In the month of September, 1869, one of the most gigantic attempts to run
up the value of gold ever made was attempted by a powerful combination of
Bulls, consisting of a set of unprincipled men whose only object was to
make money. Their scheme came near attaining a success which would have
broken the market utterly, have unsettled values of all kinds, and have
precipitated upon the whole country a financial crisis of the most
terrible proportions. Nothing but the interference of the Secretary of
the Treasury at a critical moment averted this disaster. As it was, the
losses were fearful. Men in Wall street were ruined by the score, and
for several days the best houses in the street were uncertain as to their
exact condition.
An account of this formidable transaction is interesting as revealing the
method of conducting the great operations of the street.
[Picture: SCENE IN THE GOLD ROOM--BLACK FRIDAY.]
"On the 22d of September, 1869, gold stood at 137.5 when Trinity bells
rang out the hour of twelve. By two it was at 139. Before night its
lowest quotation was 141. . . . An advance of three and a half per cent.
in five hours. At the same time the Stock Market exhibited tokens of
excessive febrility, New York Central dropping twenty-three per cent. and
Harlem thirteen. Loans had become extremely difficult to negotiate. The
most usurious prices for a twenty-four hours' turn were freely paid. The
storm was palpably reaching the proportions of a tempest.
"Nevertheless, the brokers on the Bear side strove manfully under their
burden. The character and purposes of the clique were fully known.
Whatever of mystery had heretofore enfolded them was now boldly thrown
aside, and the men of Erie, with the sublime Fisk in the forefront of the
assailing column, assured the shorts that they could not settle too
quickly, since it remained with the ring, now holding calls for one
hundred millions, either to kindly compromise at 150 or to carry the
metal to 200 and nail it there. This threat was accompanied by
consequences in which the mailed hand revealed itself under the silken
glove. The movement had intertwisted itself deep into the affairs of
every dealer in the street, and entangled in its meshes vast numbers of
outside speculators. In borrowing or in margins the entire capital of
the former had been nearly absorbed, while some five millions had been
deposited by the latter with their brokers in answer to repeated calls.
When Thursday morning rose, gold started at 141-5/8, and soon shot up to
144. Then the clique began to tighten the screws. The shorts received
peremptory orders to increase their borrowing margins. At the same
moment the terms of loans overnight were raised beyond the pitch of
ordinary human endurance. Stories were insidiously circulated exciting
suspicion of the integrity of the Administration, and strengthening the
belief that the National Treasury would bring no help to the wounded
Bears. Whispers of an impending lock-up of money were prevalent; and the
fact, then shrewdly suspected, and now known, of certifications of checks
to the amount of twenty-five millions by one bank alone on that day, lent
color to the rumor. Many brokers lost courage, and settled instantly.
The Gold Room shook with the conflict, and the battle prolonged itself
into a midnight session at the Fifth Avenue Hotel. The din of the tumult
had penetrated to the upper chambers of journalism. Reporters were on
the alert. The great dailies magnified the struggle, and the Associated
Press spread intelligence of the excitement to remote sections. When
Friday opened clear and calm, the pavement of Broad and New streets soon
filled up with unwonted visitors. All the idle population of the city
and its neighborhood crowded into the financial quarter to witness the
throes of the tortured shorts. Blended with the merely curious were
hundreds of outside speculators who had ventured their all in the great
stake, and trembled in doubt of the honor of their dealers. Long before
9 A.M. these men, intensely interested in the day's encounter, poured
through the alley-way from Broad street, and between the narrow walls of
New street, surging up around the doorways, and piling themselves densely
and painfully within the cramped galleries of the Room itself. They had
made good the fresh calls for margins up to 143, the closing figure of
the night before. The paramount question now was, How would gold open?
