6. Brush with Disaster: The New York Gold Corner Conspiracy
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125 ★ ★ ★ ★ ★ 6 BRUSH WITH DISASTER THE NEW YORK GOLD CORNER CONSPIRACY While tax and funding legislation wound its way through Congress and the Supreme Court wrestled with the legal-tender question, Congress spent considerable time in the winter of 1870 investigating an episode from the previous summer that had threatened to upend the Grant administration ’s monetary policy of “growing up” to specie resumption. This was the so-called New York Gold Corner conspiracy, a nefarious manufactured panic that reached its climax and collapse on Black Friday , September 24, 1869, when Grant and Treasury Secretary George %RXWZHOOPRYHGWRVKXWLWGRZQ7KHÀQDQFLDOLPSDFWRIWKHHSLVRGH proved relatively short-lived, but its political impact endured and cast a shadow over Grant’s performance as president that persisted long afterward. 7KLVVFKHPHWRFRUQHUWKHJROGPDUNHWLQWKHQDWLRQ·VÀQDQFLDOFDSLWDO ZDVWKHEUDLQFKLOGRIWKHQRWRULRXVÀQDQFLDOVSHFXODWRUV-D\*RXOG and James Fisk Jr. The shrewd and sinuous Gould stood in marked contrast to the volcanic and vulgar Fisk. Yet the two shared a love of making money, an attenuated concept of fair play, and scant regard for the public weal. On the eve of Grant’s administration, they were savoring their victory over Cornelius Vanderbilt in a “war” for control of the Erie Railroad. Gould had emerged with his position as president of the Erie UHODWLYHO\VHFXUHEXWWKHURDG·VÀQDQFLDOFRQGLWLRQZDVOHVVÀUP+H CHAPTER 6 126 concluded that it could reap large returns from an increased shipment of agricultural products over its routes from western states to the East Coast for export. The key way to increase the export demand, he believed , was to maintain a high premium on gold. Gold priced high in greenbacks would enable foreign customers to obtain a greater quantity of currency to purchase American products, which railroads would Jay Gould. (Library of Congress) BRUSH WITH DISASTER 127 carry eastward.The higher the price of gold, the greater the exports; the PRUHWUD΀FWKHKLJKHUWKH(ULH·VLQFRPH1 Gould later claimed he “had no idea of cornering” the gold market, but he did admit that with an aggressive program of gold purchasing, “the price of gold would go up while the movement was going on,” and “we could make money both ways by buying it then, and selling it on the rise.” By bidding up the price, Gould and Fisk stood to turn huge SURÀWVZKHQWKH\PDGHJROGDYDLODEOHWRPHUFKDQWVDQGRWKHUVZKR James Fisk Jr. (Library of Congress) CHAPTER 6 128 needed it for foreign trade exchanges and customs duties. Whatever the merits of the crop-movement theory, and whether or not they intended an absolute corner of the gold market, Gould and Fisk saw an opportunity for immense gains from a manipulation of the currency.2 From the beginning, the two schemers understood that success required a change in Boutwell’s policy of selling gold for greenbacks. If they sought to bid up the gold price, gold sold by the Treasury would tend to push it down. Starting in late April 1869, as part of his long-term plan to reduce the premium, Boutwell regularly sold Treasury gold, reaching a total of $15 million within two months. This rapid selling of gold lowered its price, resulted in a severe tightening of the currency market, and ran directly counter to Gould and Fisk’s purposes.3 Gould, the mastermind of the duo, saw little hope of successful conVXOWDWLRQ ZLWK%RXWZHOODQGWKHUHIRUHVRXJKWRWKHUPHDQVWRLQÁXHQFH the administration’s policy. Most notably he cultivated a relationship with Grant’s brother-in-law Abel Corbin, who had long been a friend of Julia Grant’s family. In 1842 Corbin had accepted the position of clerk of the House Committee on Claims in Washington, where he moonlighted as a lobbyist. He abruptly resigned the clerkship in 1858 when he was DFFXVHG RI DFFHSWLQJ SD\PHQWV IURP PDQXIDFWXUHUV WR LQÁXHQFH WKH SDVVDJHRIWDULͿOHJLVODWLRQLQ+HDYRLGHGFULPLQDOSURVHFXWLRQ moved to New York, and became a successful speculator in real estate. In 1865 he sold General Grant a house in Washington, the cost of which was promptly defrayed by a group of wealthy New York businessmen. In March 1869 Corbin attended the inaugural events in Washington, where the sixty-one-year-old widower met the new president’s unmarried sister. Two months later, ever watchful for the main chance...


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