HW Brands - American Colossus: The Triumph of Capitalism, 1865-1900

thank you I'm glad to be here how many of you were at the talk last night oh well okay then on I sometimes find myself addressing groups that I've addressed before and and but sometimes there are new people in and I don't know who exactly there was or was there before and so I'm I try not to repeat myself and I was once addressing well I grow considerably older than yourselves it was a retirement home and I said I had been there a year or two before and I hadn't remembered what I had talked about and I got up and I said well now I have to excuse me if I repeat myself because I'm not exactly sure what I said and somebody hollered out don't worry they couldn't remember it anyway so but this wouldn't apply to this group well since most of you who were here last night I maybe I can sort of continue what I was talking about because it actually segues very directly into what I was going to talk about anyway the book American Colossus is on the Gilded Age the Gilded Age is roughly defined as being the eighteen late 1860's to the 1890s night I expanded a little bit to get from well I call it 1865 to 1900 changed more dramatically than probably during any 35 or even 40 or 50 year period other periods in its history if you look at photographs having a cuff some of you mentioned that when you went home last night you hadn't had your fill of history so you turned on the local PBS affiliate and you caught the last episode of Ken Burns of Civil War who who raise your hand okay well if you look at photographs from that period from the Civil War you see in America the least to my eye looks decidedly different than the one we live in today it seems like it's a kind of a distant time and it was a different place and I think that's one of the appeals of that wonderful series because there's a certain aspect of the historical imagination of people whose interest in history that wants to see something that's quite different the exotic aspect of history but if you then look at photographs of America in the early 20th century just jump up to 1900 go from 1865 to 1919 hundred America even in the photographs is looking quite modern and you see the institutions you even see automobiles you see streetcars subways stuff that you would see today so something happened between will just say the end of the Civil War and the beginning of the 20th century and that's what I talk about in the book but before I get into this one of the big themes that I'm going to tell you a story and it's it begins in well where should I hurt you the story it begins in the late 1860's and it's based on a fundamental change in American financial life during the 1860s and it has to do with the American money supply until the 1860s the American currency was based on the dollar in the Constitution it establishes the link between the US dollar and gold and gold was the basis of the American money supply silver was added and so you get gold and silver hard money that form the basis the American currency now there's never enough gold and silver sitting around that people can confine their economic activities to just using those and so banks would issue banknotes and so you know the local bank of Grand Rapids would its equivalent would issue banknotes and they would trade his currency you got a local store and you'd use them but implicitly behind all this was supposed to be gold and silver the idea was you could take these notes to the bank and exchange them for gold and silver most people didn't want to carry gold and silver around because it's relatively clumsy paper is much more convenient but the idea was that if you needed to have the gold if you needed to have the silver you could find it you could go to the bank and get it during the Civil War because of the enormous expansion of demand for government services for government the union government and the Confederate government both were forced off of hard money off of specie and they began to print paper dollars the idea was that especially in the case of the Union these dollars were based on the Full Faith and Credit of the government but nothing else there was no guarantee that you could exchange these dollars for gold and silver they were printed in greening and therefore they were called greenbacks this was the first time dollars were called greenbacks and the greenbacks were different than the gold dollars there were two currencies that were circulating there were the gold dollars and if you took these to the Treasury these could be exchanged for gold if you took the greenbacks to the Treasury they would say nice-looking piece of paper you got there and that was it and the only thing that well I suppose I could ask you what was the only thing that would keep value in the green bags what was it that would allow the greenback just this piece of paper to have value of what is it that gives value to money pardon trust exactly and oh there is you know if you pull out a dollar bill and I'd actually don't know if I have any currency in my pocket but if you do there are two magic words on a dollar bill or a five or ten or whatever bill you have do you know what the two magic words are that convert it from just a piece of paper to money now that's not in god we trust' sorry in god we trust' everybody else has to pay cash no but now unfortunately God doesn't enter into this one now and this is before the age of Federal Reserve the Federal Reserve doesn't come along till the early 20th century there are two magic words that convert it into money otherwise it's just a piece of paper okay you've got your money out legal tender this note is legal tender for all debts public and private and what it means is that if I owe you ten dollars if I have a debt of ten