Black Friday of 1869

Black Friday of 1869 was a financial crisis that occurred on September 24, 1869, when a conspiracy to corner the gold market in the United States led to a dramatic collapse in gold prices and widespread economic turmoil. The event was orchestrated by speculators Jay Gould and James Fisk, who attempted to manipulate the gold market for personal gain.
== Background ==
In the aftermath of the American Civil War, the U.S. economy was in a state of flux. The government had issued "greenbacks," paper currency not backed by gold, to finance the war effort. This led to inflation and volatility in the value of the dollar relative to gold. By 1869, the government was attempting to reduce the national debt by selling Treasury gold, which had a stabilizing effect on the economy.
== The Conspiracy ==
Jay Gould and James Fisk, two notorious Wall Street speculators, devised a plan to corner the gold market. Their scheme involved several key elements:
* Recruiting Abel Rathbone Corbin, brother-in-law of President Ulysses S. Grant, to gain influence with the administration.
* Attempting to persuade President Grant to limit the government's sale of gold, which would drive up prices.
* Bribing officials, including the appointment of General Daniel Butterfield as assistant treasurer, to gain insider information on government gold sales.
* Accumulating large amounts of gold to artificially inflate its price.
The conspirators began buying gold in early September 1869, driving the price from $132.50 to $141 per ounce by September 22.
== Trading Locations ==
The trading of gold during the American Civil War era took place in several locations before the establishment of the New York Gold Exchange:
Initially, gold trading occurred in various basements on Wall Street, William Street, and Broad Street after it was banned from the New York Stock Exchange. One of the first notable locations was "an ill-lit den called the Coal Hole."
Trading then moved to Gilpin's News Room, also known as Gilpin's Gold Room. This facility was opened by Samuel S. Gilpin on October 12, 1863, within his Merchants' Exchange at 26 Exchange Place. Gilpin's Gold Room quickly became a central location for gold trading, attracting both speculators and merchants who needed gold for business purposes.
In 1864, following the brief closure of gold exchanges due to Congressional action, Gilpin's reopened under the name "New York Gold Exchange." The exchange was formally incorporated on October 14, 1864. Its new facility, located at the corner of William Street and Exchange Place, became widely known as the Gold Room. This lavishly appointed exchange reflected the opulence of the emerging Gilded Age.
The New York Gold Exchange quickly established itself as the preeminent gold market in the country. The value of gold over greenbacks quoted in the Gold Room, known as the "premium," became a crucial financial indicator of the strength of the Union cause during the Civil War.
== Black Friday ==
On September 24, 1869, the conspiracy unraveled:
* President Grant, having discovered the scheme, ordered the Secretary of the U.S. Department of Treasury, George S. Boutwell to sell $4 million in government gold.
* The sudden increase in supply caused gold prices to plummet from $160 to $130 per ounce in a matter of hours.
* The stock market crashed, falling more than 20% in the following week.
* Many investors were ruined, unable to repay loans they had taken to speculate on gold.
 
The day's events led to widespread panic on Wall Street, with the government deploying militias to suppress crowds attacking banks and brokerage houses.
== Aftermath ==
The Black Friday crisis had significant repercussions:
* A Congressional investigation was launched, leading to the removal of General Butterfield from his post.
* The event damaged President Grant's reputation, though he was not directly implicated in the scandal.
* Jay Gould managed to escape major financial losses by selling his gold before the crash, while James Fisk's career was cut short when he was shot dead in an unrelated incident in 1872 by a romantic rival who was trying to exhort him.
* The crisis highlighted the need for greater regulation of financial markets.
The term "Black Friday" became associated with financial panics, setting a precedent for naming other market crashes such as Black Tuesday in 1929 and Black Monday in 1987.
== References ==
Category:Financial Crises
Category:Market Manipulation
Category:Gold
Category:19th Century
Category:Wall Street