By 1869 Jay Gould is a full-blooded railway man. He is rumored to be a full-blooded Jew as well. As his facility with money becomes apparent, his rivals put out that his name was Jacob Gold before he anglicized it. He ignores the rumors as he considers how to boost the Erie’s central business: transporting freight and people. He devises a plan that depends on a financial vestige of the Civil War: the paper dollars that circulate alongside America’s gold dollars. The former, called greenbacks for the color of their ink, rise and fall in value compared with the gold dollars, which are paper too but are backed by the federal Treasury’s promise to redeem them in gold, unlike the nonredeemable greenbacks. The greenbacks, being legal tender but less valuable than the gold dollars, predominate in the domestic American economy; the gold dollars are employed in international trade. A rise in the value of gold relative to greenbacks translates into cheaper American exports, especially of farm products from the West, and hence more of them. More exports mean more traffic on the Erie. Gould therefore favors a rise in gold.
During the summer of 1869 he talks up gold to private investors, who express interest but lack especial influence, and to government officials, who possess influence but, at first, little interest. He and Fisk make friends with Abel Corbin, the husband of President Grant’s sister. Corbin arranges a meeting with Grant, during which Gould and Fisk point out the benefits to the American people in general and the Erie Railroad in particular of healthy exports. “We have employed on the Erie road some twenty thousand men, all told, and a stock of eight hundred locomotives, with the other equipments of the road on a corresponding scale,” Gould tells Grant. “I am aware of no way in which these men and equipments can be used to advantage unless the crops come forward from the West.” Grant is noncommittal but appears inclined to let the market find its own price for gold, without the government’s getting involved.
Gould cultivates the assistant federal treasurer in New York, Daniel Butterfield, who oversees the government’s gold trades. Butterfield’s is a critical position, for the federal Treasury contains sufficient gold to move the price substantially up or down, depending on whether the government is buying or selling. Butterfield doesn’t set policy, but he implements it, and he will know before anyone else in New York if Grant changes his mind and orders the government to intervene in the gold market.
Gould himself begins buying gold, discreetly but decidedly. He uses multiple brokers and keeps his own hand hidden. He hopes to create a broad surge that will feed on itself and move the gold price higher.
At some point his plans grow larger. From the devious Drew and the daunting Vanderbilt he has learned the concept of a “corner,” a market anomaly in which more of a commodity or stock has been contracted for sale to a purchaser—the cornerer—than exists on the market. The sellers find themselves at the mercy of the cornerer, who can dictate terms of settlement. Corners in wheat, pork bellies, railroad stocks, and other assets have been attempted and occasionally accomplished on Wall Street; Gould now develops a scheme to corner gold. If successful, the operation will make Gould very wealthy. It might also paralyze the financial system, but Gould leaves that problem to others.
Gould writes the script but remains in the shadows; Jim Fisk takes the production to center stage. In late September Fisk barges into the Gold Room, the special market at New Street and Wall where gold and greenbacks are frenetically traded. Regulars in the Gold Room liken it to a gambling parlor or a dog pit; the marble Cupid in the center should be a Midas, some say, turning everything to gold and starving in the process.
The latest innovation is a mechanical indicator of the current price. A large arrow responds immediately to rises and falls in the dollar value of gold. On the morning of Friday, September 24, the arrow rests at 143, indicating that 143 greenbacks are required to purchase 100 gold dollars. When the Gold Room opens at ten, the arrow likely will creep upward, as it has been creeping upward since the first of September. Gould’s quiet purchases of gold have boosted the price; market watchers and players, including speculators who have climbed on the Gould bandwagon and become gold bulls, expect the rise to continue.
Yet something strange is afoot. Gold brokers have crowded the curb outside the Gold Room since dawn, and transactions are already taking place. A broker bids 145; his offer is accepted. Another bids 147; also taken. By the time trading officially begins, the price has topped 150. The gold arrow leaps the 5 percent—a large amount in this context—all at once.
