Reminiscences of Sixty Years in Public Affairs

Author: George S. Boutwell | Date: 1902

Historical Summary

The Civil War ushered in a great bull market. As Henry Adams asserted, "everyone speculated, and for a time everyone speculated successfully." The gambling spirit which gripped farmer and shopkeeper was exploited by shrewd and unscrupulous financiers for their own ends. In devious techniques and discreditable goals none surpassed Jay Gould, Wizard of Wall Street, and the mountebank, Jim Fisk. Neither was hampered by moral scruples. ("Nothing is lost save honor," Fisk once wired after an especially malodorous deal.) The former had a gift for silent intrigue. He was small, sallow, reticent. His partner was big, florid, talkative, and obstreperous. Having seized control of the Erie Railroad in July, 1868, they installed themselves in a white marble opera house, where the opera troupe supplied Jubilee Jim with a permanent harem.

Spending lavishly, living recklessly, they needed more and more money. They figured out that if they could corner gold and boost its price, the grain the farmers would ship to Europe would be worth more and the shippers would rush their crop for export via the Erie Railway. In the intrigue was Abel Rathbone Corbin, lobbyist brother-in-law of President Grant. Despite pressure on the President, Grant was very cold to the whole idea. Misunderstanding one of the President’s remarks, Fisk and Gould plunged, buying gold recklessly, while the bears sold. But Grant’s suspicions were aroused and he had Mrs. Grant write Corbin’s wife to have him dissociate himself from the plot. Gould bribed Corbin to keep his mouth shut, and quietly began to sell, double-crossing his partner, Fisk, who went on buying recklessly. The rumor was deliberately spread that Grant and all his family were in on it.

A contemporary newspaper reports the height of the speculative orgy, September 24, 1869, known ever since as Black Friday:

"In the spacious Exchange room of the Gold Board, crowded as it had never been crowded, even in the wildest excitement of wartimes, amid the strangest variations of deathlike silence and tumultuous uproar, the pallid, hall conscience-stricken brokers of this gambling clique appeared, one after another, to do their dirty work. . . .

"There was no resisting such power. They could advance to 200 if they chose. And the usually surging, bustling, shouting mass of humanity crowded there was held silent, almost motionless, as by a magic spell. 150 is now bid for $100,000, and despair suddenly gives back life to many. They rush eagerly to bid and buy. Orders come in by telegraph to buy at any price. . . . The stillness is suddenly succeeded by frantic excitement. Transactions of enormous magnitude are made amid the wildest confusion and the most unearthly screaming of men, always excitable, now driven to the verge of temporary insanity by the consciousness of ruin, or the delusive dream of immense wealth. But amid all the noise and confusion the penetrating voices of the leading brokers of the clique are still heard advancing the price at each bid, and increasing the amount of their bids at each advance, until at last, with voice overtopping the bedlam below, the memorable bid burst forth, "160 for any part of five millions." Again the noise was hushed. Terror became depicted on every countenance. Cool, sober men looked at one another, and noted the ashy paleness that spread over all. Even those who had but little or no interest at stake were seized with the infection of fear. . . . And from the silence again came forth that shrieking bid, "160 for five millions," and no answer; "161 for five millions;" "162 for five millions," still no answer; "162 for any part of five millions." And a quiet voice said, "Sold one million at 162."

"That quiet voice broke the fascination. The bid of 162 was not renewed. But 161 was again bid for a million, and the same quiet voice said, "Sold"; and the bid of 161 was not renewed. . . . Then dimly it dawned upon the quicker-witted ones that for some reason or other the game was up. As if by magnetic sympathy the same thought passed through the crowd at once. A dozen men leapt furiously at the bidder and claimed him to have sold the whole five millions. To their horror the bidder stood his ground and declared he would take all But before the words had fairly passed his lips, before the terror at his action had had time to gain men’s hearts, there was a rush amid the crowd. New men, wild with fresh excitement, crowded to the barriers. In an instant the rumor was abroad, the Treasury is selling. In less time than it takes to write about it the price fell from 162 to 135. The great gigantic gold bubble had burst, and halt Wall Street was involved in ruin."

The Treasury’s gold sales left Fisk out on a limb. Gould landed solidly on his feet. At Gould’s advice Fisk swore that he had acted only under orders of his partner, Belden. They let Belden go down, settling a fortune on him privately, and saved their own skins.

Fisk was not so lucky the next time. Insanely jealous when Edward S. Stokes took Josie Mansfield, his special girl friend, away from him, Fisk proceeded to hound his rival relentlessly. Accosting Fisk in the lobby of the Grand Central Hotel, Stokes deliberately fired at him.

