The financiers’ attempt to control the gold market failed when the U.S. government released $4 million in gold on Friday, September 24, 1869, known as Black Friday. The resulting panic severely disrupted the U.S. national economy.

In 1869, the first year of Ulysses S. Grant’s presidency, speculators attempted to make a fortune by cornering the gold market on the New York Gold Exchange. After befriending banker Abel Rathbone Corbin, Abel RathboneCorbin, who was Grant’s brother-in-law, financiers James Fisk, JamesFisk and Jay Gould, JayGould sought to ingratiate themselves with the president and convince Grant not to sell U.S. Treasury gold. Fisk and Gould planned to buy up enormous quantities of gold at low prices and then sell the gold for massive profits once the price of gold went back up. Also involved in the scheme was General Daniel Butterfield, DanielButterfield, assistant treasurer of the United States, who promised to provide inside knowledge about the government’s time frame to sell gold. In addition, Fisk and Gould reasoned that the increase in the price of gold would ensure a rise in the price of wheat and cause farmers in the West to ship east–and thus increase rail freight for the Erie Railroad, which the financiers owned.Black Friday (1869)

During the summer of 1869, the market fell, and Gould and Fisk began to buy up large quantities of gold, which led to other financiers similarly buying up gold. This in turn caused the price of gold to rise. In September, the price of gold soared even higher–indeed by then the price of gold had risen 30 percent–in part because Gould and Fisk refused to sell the gold they had accumulated. However, Secretary of the Treasury George S. Boutwell and President Grant found out about the scheme and issued orders to sell $4 million worth of U.S. Treasury gold to stabilize the market. After the gold reached the market, the value of gold plummeted, falling from $160 to $130 in minutes. This sudden downward shift caused a panic and an immediate sell-off.

Consequently, Black Friday, as it came in time to be known, led to a two-week slide in the gold market, which severely disrupted the entire U.S. economy and lasted until the following year. Foreign trade was brought to a complete standstill, stock prices fell 20 percent, and the price of grain fell 50 percent. Butterfield was forced to resign from the U.S. Treasury, and President Grant was harshly criticized for apparently tolerating or condoning the conspiracy in its early stages.

• Ackerman, Kenneth D. The Gold Ring: Jim Fisk, Jay Gould, and Black Friday, 1869. New York: Dodd, Mead, 1988.
• McAlpine, R. W. The Life and Times of Colonel James Fisk, Jr. New York: Arno Press, 1981.
• Renehan, Edward. Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons. New York: Basic Books, 2005.

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Banking

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