dollars I bought a horse from you and I owe you ten dollars to pay off on the horse and I hand you one of these bills you have to accept it because that's the law that's what legal tender means and you know so that's what makes it money that's what makes it the sort of thing that people have to accept do you know what the temptation is though for governments if you can create legal tender by legal Fiat what's the temptation if you're a government and you have debts to pay what would be the temptation what is the temptation for our elected officials in Washington today when they're trying to hammer out a deal print money now in fact these days when money is when we say print money that's a euphemism because most of our money is in bank accounts it's just electric electronic digits but the essence is the same thing in the Civil War in fact they actually did just run the printing presses over time so the result of this was a dual currency in the United States there were the gold dollars but those were limited by the supply of gold in the Treasury and the Treasury had a big vault and in the vault was a bunch of gold and there the main vault was in Washington but there was a secondary vault that one that was actually more important was in New York City which is where Wall Street was located and that's the one where people to actually get the goal and then there were the greenbacks floating right the result of this was that there was huge speculation in currency now you know we know about how people speculate in currencies these days they'll buy euros or yen or yuan or whatever it might be guessing that one's gonna go up against the other and if you guess right make lots of money in the United States starting in 1862 there was this speculation in the two currencies of the United States one against the other and if you thought that Congress and the US Treasury and mint were going to be judicious and restrained in printing money then you would bid up the price of the greenbacks now the greenbacks were always worth less than the gold of dollars but the the premium varied so typically you it would take anywhere from a hundred and fifty greenback dollars to buy a hundred gold dollars but at times it got much worse than that so when the fortunes of the Union were declining after various defeats on the battlefield the value of the greenback would go down so it would take as many as 250 greenbacks to purchase a hundred gold dollars and last night I was talking about why they tried to get the news of the battles to New York as swiftly as possible well the currency speculators were betting on the outcome of the battles and depending on whether they bet right or bet wrong they would win big anyway the war ends but the currency problem remains it's no longer connected to battlefield victories or defeats but it's connected to a variety of other things the ordinary ups and downs of the economy now there were two individuals who had decided that they were going to try to bid up the price of gold against the greenback and one of these individuals name was Jay Gould now Jay Gould was a young man and I suppose is it fair to say that speculation is a young man's game maybe you have to have either the the nerves of a young man or the short memory of a young man maybe that's what does it and you know when I look at what happened in 2008 you know you I'm sure there were plenty of people in the room when we're saying you know this bubble we're in these always come to a bad end but it's the people who don't remember the last time the bubble burst that are pushing up the prices anyway so Jay Gould was the director of the Erie Railroad and this is important to the story because as the director of the Erie Railroad he had an interest in bidding up the price of gold just to bid up the price of gold was to drive down the price of the dollar and I say the greenback and so I'm gonna say gold on the one hand the dollar on the other two gold dollars and then greenback dollars over here to bid up the price of gold would be to drive down the draw in the price of the dollar and if the dollar weakens then American exports become more attractive in foreign markets the principle is still the same today and what Gould wanted to do was drive down the price of American grain American grain what did he have to do with American grain well the Erie Railroad shipped a lot of grain from the Midwest to New York and then it would be shipped overseas so if American grain is cheap then it's purchased by overseas buyers and they demand the grain from the Midwest which goes out over the Erie Railroad and generates business for the Erie Railroad so Jay Gould decides that he wants to take action to bid up the price of gold Gould decides that he wants to have the assistance of the US government on this the new president is none other than Ulysses Grant Grant has been elected he was elected in a an overwhelming victory after Abraham Lincoln was assassinated Andrew Johnson became president and I'll just remind you Andrew Johnson had been added to the well you could call up the Republican ticket in 1864 but the Republicans didn't call it the Republican ticket because Abraham Lincoln wanted to point out that this wasn't that the war effort was not simply a Republican manopoly Andrew Johnson was a Democrat he was a member of the opposing party he was a southerner he was from Tennessee he was a unionist which is one of the reasons he wasn't very popular in Tennessee but he added to the ticket now Abraham Lincoln's first vice president was a man named Hannibal Hamlin who was quite personally unpopular in fact Lincoln used to joke and the joke came out later it turned out to be a rather dark joke later he said that Hannibal Hamlin was his assassination insurance no one would assassinate