations and sent him a letter from Washington, Pennsylvania, criticizing that driving the price of gold down would hurt farmers.

Many brokerage firms collapsed while trade volume and agriculture prices plummeted, causing a mild recession, but by January 1870, the economy resumed its post-war recovery.

[3][14] Starting on September 1, 1869, Gould and Fisk put their plot into motion by purchasing $1.5 million in gold in the names of Corbin and Butterfield.

By September 7, Gould was faced with a startling reversal when members of his group were directed to sell off the $6 million they had achieved during the previous buying frenzy of April 1869.

Fisk reminded Gould that he still had "enough gold to sink a ship" while the two looked to others and devised other schemes to come out on top, but they knew by this time that if they began buying again, the Treasury would counter their efforts and begin selling at an accelerated rate once again.

[17] Fisk proposed that the list be published in the newspapers the next day with the demand that the "bulls and bears" settle on their debts by three o'clock, at a fixed rate of $160.

Fisk had the letter delivered by William Chapin of the Erie Railroad, to Washington, Pennsylvania, where Grant was vacationing with his wife's cousin.

[30] The Tenth National Bank, which normally closed at 3:00 pm on that day, had depositors and speculators crowding the sidewalk at its front door.

Farmers, who constituted 50 percent of the country's workforce, suffered the worst: wheat prices on the Chicago trade fell from $1.40 to $0.77 a bushel, corn dropped from $0.95 to $0.68, and other commodities such as rye, oats, and barley had similar losses.

[32][31] Grant's and Boutwell's actions to break the Gold Ring, however, kept the Wall Street panic from growing into a national depression.

Grant's decision to counter the escalating price of gold did not completely dispel rumors that he and his administration had profited from the affair.

The committee's Republican majority rejected the proffered testimony from a D.C. businessman who reported seeing the $25,000 entry in an Adams Express Company ledger.

"[11] Dodging any financial harm, Fisk and Gould escaped conviction, spending money to buy the best legal defense, including talented attorney David Dudley Field, while Democratic Tweed Ring judges such as Albert Cardozo shielded them in court.