"For God’s sake, will anybody save me?" Fisk cried out.

Not this time. He suffered a mortal wound. A jury, fed up with Wall Street knavery, let Stokes off with a four-year sentence.

The inside story of Black Friday by George S. Boutwell, Grant’s Secretary of the Treasury, who discovered the plot and ordered the gold dumped on the market, from his Reminiscences of Sixty Years in Public Affairs (1902):

Key Quote

George S. Boutwell: "This has been the most dreadful day l have ever seen in this city."

G. S. Boutwell New York 1902 Doubleday and Co., Inc.

Black Friday: The Inside Story

[1869]

Under date of the 24th day of September, I received a letter from my special and trusted correspondent in the city of New York in which I find this statement:

"This has been the most dreadful day I have ever seen in this city. While gold was jumping from forty-three to sixty-one the excitement was painful. Old, conservative merchants looked aghast, nobody was in their offices, and the agony depicted on the faces of men who crowded the streets made one feel as if Gettysburg had been lost and that the rebels were marching down Broadway. Friends of the Administration openly stated that the President or yourself must have given these men to feel you would not interfere with them or they would never dare to rush gold up so rapidly. In truth, many parties of real responsibility and friends of the Government openly declared that somebody in Washington must be in this combination."

The last sentence in this quotation unfolds the policy which had guided Gould and Fisk and their associates from April to the culmination of their undertaking the 24th day of September. As far as I know, the effort had been directed chiefly to the support of false theory that the President was opposed to the sale of gold, especially during the autumn months, when a large amount of currency is required, or in those days was supposed to be required, for "the moving," as it was called, of the produce of the West to the seacoast for shipment to Europe. They even went so far as to allege that the President had ordered the Secretary of the Treasury to suspend the sale of gold during the month of September, for which there was no foundation whatever.

Indeed, up to the 22d of September, when I introduced the subject of the price of gold to the President, he had neither said nor done anything, except to write a letter from New York City under date of September 12, 1889, in the following words: "I am satisfied that on your arrival you will be met by the bulls and bears of Wall Street, and probably by merchants, too, to induce you to sell gold, or pay the November interest in advance, on the one side, and to hold fast on the other. The fact is, a desperate struggle is now taking place, and each party wants the Government to help him out. I write this letter to advise you what I think you may expect, to put you on your guard."

At a meeting, which was accidental, as far as the President was concerned, on board one of Fisk and Gould’s Fall River steamers, when he was on his way to Boston, in June of that year, to attend the Peace Jubilee, an attempt was made to commit General Grant to the policy of holding gold. I was present on the trip with the President. What happened on the boat may be best given in the language of Mr. Fisk and Mr. Gould. Mr. Fisk, in his testimony before the committee, said:

"On our passage over to Boston with General Grant, we endeavored to ascertain what his position was. We went down to supper about nine o’clock, intending while we were there to have this thing pretty thoroughly talked up, and, if possible, to relieve him from any idea of putting the price of gold down."

Mr. Gould’s account before the committee was as follows:

"At this supper the question came up about the state of the country, the crops, prospects ahead, etc. The President was a listener; the other gentlemen were discussing. Some were in favor of Boutwell’s selling gold, and some were opposed to it. After they had all interchanged their views, some one asked the President what his view was. He remarked that he thought there was a certain amount of fictitiousness about the prosperity of the country, and that the bubble might as well be tapped in one way as another. We supposed from that conversation that the President was a contractionist. His remark struck across us like a wet blanket,"

The error of Fisk and Gould and their associates, from the beginning to the end of the contest, was in the supposition that the President was taking any part in the operations of the Treasury concerning the price of gold. [Boutwell charges that Fisk and Gould sought to influence the President to boost the price of gold and let it be known that he would intervene to that end. They relied on A. R. Corbin, a brother-in-law of the President, whom they appear to have bribed to pressure Grant and to have dangled before his eyes the presidency of the Tenth National Bank of New York. These attempts, according to Boutwell, were "feeble" and "misdirected." Newspapers were reed to strengthen the impression that the President intended to prevent the sale of gold, and Gould brought pressure on Boutwell to the same end. As early as September 20th Boutwell had evidence that the Tenth National Bank was a party to the speculation in gold. He had the books examined after the close of business on September 22d, but the speculation did not abate.]

I called upon the President after business on the 23rd of September, and made a statement of the condition of the gold market in the city of New York, as far as it had been communicated to me during the day. I then said that a sale of gold should be made for the purpose of breaking the market and ending the excitement. He asked me what stun I proposed to sell.

I said: "Three million dollars will be sufficient to break the combination."

He said in reply: "I think you had better make it $5,000,000."

