Black Friday

The Black Friday of 1869 was the result of a government scandal that shook the core of Ulysses S. Grant's presidency. In his inaugural address in January 1869, Grant demonstrated his commitment to gold-backed currency by insisting on repaying the war bond debt from the Civil War with gold. He also planned to use gold to purchase dollars from citizens at a discount and replacing those dollars with gold-backed currency.

Jay Gould and Jim Fisk, two financiers already infamous for their involvement in a bribery and fraud scandal surrounding the Erie Railroad, were attempting to corner the gold market at the time by driving the price of gold up and then selling it all for huge profits. Gould and Fisk heard of Grant's plan to sell gold and knew their scheme would not work (the increased supply of gold in the markets would keep the price too low). So to prevent the government sale, Gould and Fisk enlisted the help of Grant's brother-in-law, Abel Rathbone Corbin. The three met Grant at several social gatherings and attempted to persuade him that his monetary policy was a mistake. Corbin also successfully urged Grant to name General Daniel Butterfield as the assistant treasurer of the United States. Butterfield was responsible for handling the government's gold sales, and he agreed to give Gould, Fisk, and Corbin advance notice of when the government was going to sell gold if they would pay him in return.

Assuming that their efforts to stop the government's gold sale were successful (and widely advertising that they were), Gould and Fisk bought as much gold as they could on September 20, 1869, and prices rose by 20%.

However, Grant was suspicious of his brother-in-law's interest in the gold markets and later found a letter from his sister to First Lady Julia Grant about the entire matter. Furious, Grant ordered Corbin to put an end to his scheme and then quietly ordered a government sale of $4 million of gold.

When the government gold hit the market on September 24, 1869, the price fell and panic ensued. Many investors had purchased gold on margin and others were locked into purchase contracts. When the price fell, not only did these investors face financial disaster, but other commodity prices destabilized, foreign trade was nearly halted (because it was conducted in gold), and the stock market nearly came to a halt. Abel Corbin lost significantly, but Gould sold his gold before the market fell and went on the control the Western Union Telegraph Company and the Manhattan Elevated Railroad. Butterfield was fired following a Congressional investigation, and Jim Fisk was shot dead by another financier, Edward Stokes, in 1872, after the two got into an argument over money and Broadway showgirl.