They had not many minutes to wait. Pressing up to the fountain, around
which some fifty brokers had already congregated, a Bull operator with
resonant voice bid 145 for twenty thousand. The shout startled the
galleries. Their margins were once more in jeopardy. Would their
brokers remain firm? It was a terrible moment. The Bears closed round
the aggressors. Yells and shrieks filled the air. A confused and
baffling whirl of sounds ensued, in which all sorts of fractional bids
and offers mingled, till '46 emerged from the chaos. The crowd within
the arena increased rapidly in numbers. The clique agents became
vociferous. Gold steadily pushed forward in its perilous upward movement
from '46 to '47, thence to '49, and, pausing for a brief twenty minutes,
dashed on to 150.5. It was now considerably past the hour of regular
session. The President was in the chair. The Secretary's pen was
bounding over his registry book. The floor of the Gold Room was covered
with 300 agitated dealers and operators, shouting, heaving in masses
against and around the iron railing of the fountain, falling back upon
the approaches of the committee-rooms and the outer entrance, guarded
with rigorous care by sturdy door-keepers. Many of the principal brokers
of the street were there,--Kimber, who had turned traitor to the ring;
Colgate, the Baptist; Clews, a veteran government broker; one of the
Marvins; James Brown; Albert Speyer, and dozens of others hardly less
famous. Every individual of all that seething throng had a personal
stake beyond, and, in natural human estimate, a thousand-fold more dear
than that of any outside patron, no matter how deeply or ruinously that
patron might be involved. At 11 of the dial gold was 150.5; in six
minutes it jumped to 155. Then the pent-up tiger spirit burst from
control. The arena rocked as the Coliseum may have rocked when the gates
of the wild beasts were thrown open, and with wails and shrieks the
captives of the empire sprang to merciless encounter with the ravenous
demons of the desert. The storm of voices lost human semblance.
Clenched hands, livid faces, pallid foreheads on which beads of cold
sweat told of the interior anguish, lurid, passion-fired eyes,--all the
symptoms of a fever which at any moment might become frenzy were there.
The shouts of golden millions upon millions hurtled in all ears. The
labor of years was disappearing and reappearing in the wave line of
advancing and receding prices. With fortunes melting away in a second,
with five hundred millions of gold in process of sale or purchase, with
the terror of yet higher prices, and the exultation which came and went
with the whispers of fresh men entering from Broad street bearing
confused rumors of the probable interposition of the Government, it is
not hard to understand how reason faltered on its throne, and operators
became reckless, buying or selling without thought of the morrow or
consciousness of the present. Then came the terrific bid of Albert
Speyer for any number of millions at 160. William Parks sold instantly
two millions and a half in one lot. Yet the bids so far from yielding
rose to 161, 162, 162.5. For five minutes the Board reeled under the
ferocity of the attack. Seconds became hours. The agony of Wellington
awaiting Blucher was in the souls of the Bears. Then a broker, reported
to be acting for Baring & Brothers, at London, sold five millions to the
clique at the top price of the day. Hallgarten followed; and as the
shorts were gathering courage, the certain news that the Secretary of the
Treasury had come to the rescue swept through the chamber, gold fell from
160 to 140, and thence, with hardly the interval of one quotation, to
133. The end had come, and the exhausted operators streamed out of the
stifling hall into the fresh air of the street. To them, however, came
no peace. In some offices customers by dozens, whose margins were
irrevocably burnt away in the smelting-furnace of the Gold Board,
confronted their dealers with taunts and threats of violence for their
treachery. In others the nucleus of mobs began to form, and, as the day
wore off, Broad street had the aspect of a riot. Huge masses of men
gathered before the doorway of Smith, Gould, Martin & Co., and Heath &
Co. Fisk was assaulted, and his life threatened. Deputy-sheriffs and
police officers appeared on the scene. In Brooklyn a company of troops
were held in readiness to march upon Wall street.
"When night came, Broad street and its vicinity saw an unwonted sight.
The silence and the darkness which ever rests over the lower city after
seven of the evening, was broken by the blaze of gas-light from a hundred
windows, and the footfall of clerks hurrying from a hasty repast back to
their desks. Until long after Trinity bells pealed out the dawn of a new
day, men bent over their books, scrutinized the Clearing-House statement
for the morrow, took what thought was possible for the future. At the
Gold Exchange Bank the weary accountants were making ineffective efforts
to complete Thursday's business. That toilful midnight, at the close of
the last great passion-day of the bullion-worshippers, will be ever
memorable for its anxieties and unsatisfying anguish.
