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The First Black Friday: September 24, 1869
Issue #09 - Black Friday
With all the shopping activity that takes place the Friday after Thanksgiving, the day became one of the most profitable days of the year for retailers and businesses. Because accountants use black to signify profit when recording each day's book entries (and red to indicate a loss), the day became known as Black Friday—or the day when retailers see positive earnings and profits "in the black." Retailers adopted the name to reflect their success. To encourage even more people to shop, retailers began to offer deep discounts that were only available on that day. Since retail and consumer spending drive almost 70 percent of the U.S. gross domestic product, Black Friday (and the following “Cyber Monday”) have a big impact on the U.S. economy.
The very first Black Friday wasn’t designed to boost the economy; it was a criminal scheme that nearly destroyed it. This week we look at the first day designated as Black Friday, in 1869, an insider gold trading ring that began in New York City and used White House connections to nearly topple the American gold market and wreak financial havoc on millions of everyday citizens. Although the millionaire financiers directly responsible for the crime got away without punishment, the blatant greed and corruption behind 1869’s Black Friday eventually proved the undoing of one of the nation’s most notorious political scam artists, Tammany Hall’s Boss Tweed.
“A terrific hurricane swept over Wall Street... Broad Street, New Street, and Exchange Place were strewn with wrecks. Every gold and stock broker wore a pallid face.” The breathless reporting of the New York Sun newspaper reflected the chaos in the streets and New York City stock exchange on Black Friday, September 24, 1869. But it wasn’t a hurricane. The traders and stockbrokers and bankers of the nation’s financial capital were trying to protect themselves from something equally destructive: a carefully planned conspiracy to corner the market on the United States’ gold reserves, which would enrich just a few well-connected financiers at the expense of the rest of the U.S. stock market and economy. And it worked, if only briefly.
The financial system we call Wall Street was created for one purpose: financing American industry. But it can also be played by investors the same way a gambler plays a casino, trying to manage and beat the odds in order to win a financial bet. Just like a casino, there’s always risk involved. The Gold Ring, a cabal of financiers who became known as two of the most notorious Robber Barons of the Gilded Age, tried to edge the odds of the Wall Street casino in their favor. Jay Gould and Jim Fisk were co-directors of the Erie Railroad and were already notorious for their unscrupulous, often illegal business dealings. Their friend Abel Corbin was a real estate speculator but, more importantly, the brother-in-law of President Ulysses S. Grant. The Gold Ring also had the support of William “Boss” Tweed, the kingmaker of New York City’s Tammany Hall, an Irish-American political organization founded in 1789 that became the core of the Democratic Party’s corrupt political machine.
The Gold Ring bought gold in early September 1869, knowing (thanks to Corbin’s familial conversations with President Grant) that the U.S. Treasury would soon be putting a temporary stop to selling its gold, thus driving up demand and price. Through a complex insider-trading scheme the Gold Ring illegally cornered the market on gold and immediately began to profit from it, pocketing over $250,000 every time the market price of gold increased by $1. In the beginning of September 1869 the price of gold was $4.50 per ounce. Within a week of the Gold Ring’s investment, the price rose to over $125.
“Moneyed men rushed about the streets as if insane. Some of them were literally made insane,” reported the New York Sun. “The dealings in gold absorbed everybody’s attention, and stocks were comparatively of no account.” As the price of gold rocketed up, rumors began to circulate about the “bulls” of Wall Street who might be behind the artificial bubble. On September 22 Gold Ring member Abel Corbin made the mistake of writing a letter to President Grant, asking him to confirm the current no-sell policy for gold. The boldness of his demand aroused the President’s suspicion. Grant responded, warning his brother-in-law Corbin that he would “do his duty to the country” by releasing more gold from the U.S. Treasury. Corbin shared the news with partner Jay Gould, and the two immediately began to sell all their gold holdings. Proving the adage about honor among thieves, neither of them told their third partner, Jim Fisk.
On September 24, 1869, the Treasury flooded the market with $4 million in gold and the Gold Ring’s corner on the market was broken. The price of gold plummeted from $160 to $133 in a matter of hours. Unfortunately, so did the rest of the stock market, which immediately dropped by 20 percentage points. The crash left speculators bankrupt, led to the collapse of many longstanding financial firms, and the United States’ foreign trade came to a standstill. In an era when 50 percent of people were farmers, the price of the staple crops they were selling suddenly dropped by half. The national economy took several years to fully recover.