Without assenting to a proposition or dissenting from it, I returned to the department, and sent an order for the sale of $4,000,000 of gold the next day. The order was to the assistant treasurer in these words:

"Sell $4,000,000 gold tomorrow, and buy $4,000,00 bonds."

The message was not in cipher, and there was no attempt to keep it secret. It was duplicated, and sent by each of the rival telegraph lines to New York. Within the space of fifteen minutes after the receipt of the dispatch, the price of gold fell from 160 to 133, and in the language of one of the witnesses, "half of Wall Street was involved in ruin."

[Boutwell explicitly denies that Grant was a party to Corbin’s activities, and concludes that "it is not safe to trust persons engaged in large business and commercial transactions as guides for the administration of the Government in financial matters. Indeed, one may go still further, and say that it is not safe to trust the guidance of the Government in financial affairs to men whose life business ithas been to convert information into gold."]

. . . From the testimony of Jay Gould and James Fisk, Jr., as it appeared in the printed report, we are able to comprehend the characteristics of the two men. Gould was cool and collected from the beginning to end, with no indication in his statements that the events of the 24th of September had in any particular disturbed him in temper, or nerve or confidence in his ability to meet the exigencies of the situation. On the other hand, the testimony of Fisk indicates the absence of the qualities ascribed to Gould, and during his examination he failed to maintain even ordinary equanimity of temper. He interfered with the proceedings and delivered this address to the committee:

"I must state that I must ask you gentlemen to summon witnesses whose names I shall give you. My men are starving. When the newspapers told you we were keeping away from this committee, I say to you that there is no man in this country who wants to come before you as bad as Jim Fisk, Jr. I have thirty or forty thousand wives and children to feed with the money disbursed from our office. We have no money to pay them, and I know what has brought them to this condition."

Another extract from Fisk’s testimony gives a graphic view of his condition when the crash came:

"I went down to the neighborhood of Wall Street Friday morning. When I got back to our orifice yon can imagine I was in no enviable state of mind, and the moment I got up street that afternoon I started right round to old Corbin’s to rake him out. I went into the dining-room, and sent word that Mr. Fisk wanted to see him in the dining-room. I was too mad to say anything civil, and when he came into the room, said I,

"’Do you know what you have done here, yon and your people?’

"He began to wring his hands, and ’Oh,’ he says, ’this is a horrible position. Are you mined?’

"I said I didn’t know whether I was or not; and I asked him again if he knew what had happened. He had been crying, and said he had just heard; that he had been sure everything was all right; but that something had occurred entirely different from what he had anticipated.

"Said I, ’That don’t amount to anything. We know that gold ought not to be at thirty-one, and that it would not be but for such performances as you had this week; you know —— well, it would not if you had not failed.’

"I knew that somebody had run a saw right into us, and said I,

"’This whole —— thing had turned out just as I told you it would.’

"I considered the whole party a pack of cowards; and I expected that, when we came to dear our hands, they would sock it right into us. I said to him,

"’I don’t know whether you have lied or not, and I don’t know what ought to be done with you.’

"He was on the other side of the table, weeping and wafting, and I was gnashing my teeth.

"’Now,’ he says, ’you must quiet yourself.’

"I told him I didn’t want to be quiet; I had no desire to ever be quiet again.

"He says, ’But, my dear sir, you will lose your reason.’

"Says I, ’speyers has already lost his reason; reason has gone out of everybody but me.’ "

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Chicago: George S. Boutwell, Reminiscences of Sixty Years in Public Affairs, ed. G. S. Boutwell in History in the First Person: Eyewitnesses of Great Events: They Saw It Happen, ed. Louis Leo Snyder and Richard B. Morris (Harrisburg, Pa.: Stackpole Co., 1951), Original Sources, accessed December 3, 2024, http://originalsources.com/Document.aspx?DocID=WMM4CEGRQWKFMVH.

MLA: Boutwell, George S. Reminiscences of Sixty Years in Public Affairs, edited by G. S. Boutwell, in History in the First Person: Eyewitnesses of Great Events: They Saw It Happen, edited by Louis Leo Snyder and Richard B. Morris, Harrisburg, Pa., Stackpole Co., 1951, Original Sources. 3 Dec. 2024. http://originalsources.com/Document.aspx?DocID=WMM4CEGRQWKFMVH.

Harvard: Boutwell, GS, Reminiscences of Sixty Years in Public Affairs, ed. . cited in 1951, History in the First Person: Eyewitnesses of Great Events: They Saw It Happen, ed. , Stackpole Co., Harrisburg, Pa.. Original Sources, retrieved 3 December 2024, from http://originalsources.com/Document.aspx?DocID=WMM4CEGRQWKFMVH.