Reminiscences of Sixty Years in Public Affairs, Vol. 2

G >> George S. Boutwell >> Reminiscences of Sixty Years in Public Affairs, Vol. 2

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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 a 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 sea coast 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, 1869, in the following words:

NEW YORK CITY, _September_ 12, 1869.

DEAR SIR: I leave here for western Pennsylvania to-morrow morning and
will not reach Washington before the middle or last of next week. Had
I known before making my arrangements for starting that you would be in
this city early this week, I would have remained to meet you. 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 of what I think you may expect, to put
you on your guard.

I think, from the lights before me, I would move on without change
until the present struggle is over. If you want to write me this week,
my address will be Washington, Pennsylvania. I would like to hear
your experience with the factions, at all events, if they give you time
to write. No doubt you will have a better chance to judge than I,
for I have avoided general discussion on the subject.

Yours truly,
U. S. GRANT.

Hon. GEORGE S. BOUTWELL,
_Secretary of Treasury_.

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 in regard to the finances 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. If he expressed any opinions outside in conversation, there
were no acts on his part in harmony with or in antagonism to the views
he entertained. As a matter of fact, with the exception of the letter
from the city of New York, he had no conference or correspondence with
me up to the 22d day of September, when I called upon him, and gave
him a statement of the price of gold in the city of New York, and of
the nature and character of the combination that existed there, as far
as it was understood by me. Their policy was directed to two points:
first, to influence the President, if possible, to interfere in a way
to advance the price of gold; and, second, to satisfy their adherents
and opponents that the President either had so interfered or would so
interfere.

Even Fisk and Gould may at a period of time have rested in the belief
that the President either had interfered or that he would interfere.
Their confidence was in Mr. A. R. Corbin, a brother-in-law of the
President, who, under the influence of various considerations, which
appear to have been personal and pecuniary to a very large extent, lent
himself to the task of influencing the President. As a matter of fact,
his attempts were very feeble and misdirected and of no consequence
whatever. Indeed, such is my opinion of the President, and such my
belief as to his opinion concerning Mr. Corbin, that nothing which Mr.
Corbin did say, or could have said, did have or could have had the
least influence upon the President's opinion or conduct. It is,
however, also true that Fisk and Gould employed Corbin and gave him
consideration in their undertakings out of which he realized some
money. I received information, also, which may not have been true,
that they suggested to him that he might become president of the Tenth
National Bank, which had a very conspicuous part in the events which
culminated in Black Friday.

An attempt to strengthen the impression that it was the purpose of the
President to prevent the sale of gold was made through an article
prepared by Mr. Corbin, probably under the direction of Mr. Gould and
others, which appeared finally, with some alterations and omissions, in
the New York _Times_ of the 25th of August. It appears to have been
the purpose of the parties interested to mislead the _Times_ as to the
authorship of the article, and they secured the agency of Mr. James
McHenry, a prominent English capitalist, who called at the _Times_
office, and presented the article to Mr. Bigelow, the editor, as the
opinion of a person in the intimate confidence of the President. The
article was put in type and double leaded. When so prepared,
suspicions were aroused, and the financial editor, Mr. Norvell, made
very important corrections, taking care to omit sentences and
paragraphs that contained explicit statements as to the purposes of the
President. Some of the phrases omitted were in these words: "It may
be that further purchases of bonds will be made directly with gold."
"As gold accumulates, the less would be the premium upon it. High
prices for gold before the sale of our products would cause lower
prices of gold after the sale of products."

Among the statements made which were preserved in the article as
printed finally were these: "The President evidently intends to pay
off the 5-20s as rapidly as he may in gold"; "So far as current
movements of the Treasury are concerned, until crops are moved it is
not likely Treasury gold will be sold for currency to be locked up."

Following the appearance of this article, I received a letter from Mr.
Gould, dated the 30th of August, in which this sentence appears: "If
the New York _Times_ correctly reflects your financial policy during
the next three or four months; namely, to unloose the currency balance
at the Treasury or keep it at the lowest possible figure, and also to
refrain during the same period from selling or putting gold on the
market, thus preventing a depression of the premium at a season of the
year when the bulk of our agricultural products have to be marketed,
then I think the country peculiarly fortunate in having a financial
head who can take a broad view of the situation, and who realizes the
importance of settling the large balance of debt against us by the
export of our agricultural and mining products instead of bonds and
gold."

Of my reply to that letter, the committee say: "The brief and formal
reply of the Secretary gave Gould no clew to the purpose of the
Government."

