Grant’s Black Friday

The Civil War and Reconstruction years were characterized by the absence of the traditional American two-party system in Washington.   The Democrats were traditionally a Southern Party and during and following the Civil War their absence in Washington allowed an unprecedented advancement of traditional Republican Party policies.  Most noticeably the pro-business development programs such as support of railroad building and the Homestead Act serve as two examples most that certainly helped western development.   However, without political opposition and a healthy debate the deregulation of American businesses during this period also set the stage for several business/political scandals that nearly brought down the Grant Administration during the early 1870s.  We are talking Enron, World Com and Bernie Madoff all rolled into one here folks.  Over the next few days, Killer History will present the Grant Scandals. 

Ulysses S. Grant, the victorious Union general of the Civil War was elected president in 1868.  He grew up in Galena, Illinois, which was a favorite day trip when I lived in eastern Iowa.  During the Civil War he became quite the celebrity and following the less than impressive presidency of Andrew Johnson, Americans hoped that Grant would work the same magic he had displayed on the battlefield in Washington.  While Grant’s honesty and straight-shooter personality worked well in combat he did not always show the best personal judgment in his civilian and presidential affairs.

He often accepted extravagant gifts from people trying to impress ad secure his help.  He also allowed himself to be seen hanging out with unscrupulous speculators such as Jay Gould and James Fisk.  This association was a tad bothersome for Grant, because they were trying to corner the Gold Market.  If they could pull this off they would essentially control the American economy.  

Gould and Fisk enlisted the help of Grant’s brother-in-law Abel Corbin, who provided intelligence and manipulation of the president’s actions.  Corbin encouraged Grant to appoint General Daniel Butterfield as assistant secretary of the Treasury.  Butterfield, who was a buddy of Gould and Fisk, was assigned the job of sounding the alarm if the government planned to release gold into the market. 

 Gould and Fisk started to buying and holding gold in large quantities. This drove the price through the roof. While Grant did eventually figure out their plans it was not before they sent the stock market into a tailspin.  Grant authorized the Treasury to flood the marketplace with gold so as to thwart their plans. On Friday September 24, 1869, also known as Black Friday, the US Treasury opened up the gold market flood gates.  This flash flood of the gold in the market resulted in a rapid resetting of the gold price.  As the price of gold plummeted, average speculators were financially ruined in a matter of minutes.   Congress did investigate Grant’s involvement, but were not able to make the connection that he was directly connected to Gould and Fisk.  While the scandal harmed his reputation, the damage was not enough to hinder his reelection in 1872.  Of course the Grant Administration would go onto bigger and more impressive scandals in his next term.

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