The millionaire fraud that originated the first black Friday
Jay Gould and Jim Fisk were the protagonists of the largest and most scandalous financial scam that caused the first cataclysm of the New York Stock Exchange in history
A millionaire fraud originated the first black Friday. In 1860, railroad entrepreneurs Jay Gould and Jim Fisk decided to do business with gold on the black market, accumulating the metal so that it would rise in price.
Both businessmen allied themselves with the banker Abel Corbin, brother-in-law of President Ulysses Grant, who was in charge of bringing them closer to the president and thus suggesting that he keep the price of gold high. They had an informant, Daniel Butterfield, undersecretary of the Treasury, who leaked when the government would sell the reserves.
Gould and Fisk began their accumulation of gold, in August 1869, using for this purpose interposed companies and other “tricks” that allowed them to remain anonymous. However, his plans to accumulate the metal was discovered by the president of the United States and Gould decides to sell as much gold as possible, without notifying his partners and accomplices.
The disorder remained for two days and on Friday, September 24, what history remembers today as the first Black Friday takes place. Gold, which was trading at $ 132, had closed on Thursday the 23rd at more than $ 144, reaching a maximum of $ 200 on Friday, when Grant decided to act and “flooded the market with the government’s gold reserves, and caused an earthquake on Wall Street.”
Prices plummeted in minutes to $ 133, which is equivalent to a drop of the order of 33 %, while equities fell 20 % and many small and medium-sized entrepreneurs went out of business. The economic consequences were, in some cases, devastating, even hitting European markets. However, the protagonists were practically unscathed from an economic and legal point of view.
M.Rodríguez
Source: bancaynegocios.com