Under date of September 20, I received a letter from Gould to which I
made no reply. Aside from the topics to which he directed my attention
in the letter, it is the unavoidable inference from the context as a
whole that Gould had then no faith in the statements given to the
public that the President was in any manner pledged to interfere and
prevent the sale of gold. The following extracts from the letter of
September 20 are a full exposition of his policy and of the means on
which he relied to advance the price of gold during the month of
September:

"On the subject of the price of gold and its effect upon the producing
interests of the West, permit me to say that during the months of
September of the past two years the price has averaged about forty-
five. Gold must range this year at about that premium to enable the
export of the surplus crops of wheat and corn. We have to compete with
the grain-producing countries bordering on the Black and Mediterranean
seas, and it requires a premium of over forty per cent on gold to
equalize our high-priced labor and long rail transportation to the
seaboard.

"My theory is to let gold go to a price that we can export our surplus
products to pay our foreign debts, and the moment we turn the balance
of trade in our favor gold will decline from natural causes. In my
judgment, the Government cannot afford to sell gold during the next
three months while the crops are being marketed, and if such a policy
were announced, it would immediately cause a high export of bread-
stuffs and an active fall trade.

"P. S. In addition to the above, if gold were put upon the market,
government bonds would decline to at least fifteen, leaving the
purchases made by the Government in the past few months open to
criticism as showing a loss."

As early as the 20th of September, I had evidence satisfactory to me
that the Tenth National Bank in the city of New York was a party to the
speculation in gold, and that its assistance was rendered largely
through the certification of checks drawn by the brokers, and largely
in excess of the balances due them upon the books of the bank when the
certifications were made. It appeared from the evidence submitted
that these certifications of checks in excess of the balances due to
brokers amounted to about $18,000,000 on the 22d and 23d of September,
when the speculation was at its height.

For the purpose of arresting that process and checking the speculation
in gold, I detained the comptroller of the currency and three competent
clerks after the close of business on the 22d of September. The clerks
received commissions as bank examiners, and were instructed to go to
New York that night and to take possession of the Tenth National Bank,
at the opening of business in the morning, and to give directions that
the habit of certifying checks in excess of the balances due must be
suspended. It was my expectation that the enforcement of that rule
would, or might, end the speculation, inasmuch as the purchasers of
gold would be unable to meet their obligations, and therefore it would
be out of their power to create them. This expectation was not
realized. Whether the certification went on at the Tenth National
Bak in defiance of the order, or whether other banks were so
connected with the speculation that checks were certified elsewhere,
was not known to me.

I called upon the President after business on the 23d 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 sum
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 his 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 to-morrow, and buy $4,000,000 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 despatch, 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."

For the moment, the condition of Wall Street and the Gold Exchange
seemed to justify the statement of the person whose language has just
been quoted. As a matter of fact, however, many of the people involved
recovered from the panic, and were able to meet their obligations.
Some were gainers, probably, by the proceedings of the month of
September, and some were losers. As I have already said, I had no
purpose to help anybody or to hurt anybody, and I interfered in Wall
Street only when the operations that were going on there involved
innocent parties who were engaged in legitimate business, and also
imposed upon the Government a sacrifice in the loss of revenue.

Following the downfall of the combination, there appeared in the
newspapers statements and imputations which reflected upon the
President and his family as to their relations to the gold operations.
All these statements were without foundation. Mr. Corbin's connection
was established beyond controversy, but the evidence which established
his relations to the parties engaged in the gold speculation was also
conclusive as to the fact that the President had no connection with it,
and that he was not in any way interested in any policy calculated to
advance the interests of the combination.

The apprehensions that were entertained on the evening of the 24th and
on the 25th of September as to the extent of the disaster to business
and to individuals engaged in gold speculation were not realized in
full. My special correspondent in New York said in a letter dated
September 25: "Many of the houses hurt and reported failed yesterday
are likely to recover." Again he said: "The demoralization in the
street was never equaled, and it must take several days at least
before matters get fairly straightened. There is a wholesome dread
against making any obligations. Smith, Gould and Martin are just
reported as paying in full."

In a letter dated September 27 at 6:30 P. M., the assistant treasurer
at New York wrote me: "From the best evidence to be gathered in the
excitement here, it is safe to infer that the Gold Exchange Bank will
suffer losses to the extent of its capital and surplus at least, and
perhaps more." To the contrary of that prediction, it is to be said
that the Gold Exchange Bank was able to meet all its obligations.

In a letter written by Mr. Grinnell, then collector of the port of New
York, under date of September 24, after the announcement of the sale of
gold had been made, I find this statement: "Had you not taken the
course which you did, I believe a large proportion of our most reliable
merchants and bankers would have been obliged to suspend before three
o'clock to-day, as confidence was entirely gone and the panic was
becoming universal."