Lincoln knowing that Hannibal Hamlin would be the next president of the United States now it was Lincoln who decided to remove Hamlin from the ticket in 1864 and replace him with Andrew Johnson Lincoln appears not to have commented on what this cancellation of his insurance policy might have portended but of course Lincoln was assassinated shortly after his second inauguration and this southerner now this Democrat becomes President of the United States now how fully John Wilkes Booth thought through this is unclear it was mostly a matter of vengeance against Lincoln whether he thought that Johnson would do any better for the south it's hard to say Johnson suffered from being an impossible situation he was the heir to the successor to the now martyred Lincoln no one in the North liked him because he was a southerner no one in the South liked him because he was an apostate he had joined the Republican side the Republicans didn't like him because he was a Democrat the Democrats didn't like him because he had joined with the Republicans there was no way he could even servile maybe he could survive his presidents he did survive as president but not by much oh there was something else that happened you know the story roughly speaking of how Johnson was impeached but barely not convicted his Pietschmann twas not necessarily for ordained but there was going to be a huge challenge of confrontation between whoever was president and Congress even if it had been Lincoln if Lincoln had lived Lincoln would have had to deal with many of the same issues as Johnson and at the heart of the issue was the question of the role of the president during the 19th century it was understood that the initiative in American politics lay with Congress the big decisions originated in Congress the president the president was mostly well we call him the chief executive but he was like the CEO of a Board of Directors Congress ordained and the president then enforced things changed during the war things always change during the war because during the war Congress loses ground to the president the president is the commander in chief and his commander in chief the president can do stuff that doesn't depend on Congress and the major initiatives of the Civil War were undertaken by Lincoln as President and Congress sort of had to tag along but there was an institutional resistance and jealousy that was building up that was going to snap back against the president as soon as the war ended regardless of who the president was anyway it wasn't Lincoln and it was Andrew Johnson who didn't have the personal stature of having led the country to war so Johnson was a lame duck almost a dead duck from the moment he took office he barely survived everyone knew he would be succeeded by another Republican not a Democrat like Johnson a Republican who would the Republican be America at this point did what it had done after each of its previous wars after each war America elected the victorious general after the Revolutionary War who became president George Washington after the war of 1812 who became president Jackson and then William Henry Harrison after the war with Mexico who became president Zachary Taylor and after the Civil War it was going to be of course Ulysses Grant Grant was approached to have his name put in play in 1864 as early as 1864 there were Republicans who were dissatisfied with Lincoln and who thought grant would make a better candidate but Grant said now he didn't want anything to do with it he had a war to win after the war ended though grant realized that he could very well be the next president of the United States and he looked upon this with some ambivalence he was not an ambitious fellow and I read his letters and I try to figure out so it's there is there a president inside this guy secretly screaming to get out and I just can't find it but grant took the same position that Andrew Jackson took and I'm aware of this maybe just because I read about written about Andrew Jackson but both of them adopted the attitude of the soldier by the way this is the attitude adopted by Dwight Eisenhower who didn't seek the presidency but was willing to answer the call of the people when you are when you become the top soldier of your generation in your country when the people call when they give you an order it's almost like the president giving you an order and you can't really say no and so grant was all right if the people want me to be President I will answer the call of the people and it was not exactly automatic that he became frightened Lee was automatically he got the nomination the Republicans knew that a victorious general would be unbeatable especially since in 1868 most of the South could not yet vote it was not reconsider is not back in the Union and so the only people who objected to grant were those on the side that he had defeated and they weren't voting so grant was a shoe-in huh and now things get more interesting because there were people who nominated grant on the assumption that Grant would be kind of an empty suit someone who would be willing to go along with whatever the Republican leaders in Congress wanted him to do and grant was I guess I could say shrewd enough or maybe he was just it's hard to tell with God I'll say shrewd enough to let them think precisely that this happens repeatedly if somebody becomes the nominee of the the favorite of some powerful group and they go ahead and let that powerful group put their name forward and the powerful group often thinks okay we elect this person and then we'll be able to tell him what to do then lo and behold the person gets elected takes the inauguration the inaugural oath and then decides you know what I'm president you're not and Theodore Roosevelt for example did this when he was