[Picture: BROAD STREET ON BLACK FRIDAY.]
"Saturday brought no relief. The Gold Board met only to adjourn, as the
Clearing-House had been incapable of the task of settling its accounts,
complicated as they were by ever fresh failures. The small brokers had
gone under by scores. The rumors of the impending suspension of some of
the largest houses of the street gave fresh grounds for fear. The Stock
Exchange was now the centre of attraction. If that yielded, all was
lost. To sustain the market was vital. But whence was the saving power
to came? All through yesterday shares had been falling headlong. New
York Central careened to 148, and then recovered to 185.75. Hudson
plunged from 173 to 145. Pittsburgh fell to 68. Northwest reached 62.5.
The shrinkage throughout all securities had been not less than thirty
millions. Would the impulse downward continue? The throngs which filled
the corridors and overhung the stairway from which one can look down upon
the Long Room saw only mad tumult, heard only the roar of the biddings.
For any certain knowledge they might have been in Alaska. But the
financial public in the quiet of their offices, and nervously
scrutinizing the prices reeled off from the automaton telegraph, saw that
Vanderbilt was supporting the New York stocks, and that the weakness in
other shares was not sufficient to shadow forth panic. It soon became
known that the capitalists from Philadelphia, Boston, and the great
Western cities had thrown themselves into the breach, and were earning
fortunes for themselves as well as gratitude from the money-market, by
the judicious daring of their purchases. The consciousness of this new
element was quieting, but Wall street was still too feverish to be
reposed by any ordinary anodyne. A run on the Tenth National Bank had
commenced, and all day long a steady line of dealers filed up to the
counter of the paying teller demanding their balances. The courage and
the ability in withstanding the attack which were shown by the president
and his associates deserve something more than praise. The Gold Exchange
Bank witnessed a similar scene, angry brokers assaulting the clerks and
threatening all possible things unless instantaneous settlements were
made. The freedom with which the press had given details of the
explosion had been extremely hurtful to the credit of many of the best
houses. In a crisis like that of Black Friday the sluice-gates of
passion open. Cloaked in the masquerade of genuine distrust, came forth
whispers whose only origin was in ancient enmities, long-treasured
spites, the soundless depths of unquenchable malignities. Firms of
staunchest reputation felt the rapier-stroke of old angers. The
knowledge that certain houses were large holders of particular stocks was
the signal of attacks upon the shares. Despite of outside orders for
vast amounts, these influences had their effect upon securities, and
aided to tighten the loan market. One, one and a half, two, and even
four per cent. were the compulsory terms on which money could alone be
borrowed to carry stocks over Sunday.
"On Monday the 27th the Gold Board met, but only to be informed that the
Clearing-House was not yet ready to complete the work of Friday.
Important accounts had been kept back, and the dealings, swollen in
sum-total to five hundred millions, were beyond the capacity of the
clerical force of the Gold Bank to grapple with. A resolution was
brought forward proposing the resumption of operations Ex-Clearing-House.
The measure took the members by surprise, for a moment quivered between
acceptance and rejection, and then was swiftly tabled. It was an immense
Bear scheme, for no exchange can transact business where its dealers are
under suspicion. All outstanding accounts require immediate fulfilment.
Failure to make good deliveries would have insured the instant selling
out of defaulters 'under the rule.' As the majority of brokers were
inextricably involved in the late difficulty, the only consequence would
have been to throw them into bankruptcy, thus bringing some $60,000,000
under the hammer. The market could not have borne up under such an
avalanche. It was decided that the Room should be kept open for
borrowings and loans, but that all dealings should be suspended. One
result of this complication was that gold had no fixed value. It could
be bought at one house for 133 and at other offices sold for 139. The
Board thus proved its utility at the very juncture when least in favor."