1869’s Black Friday left a scar on the nation’s economy, the lives of uncountable everyday Americans, and the presidency of Ulysses S. Grant, yet none of the members of the Gold Ring were ever held accountable for their crimes. Jim Fisk escaped personal bankruptcy by blaming the trades on his associates. Jay Gould may have netted millions from the scheme and took advantage of the financial Panic of 1873 to take control of the Union Pacific Railroad, becoming one of the country’s richest businessmen.
“While the financial crisis destroyed careers and reputations, and left many more bruised and battered, it also left the survivors with a genuine sense of invulnerability at having made it back from the brink,” one New York Times financial writer said of the crisis. But he wasn’t writing about Black Friday 1869; Andrew Ross Sorkin was writing about the subprime mortgage crisis of 2007-2008. Depending on how you define a major stock market crash (generally a percentage drop of 10 percentage points or more), there were five Black Friday-type crashes before 1869 and there have been sixteen since. Despite attempts to regulate Wall Street and insure the financial security of everyday Americans, a cycle of booms and busts in the modern global economy persists, with few real consequences for those pulling the levers, as the cases of Jay Gould and the directors of financial institutions deemed “too big to fail” during the 2007-2008 crash demonstrate. “Still missing in the current environment,” Sorkin wrote of Wall Street, 138 years after the first Black Friday,”is a genuine sense of humility.”
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Stake Your Claim in California
Gold and the lust for it had an enormous impact on the United States in the 19th century, and not just on Wall Street. It may have influenced the migration patterns of your own ancestors, even if they weren’t “Forty-Niners.” Understanding not only how our ancestors migrated, but also why, can play a significant role in unraveling genealogical mysteries.
Gold plays an integral part in the United States economy and, at least for a time, the ore spurred one of the largest migrations across the country, as well as immigration into the country, in our nation’s history, rapidly altering the course of America. This period of great movement began thanks to a singular event at Sutter’s Mill near Coloma, California, where a Swiss immigrant named John Sutter discovered gold on 24 January 1848.
Just days after Sutter’s discovery, on 2 February 1848 the Mexican-American War (1846-1848) ended and California became a territory of the United States. News of Sutter’s incredible discovery slowly began to spread, first in California and Oregon, then to countries around the world - especially to those that could easily access the California coast by ship - and finally making it to the East Coast of the United States. It wasn’t until December of 1848, when President James K. Polk’s report of the gold discovery during his State of the Union address, that most Americans finally began to believe Sutter’s story was real.
The influx of miners drove the California population to almost 108,000 by 1849, with an influx of almost 90,000 miners arriving that year, two-thirds of them American citizens. Many of the other immigrants were Latinos or Chinese. By 1851, over 25,000 Chinese immigrants made the journey to California, having been enticed by the promised land of gam saan (“gold mountain”), where they would presumably strike it rich.
California’s rugged mining camps soon became overcrowded and the struggle for a small piece of the pie and the opportunity to strike it rich was intense. Pressure from American miners led the California legislature to enact a monthly tax of $20 on all miners who were not citizens of the United States, which was eventually lessened to $4 per month. Most of the immigrants were left struggling to survive, never mind striking it rich, without means to send for their families back home or to return themselves.
The Gold Rush also spurred the building of the First Transcontinental Railroad. Central Pacific Railroad began laying track from Sutter’s Fort eastward in January of 1864 and by 1867 about 90 percent of their labor force was Chinese. In contrast, the competing Union Pacific Railroad, approaching from the east, employed mostly Irish immigrants. The Chinese work force received 30-50% lower wages than its white American counterpart. The two companies joined tracks on May 10, 1869 in Promontory Summit, Utah Territory, when the Chinese and Irish met, hammered into place by a Golden Spike. In that moment, travel time from New York to San Francisco shrank from six months to one week.
Did your ancestor participate in the Gold Rush as a miner, a railroad worker, or perhaps an enterprising entrepreneur? To find out, begin by searching for them in the 1850 and 1860 Federal Censuses as residents of El Dorado County, California, or one of the other six original Gold Rush counties - Butte, Calaveras, Mariposa, Sutter, Tuolumne and Yuba counties - where oftentimes there were large encampments of miners enumerated together. The 1850 Census was the first federal census which included the names of all individuals residing within a household, as well as recording each person’s place of birth.