elected governor governor of New York and he allowed the New York boss as the New York political machine to put his name in nomination and they thought okay we're gonna get this guy in there he'll do what we tell him to do and Roosevelt played along and then once he was inaugurated I'm governor and I'll do what I want William Howard Taft did this in history the presidency Taft was Theodore Roosevelt's anointed successor Theodore Roosevelt had thought about running for a third term but now he better not he better not hold himself up higher than George Washington and furthermore on election night in 1904 when he was elected the first time in his own right through some fit of odd humility he's very odd for Roosevelt he said he would not run for election in 1908 and he later said he would give his right arm to be able to take that back but he couldn't so he said okay I know I'll make Taft president and he prepared Taft and he thought the Taft would do exactly what Roosevelt would have done well Taft goes along with this even to the point of Roosevelt was advising him how to run his campaign he said don't play golf Taft liked to play golf don't play golf golf is not the sport of the people you know do something like Theodore Roosevelt would have done you know a real man of people you know a single sticks yeah teddy that's a people do that all the time but anyway so Taff gets elected and decides hey I'm president I'm gonna do it the way I want anyhow so the Republicans elect Ulysses Grant and they got this president what are they going to do with him grant grin had a very modest agenda he wanted to first of all first and foremost balance the budget because the government was deeply in debt after the Civil War and the thing to do was to pay off the debt and he also wanted to restore the currency to its gold and silver bases he mode like most everybody else felt that the greenbacks were an emergency wartime measure and so he wanted to gradually retire the greenbacks have the government buy them up and then replace them with gold and silver backed notes that was the long-term agenda but the question is how could you do that without disrupting the currency markets so this is grants position now grant is no financial expert he has a basic understanding of the way the money markets work of the way the economy works but he's no expert and Jay Gould knows this Jay Gould is an expert he has made a career a short career until now but nonetheless a career in a successful career out of speculation and so he manages to arrange an interview with Ulysses Grant now this is a little bit strange here is this 35 year old Wall Street trader who gets an interview with the President of the United States how could such a thing happen well he was indeed the director of a major railroad the Erie Railroad was a big deal and so it would be like some head honcho of a big fortune 500 company getting an interview with the president but there was another Avenue Ulysses Grant had a younger sister and this younger sister had never been married she was well in the terminology today a spinster she was an old maid and it looked as though she would never be married and this was considered either something between a misfortune and a minor tragedy and then in her let's see she I guess she was probably pushing 40 which was old age for a single woman in those days um she had a bow and this fellows name was Abel Corbin and Abel Corbin was a very minor Wall Street player now interestingly enough Corbin had known something about Jenny grant for a while but had no romantic interest in her until wouldn't you know it until her brother was elected president of the United States and all of a sudden her attractions grew more powerful and Corbin proposed and they were married well Jay Gould knew about this and decided to approach Abel Corbin and tell Corbin that he Gould had this plan where they were going to try to drive up the price of gold and perhaps Corbin would be interested in getting in on the speculation and so Corbin was cut in on the deal now exactly when in this transaction it was suggested that Abel Corbin would arrange a meeting between Jay Gould and his brother-in-law is unclear but Corbin did and grant now it's hard to know whether grant was simply being naive at this point or was trying to be nice to his sister because his sister was still kind of nervous about you know she was now married to this guy but still she wanted to please her new husband and her new husband thought that it would be very good for the business interests of the country if President Grant spoke to Jay Gould because Jay Gould as I say was the director of the Erie Railroad anyway a meeting is held and Gould talks to Grand and Gould is describing the advantages to the country of getting the price of gold up and he explains how it would will make American exports more attractive overseas and it will approve American business and farmers will do better and the people who are engaged in the big theory where if American goods are more competitive the American economy does well and grant is listening it seems okay and at this point Jay Gould is not trying to get any action out of the government what he's really trying to do is figure out what the response of the government will be if the price of gold increases this is the critical thing about all this Gould doesn't want grant to do anything in fact what he wants grant to do is nothing at all because at some point in this and that now we're talking about the summer of 1869 in the summer of 1869 and this is when the produce of the Midwest is going to be shipping to the east anyway so sometime during the summer of 1869 Gould decides to go for bigger game than just a modest increase in the price of gold so it will boost the Erie Railroad traffic