And it keeps moving upward. Violent emotions surge across the Gold Room: the money lust of the gold bulls, who see their speculation nearing success and shout for the price to go still higher; the incipient panic of the gold bears, who have bet on a fall and now stare ruin in the face.
Amid the maelstrom stands Jim Fisk. His cherubic face beams with the pleasure of a child at play, an image rendered a bit incongruous by the cigar with which he punctuates his shouts at the brokers. In the stifling atmosphere of the Gold Room he is sweating profusely; the salty rivulets have plastered his strawberry ringlets to his forehead and caused the waxed ends of his moustache to droop. Fisk loudly and belligerently leads the charge of the gold bulls against the bears. As the price rises past 150, he bawls to his brokers: “Take all you can get.”
The price leaps upward again; the big arrow on the gold indicator lurches to 155. The Gold Room explodes in shouting, arm waving, and rushing to and fro. The anarchy sloshes next door to the stock exchange, where share prices have been heaving up and down on the hopes and fears of the gold men. One broker, more agitated than most, vows mortal harm to a nearby gold bull, promising to shoot him dead if he persists in driving gold up. The bull responds by tearing open his shirt and inviting the bear to fire. Fisk roars with delight and goads the bears further. “Take all you can get at 160!” he shouts above the din.
The bears see their end fast approaching. Most are already insolvent; their only hope is that the corner will break and the price fall before their creditors can catch them. This last hope fairly vanishes when the price jumps again, to 162.
And then …
The weak link in the golden chain of Gould and Fisk has always been the gold reserve of the government. Should this gold be released on the market—should the government in Washington even signal an intent to release it—the corner will be broken. This is why the partners have urged the president to keep the government out of the market, and why they have cultivated Butterfield as a lookout in the Treasury Department.
Grant has withheld the government’s hand till now, not wishing to intervene in a contest among the capitalists. But the wailing of the bears has carried to Washington by telegraph, and finally the president becomes alarmed, fearing that a gold corner will trigger a financial collapse. Shortly before noon on this Friday, he orders the Treasury to sell.
The order, relayed to New York, hits the Gold Room like a thunderclap. At noon, by the first chimes from the steeple of Trinity Church, the neighborhood outpost of Episcopalianism, where winning brokers offer thanks and losers pray for deliverance, the gold arrow hovers in the 160s; only moments later, before the echoes of the last of the dozen peals has faded, the arrow has plunged to the 130s.
The bears, lately strangling on their fears, suddenly breathe the fresh air of salvation. Again they see the sun; once more they feel the earth beneath their feet.
It is the bulls’ turn to panic. Great riches were in their grasp a moment ago; these have been snatched away. And because most of their purchases have been made with borrowed money, accepted at extortionate rates, the evaporation of their golden dream now threatens them with utter dissolution. As the new reality sets in, their groans of disappointment turn to howls of fear and rage.
The bulls look to their leader, Fisk, for guidance. But Fisk has vanished. Some claim to have seen him dashing north toward the Opera House. A small herd of angry bulls give chase; they shout that if they catch Fisk, his carcass will swing from one of the lampposts that line Broadway.
The mob reaches the Opera House, where they crash against a wall of thick men retained by Fisk and Gould for such emergencies. The jagged scars and flattened noses of the men suggest they have dealt with desperadoes more threatening than disappointed brokers. The mob mills around, wondering what to do.
Inside the Opera House, behind the heavy doors of the Erie office, Fisk wipes the sweat from his face and reclaims his composure. Gould greets him in a calm, low voice, apparently oblivious to the uproar outside. But his fingers work with subtle fury, tearing odd sheets of paper into tiny bits. While Fisk mops his brow, Gould carpets the floor around his desk with confetti. Separately and silently they calculate how they’ll survive this latest debacle. “It was each man drag out his own corpse,” Fisk will say of the moment. “Get out of it as well as you can.”