The First Black Friday, 1869 – Stocks, Not Shopping

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Photograph of the black board in the New York Gold Room, September 24, 1869, showing the collapse of the price of gold. Handwritten caption by James A. Garfield indicates it was used as evidence before the Committee of Banking & Currency during hearings in 1870. (Source: Wikimedia Commons)

Today we think of Black Friday as all about the shopping, but it hasn’t been that way for long. There are rumors that the origin of the term had to do with slave trading but that has been disproven. What we know of as Black Friday didn’t originate until 1961 when a Philadelphia PR firm attached it to the Christmas shopping season, which begins on the day after Thanksgiving. Or possibly, the same year Philadelphia police began using it as a derisive term because of the extra patrolling they had to do that day because of the shoppers. Take your pick.

However, the historical origin of the term dates from September 24, 1869, one of the greatest stock market crashes in American history. The whole situation began with greed, as such things often do. In the months leading up to September, two Wall Street speculators, Jim Fisk and Jay Gould, use their connections to the Grant White House (Gould was close friends with President Grant’s brother-in-law) to try to corner the gold market. They spread malicious rumors that the government refused to sell its gold, which lead to great demand, driving up the price. (At the time, gold was the currency standard in America. “Greenbacks,” the bills we know as money today, had been issued during the Civil War, but they were not backed dollar for dollar by gold, and thus, were less valuable.)

Scene in the New York Gold Room During the Great Excitement of September 24.

Scene in the New York Gold Room During the Great Excitement of September 24.

On September 23, 1869, Fisk and Gould met and decided to drive up the cost of gold to $150 an ounce ($130 was normal) and then sell their shares while others were still eager to buy. By the time trading opened the next day at 10 a.m., gold was already at $150 and growing steadily higher. Crowds were gathering outside the gold room at the New York Stock exchange and the National Guard had to be called in to keep order. As the price entered the $160s, inside brokers were running around like madmen, purchasing gold on credit. Rumor had it things were so crazy inside that men were dunking their heads in the water of the golden fountain in the center of the room just to say cool.

By 1 p.m., gold was at $164. The President finally agreed to prevent national collapse by selling gold (which his advisers had been telling him to do for four days). When Treasury Secretary George Boutwell announced the government would sell gold the following day, prices plummeted to $132 causing mass bankruptcy (due in part to the buying on credit). The stock market crashed as people sold stock like mad. With 30 minutes, gold was back down to the $130 it traded at before Fisk and Gould began monkeying with it months before. Hundreds of brokerages on Wall Street and around the country were ruined. By midnight 25 stock brokers committed suicide. The newspapers were quick to dub the day Black Friday.

fisk_gouldYou’ll see this take place in my next book. And despite the devastation, many people came out on top. Cornelius Vanderbilt, who had been warned of the scheme by my book’s main character, made $1.3 million. My main character made $100,000 (which is about $1 million today). And Gould? He made $11 million.

Sources
My source for the first paragraph is Snopes.com. The others come from three biographies of the main character of my next novel. As I’m not yet ready to reveal who that is, I am refraining from listing the titles. But please know the information in this post was well researched. I will list the sources when I reveal who my book is about.

Did you know about the origins of Black Friday? What rumors have you heard about Black Friday?

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4 thoughts on “The First Black Friday, 1869 – Stocks, Not Shopping

    • Hi Tessa,

      It fascinates me to hear that this story is so well known in the investment industry, but most other people have never heard it. (Or least I hadn’t.) I think you’ll like the detailed story. It actually involves two very bold, ingenious women.

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