that's part of it but he realizes that in fact he could perhaps accomplish a grand coup in American speculation probably the biggest coup in American speculative history he has in mind a plan to corner the market in gold now corners were fairly common in the nineteenth century but and you occasionally hear about them these days but they're much rarer now the last time that I remember hear anything about it was when the Hunt Brothers in the 1970s wanted a corner the silver market and what it means essentially is and for those of you who are who know finance you'll know more about this than I do but basically a corner occurs when people have made commitments signed contracts to deliver more of a product than exists on the market to deliver and so people take speculative positions they'll they'll promise to deliver pork bellies at some time in the future and they'll hope that they can before they deliver the pork bellies I hope they can actually acquire the pork bellies to deliver well if enough people are making promises deliver in the future there will be more promises out there than pork bellies actually to deliver at which point if one person can control all those promises if one person is owed all the pork bellies then that person has a corner on the market because more is owed to him than exists and in order to get out of their commitments typically those people who have pledged to commit are contracted to commit have to pay a premium as I say there had been corners in pork bellies there had been corners in wheat there had been corners in things like copper but nobody had ever cornered gold and gold was special because gold was money if you could control the gold supply of the country everybody needs gold on a daily basis at least everybody who's engaged in international trade needed gold everybody who had to pay their taxes had to pay in gold now you can do without pork bellies for a while you can do without wheat for a while you can eat rice or corn but the country could not do without gold and Gould knew that if he could corner gold he would have command of the American financial system and people would have to pay him essentially extortionate rates to be released from their contracts so this became the plan and Gould enlisted a friend of his a guy named Jim fish now Fisk was as flamboyant as Gould was quiet almost nobody knew what Jay Gould looked like he was this young guy with a big dark black beard but he kept out of the limelight he stuck to the offices of the Erie Railroad Jim Fisk on the other hand was the face of the Erie Railroad he was a showman he was the PT Barnum of Wall Street he was called Diamond Jim or Jubilee Jim he made a show wherever he went he had a very notorious notorious yes I guess so affair with a woman named Josie Mansfield Josie Mansfield was the term of the day was actress she was an actress but actress covered all sorts of activities and Josie was Jim Fisk kept woman now mrs. Fisk existed but she never came to New York Fisk lived in Boston she stayed in Boston and down in New York Jim Fisk was carrying on with Josie Mansfield and this scandalized much of New York in titillated the rest of New York and this was this was famous Fisk was notorious and Fisk was going to be the face of Gould plan to corner the gold market so the plan develops over the summer of 1869 and slowly carefully Gould and Fisk begin to buy up gold they enlist various brokers and none of the brokers know what the other brokers are doing because if word gets out that Gould and Fisk together trying to buy up all the gold then people will realize that something is afoot but there was just this mysterious groundswell of support for gold and as the price of gold rose more people jumped on the go bandwagon they didn't know what was driving up the price of gold but something was and when the speculators saw that the price of gold was rising they wanted to get on board as well and naturally this happens in bubbles all the time the more people got on board the higher the price went and as the price of gold went up then all those good things that Jay Gould had predicted to Ulysses Grant began to happen and as in all sorts of pick your bubble real estate bubble dot-com bubble while the bubble is rising everybody thinks this is a grand thing business is exuberant everybody's making money but as the price of gold rose further and further people began to bet that it couldn't be sustained that the price rise could not be sustained now gold is different I guess in this respect then say real estate and I'm sure many of you here experienced the rise the real estate bubble of the last decade and most people well as it must be a lot of people seem to think or act as though real estate bubbles are different because you know the saying is that the price of land can only go up because they're not making any more of it and all this sort of thing and so in the case of real estate now maybe some of you have different experiences than I do but almost nobody was selling real estate short now short sales are basically bets that the price will fall and people weren't selling real estate short they sell other things short and people began to take short positions in gold in the early part of September 1869 and they began to think okay the price rise cannot be sustained the price will have to fall and when you take a short position you bet the price will fall essentially what you do is you promise future delivery of gold at a lower price and meanwhile you are gonna borrow the gold you sell gold that you have borrowed and then you're gonna buy it at a lower price to pay off and so and the people who take the position the short position the ones who are betting on a fallen price these are the Bears of the market and the Bulls are the ones who are