Following the break in the price of gold, there were persons who became
apprehensive that the rate would fall to a point which would affect
their interests unfavorably, and I received a letter, dated after
business hours on the 24th, in which the writer said: "It is not
impossible that, in view of the largeness of the amount of gold to be
sold to-morrow, there may be a combination to procure it at a low
price, and you will therefore excuse a suggestion that, as the effect
of your intervention has already been realized, it might be well to
protect the Government by making it known that you will reject all
unacceptable bids."

These extracts from letters received previous to and during the crisis
may lead to the conclusion that it is not safe to trust to 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 it has
been to convert information into gold.

The most unpleasant incident of the gold speculation of 1869 was the
fact that General Butterfield, the assistant treasurer in the city of
New York, was so far involved as to lead the President to ask for his
resignation. That request did not arise from any evidence that General
Butterfield was in any way concerned in the movement or combination,
which led to the advance in gold. Indeed, the evidence was conclusive
to the contrary. This fact, however, did appear--that during the
period of the excitement he had made some purchases and sales of gold
and bonds. The suspicions that existed in the city of New York as to
his connection with the gold movement were largely exaggerations of
the actual facts. There was no evidence which impeached his official
or personal integrity in business. His resignation was requested upon
the ground that it was essential to the proper administration of the
office that the person holding the important place of assistant
treasurer in the city of New York, should not be engaged in business
transactions which might give rise to the conjecture that he had
advantages over others in consequence of his connection with the
Government.

It ought to be said the Mr. Gould, in his testimony before the
committee, which was given at great length and with singular clearness
of statement, denied expressly the existence of any combination. In
fine, he claimed, what may have been the truth, and upon the whole
probably was the truth, that it was not part of his purpose to carry
the price of gold above forty or forty-five per cent premium. He
attributed the excessive and rapid advance of the price of gold to the
persons who had sold short and who, becoming alarmed, attempted to
cover their sales by making purchases, and by bidding against each
other carried the price from about 140 to 160.

The same statement was made by Mr. Fisk as to the cause of the
excessive rise in the price of gold. He said: "It went up to sixty,
for the reason that there were in that market a hundred men short of
gold. There were banking houses which had stood for fifty years, and
who did not know but what they were ruined. They rushed into the
market to cover their shorts. I think it went from forty-five to
sixty without the purchase of more than $600,000 or $700,000 of gold.
It went there in consequence of the frightened bear interests. There
was a feeling that there was no gold in the market and that the
Government would not let any gold go out."

At the time of the gold panic, Gould and Fisk were interested in the
business of railway transportation from the West to the seaboard, and
Mr. Fisk made a statement which sets forth the theory on which he and
Gould professed to act. Fisk said: "The whole movement was based
upon a desire on our part to employ our men and work our power getting
surplus crops moved East and receiving for ourselves that portion of
the transportation properly belonging to our road. That was the
beginning of the movement, and the further operations were based upon
the promise of what Corbin said the Government would do."

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 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 indicated 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 office you 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 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,
you and your people?' He began to wring his hands, and 'Oh,' he says,
'this is a horrible position. Are you ruined?' 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 have had this
last 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 has 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 clear 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 wailing, 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.'"

My part and my interest in the events of Black Friday came to an end
with an effort to ascertain the authorship of an anonymous
communication, written in red ink, that I received the 6th day of
October. It was postmarked at New York, the 5th of October, 1869.
(A reduced facsimile of the communication is shown below.) An attempt
was made through the police and the secret service system to trace the
authorship of the superscription. The attempt was ineffectual.

[Facsimile]
If gold does not sell at 150 within 15 days I am a ruined man. You
will be the cause of my ruin! Your life will be in danger.
Wilkes Booth.

It appears in the review that Mr. Gould originated the scheme of
advancing the price of gold and that Mr. Fisk was his principal
coadjutor. It also appears that Mr. Fisk entered into the arrangement
upon the basis of friendship for Mr. Gould, and not in consequence of
an opinion on his part that the scheme was a wise one. Mr. Gould had
two main purposes in view: first, the profit that he might realize
from an advance in gold; and, second, the advantage that might accrue
to the railroad with which he was connected through an increase of its
business in the transportation of products from the West. As set forth
in Mr. Gould's letter, he entertained the opinion, which rested upon
satisfactory business grounds, that an advance in the price of gold
would stimulate the sale of Western products, increase the business
of transportation over the railways, and aid us in the payment of
liabilities abroad. If the price of gold had not been advanced beyond
a premium of forty or perhaps forty-five per cent, all these results
might have been realized, without detriment to the public, while Mr.
Gould and his associates would have realized large profits. When the
price had advanced to forty or forty-five per cent, Mr. Gould or his
associates made calls upon those who were under contracts to deliver
gold to make their margins good or else to produce the gold. These
demands created a panic, and the parties who had agreed to deliver gold
entered the market, and bidding against each other, they carried the
price beyond the point that Mr. Gould had contemplated.

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