Evening star., 1909-08-22
BROKERAGE IN GOLD
Speculation in Precious Metal
in the Sixties.
A FEATURE OF WAR DAYS
Efforts of New York Stock Exchange
to Check Dealings.
GAMBLED ON BATTLE NEWS
First Gathering Of the Brokers in
the "Coal Hole'-Motley Crowd
of Spectators.
GAMBLED ON BATTLE NEWS

Marc N. Reynolds in Moody's Magazine
No chapter in the history OF Wall
street contains a more sensational story
than the one covering gold trading dur
ing civil war times. The New York
Stock Exchange discouraged gold trad
Ing. but the Unborn cupidity of the spec
ulator could not be suppressed by the
loyal dictations Of any organization, and
the result was that the dissenting brokers
OF the stock exchange formed an al
lance with outsiders. and a gold ex-
change trading place, known as the coal
hole, was established In the early part
of 1852. The coal hole was a dark
gloomy place. in the basement Of No.
% William street. There was no regu-
lar organization, but any one who paid
the lessee of the room an agreed-upon
annual subscription was entitled to free
access and such benefits of trading as
the gatherings afforded
The development OF gold trading was
logical sequence of the depreciation
of greenbacks, dating from December 2s,
1851 In January of 1862 dealers in bull
lion began demanding a small premium
and public intelligence soon appreciated
the situation and realized that the fu
ture would augment rather than abolish
the gold premium Spectators compre-
hended the possibilities of fluctuations in
prices due to news from the fields of
battle, and the energy and enthusiasm
Of the irrepressible broker started a spec
ulation the intensity of which has never
been exceeded, IL it has been eQualed, in
the history of market trading.
The glittering sensation of gold trad
ing attracted a motley collection of spec
ulators of all stages Of wealth and So
ciety. Transactions grew apace, and In
a comparatively short time the coal hole
became congested to such an extent that
more commodious quarters were demand
ed. In 1853 Gilpin's news room, at the
corner of William street and Exchange
place. was selected as q trading room,
and the coal hole was abandoned. At
Gilpin'S the atmosphere was better, but
no attempt at restriction in organiZa-
tion was made. Any one who paid $25
a year had free entry, the only condition
being that each one fulfill his contracts.
The element Of doubt which beclouded
the government credit in the minds of
many flnanciers stimulated gold specula-
tion, and caused rapid action in market
f1uctuat tions. Constant interest was kept
up by conflicting rumors, favorable or
adverse, according to the temper of the
trader Some idea of the far-reaching
effect Of gold trading in the sixties may
be formed when one considers that every
transaction changing a quotation in the
price OF gold affected every man, woman
and child who had in his or her posses
SlOH lHlISU Suites HlOuey. lie idOOIlllk
man and the capitalist were both con-
cerned. and there naturally could be no
Indifference on the part Of any one in
the business world when the prices OF
life's necessities were subject to sudden
advance caused by gold appreciation and
corresponding depreciation of the gov
ernment currency. The eyes of the whole
nation were centered on the gold room.
Extravaganza the Rule.
Jp yo1 CIV hrol
extravaganza in living was the rule. and
successful operators fattened on money
making possibilities which the awful dis
tress Of war time and tho governments
pivotal credit allowed through the me-
dium of unstable greenbacks. 1t is not
to the credit of many officials of the
government that the largest speculative
orders in gold reached the goldroom
brokers direct from Washington. Every
Union victory or defeat reflected strong
" on the gold market, and the news
reached the government before being dis
tributed to the world. The condition
gave those in close touch with the War
Department, war correspondents, pOliti-
clans and other insiders special advan-
tages which they did not hesitate to use,
and they reaped in numerous instances
fortunes of no mean size as the result
of their telegraphic orders to buy or sell
as the news warranted. The expression
phrase of the period, referring to the
various sources Of information received
in advance of published news
According to q story generally cred
tied, one private secretary at the Capitol.
whose position enabled him to be in pos
session of news hours in advance of the
public, made an arrangement with a firm
of New York brokers and telegra phed
orders to buy or sell. according to the
tenor of his inside information the brok-
or nf in,
return for his services In tipping them
off, One day this honorable secretary
came to New York and discovered that
the firm had the neat little fortune of
$3.50 600 credited to his account, all with
out the investment of a penny OF his
part.
The rumor factory was as much in
evidence then it is now. and ever has
been. and misinformation was the order
of the day. Brokers We're supposed to
keep customers supplied with inside in
formation, without which much of the
spice Of trading would have been lost.
and mere guesses by a broker given to
his client became confidential news from
the inside when the client impaired the
bit OF gossip TO friend.
Deprecated Traffic.
Secretary Chase and all the loyal off,
cials Of the government deprecated the
gold trading epidemic and discussed seri-
ouSly several remedies. In 1864 Secre-
tary Chase decided to make q strong at
tempt to stop further advance and to.
reduce the price OF gold by selling sew
eral million dollars worth of the govern
ments supply and putting the proceeds
into the subtreasury. The price OF gold
was carried down the scale, but the
locking up OF SO much OF the floating
supply Of the circulating medium caused
the Morse panic and carried stocks and
merchandise down also. The fall In the
price OF gold due to Secretary Chase's
action was not of long duration. the
bulls soon starting an upward movement
Secretary Chase advocated a measure de-
signed to kill gold speculation, and July
10. 1864, Congress adopted the measure,
which became a law a few days prior to
Secretary Chases resignation. This
measure provided that no one could sell
gold unless the seller had it and made
delivery the next day. 1t prohibited the
purchase or sale of foreign exchange to
be consummated later than ten days sub
sequently, and any loan OF greenbacks
or coin to be repaid each with the other
No sale or purchase of gold. bullion or
foreign exchange was allowed. except at
the place of business of the buyer or
seller. ANY violation of these proyi-
sions was punishable with fine of from
Sl,OD to $4,000. or Imprisonment from
three months to one year, or both. The
enactment of this law was primarily
fny ~ nj i,er ,fy.'c