The State of California conducted a census in 1852, which fell between the 1850 and 1860 Federal Censuses. This enumeration can be useful, as it recorded not only the place of birth, but also the last location of residence. These details, along with the age can prove invaluable in determining if the enumerated individual was one’s ancestor.
Mining claims of mineral lands can also prove insightful, in regard to one’s fortune-seeking ancestors. Though the term “staking a claim” is commonly used, one could not legally own a mining claim until 1866. If it is believed that an ancestor may have laid claim, the best place to begin is by contacting the County Recorder in the area where they resided to determine what records may be extant.
A search of the wagon train records or ship passenger lists for one’s ancestor might also reveal those who traveled with them. The Argonauts of California by Charles W. Haskins includes the names of approxmiately 27,000 immigrants, arriving in California prior to 1850, while the California Wagon Train Lists: April 5, 1849 to October 20, 1852, written by Louis J. Rasmussen published in 1994, is a compilation of names abstracted from newspapers. Ship passenger lists arriving at Port of San Francisco include many would-be miners during the Gold Rush. Rasmussen extracted names of those ship passengers in a four-volume collection titled the San Francisco Ships Passenger Lists, which are searchable on Ancestry.com. Additionally, the Maritime Heritage Project provides not only passenger lists, but also details about the ships and captains coming into the Port of San Francisco during the 19th century.
Even if you don’t discover valuable mining claims in your family name, you may still “strike it rich,” genealogically speaking, by discovering something new about your family’s role in one of the most dramatic eras in our nation’s history. You can learn more about conducting research in this ethnically-diverse state with our blog post, Researching Family Roots in California.
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On This Day (https://archive.nytimes.com/ : accessed 23 November 2020), “October 16, 1869.”
PBS (https://www.pbs.org/ : accessed 23 November 2020), “Black Friday, September 24, 1869.”
"Wail in Wall Street," The Sun (New York, New York), 25 September 1869, digital images, Chronicling America (https://chroniclingamerica.loc.gov/.com : accessed 23 November 2020), citing print edition, p. 1, cols. 1-5.
Roger Lowenstein, The New York Times, (https://www.nytimes.com/ : accessed 23 November 2020), “Gambling With the Economy.”
Ryan Fuhrmann, Investopedia (https://www.investopedia.com/ : accessed 23 November 2020), “5 Top Investors Who Profited From the Global Financial Crisis.”
Andrew Ross Sorkin, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the FinancialSystem--and Themselves (United States: Penguin Publishing, 2010), 66.
Library of Congress, “[New York Gold Room bulletin board on Black Friday, Sept. 24, 1869],” database with images, Library of Congress (https://www.loc.gov/ : accessed 22 November 2020), image of photographic print, digital ID ppmsca.12856; citing, Prints and Photographs Division, Library of Congress, Washington, D.C.
PBS (https://www.pbs.org/ : accessed 23 November 2020), “The California Gold Rush.”
Library of Congress (https://www.loc.gov : accessed 23 November 2020), “ Searching for the Gold Mountain.”
PBS (https://www.pbs.org/ : accessed 23 November 2020), “The West (Episode 3): This Land of Gold and Hope.”
History (https://www.history.com/ : accessed 23 November 2020), “Building the Transcontinental Railroad: How 20,000 Chinese Immigrants Made It Happen.”
1850 U.S. census, El Dorado County, California, population schedule, Placerville and Vicinity, p. 331b (stamped), dwelling [?], family 26, James E. Dowel household, database with images, Ancestry.com (https://ancestry.com : accessed 23 November 2020), citing NARA microfilm publication M432, roll 34.
Ruth Lang, Archives, (https://www.archives.com/ : accessed 23 November 2020), “Stake Your Claim In California Gold Rush Records.”
Library of Congress, “[Gold minders, El Dorado, California],” database with images, Library of Congress (https://www.loc.gov/ : accessed 23 November 2020), image of photographic print, digital ID ds.04487; citing, Prints and Photographs Division, Library of Congress, Washington, D.C.
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