betting on a price rise so in September of 1869 in Wall Street there is this special room in which gold is traded in fact the gold market was so active during the last part of the civil war that this brand-new arena was developers called the Gold Room and in the Gold Room in the middle of the Gold Room there was this pearly fountain that showed this little cupid shooting out water and this was considered a nice sumptuous sort of thing but the big deal was this indicator of the price of gold they didn't have tickers in those days and people kept up with the prices just by listening to people shouting okay so what's bid what's asked and all this and so it was difficult to know what the price was of commodities or stocks at any given time and here I'll pause and say parenthetically that one of the biggest differences between the economy in the 19th century and the economy now is now things are very transparent comparatively speaking so you know what the price of a given stock is right now you know you can go on the ticker and the ticker will say you know what the last bid was you know what the price of any commodity is you know what the government is doing you know this you know that one of the reasons we know this is that by law this has to be reported and the reason the laws are the way they are is well in part because of what happened on the day that I'm coming up to Black Friday and this was the first Black Friday they've been blacks all sorts of other things Oh in this Black Friday how many of you have any view scratched your heads in the last ten years or so at the reference to when people say Black Friday these days what do they mean the day after Thanksgiving now I mean I knew Black Friday from 1869 and Black Friday was black because it was a very disastrous day and when I hear Black Friday after Thanksgiving it it took me a few years what in the world are they talking about but anyway so the name has been caught so leading up to the end of September 1869 the price of gold is going higher but there is this countervailing force the camp of the Bears who are betting that the price is going to have to fall and if you have taken a short position if you are betting on fall in prices then you are in grave danger it's a very dangerous position to be in because there is no upper limit on the price of a commodity if you promise to deliver goal that let's say and that the price we're talking about now is gold was at about 150 which meant that it took 150 greenback dollars to buy a hundred dollars in gold and so if you have if you're betting on a fall in the price of gold and you say okay I'm going to deliver gold at 130 in a month well you have to deliver it 130 what if the price of gold goes to 200 one of the price of gold goes to 300 one of the price of gold goes to 400 there is no upper limit on how much you can lose if you're a bear there is an upper limit on how much you can lose if you're a bull if you bought something at 100 and then it falls to 80 you've lost 20 if it falls to 0 you've lost 100 you can't lose any more than you've invested but the Bears can lose everything and as the price of gold kept mounting and mounting the Bears saw their lives passing before their eyes because you know they might all be financially ruined by the end of the week by the end of the day and amid all of this jiggle-jiggle had this habit in the middle of a complicated tense financial transaction he wouldn't say anything he wouldn't speak to anyone he would remain in his office and he would think and he had a habit of taking pieces of paper and just tearing them into small little bits and you knew that things were getting tense as the pile of confetti grew around ghouls feet meanwhile Jim Fisk had an entirely different reaction Fisk wanted to be out in public so he went into the gold room where everybody was gathered and there was no electronic of course the trading was by voice and people were shouting all bid 144 gold I'll take it I'll bid 145 for gold I'll take it and in the middle of this fist was the one standing up bellowing I'll take all the gold that anybody will sell me at 150 and then 155 now the innovation in the gold market was in this gold room was this big indicator this arrow that showed what the price of gold was and the arrow kept going up and up and up and the gold bulls as the arrow went up they cheered and hollered and the Bears began to scream and swoon as the gold price went up and up it came to a climax on September 24th a Friday 1869 and the markets in those days opened at 10 o'clock in the morning but even before the markets opened the price was being bid up on the curb so there the curbside traders there was the informal trading that took place before the markets open and the gold price was being bid up but the arrow wouldn't move until the market actually opened and so people who were watching the arrow ok the arrow was stuck into whatever it was 145 and as soon as the market opened it leapt 10 points to reflect the overnight trading and the Bears were even more distressed and there was talk of inflicting mortal harm on the Bulls and Jay Gould got out there's a no buy all the gold I can get at 160 and at least one of the Bears got so desperate that he pulled a gun on the Bulls and another one of the Bulls not fist but another one of the Bulls said oh could got up on top of a table and so alright you wanna shoot me shoot me but he didn't he was hauled away the guys the gun was hauled away ok now attention shifts from New York to Washington because Ulysses Grant has been watching this and Ulysses Grant is a firm believer in small government in lays a fair attitudes toward the financial markets and Ulysses Grant has pretty much decided to keep hands off of this this is an affair among the speculators this is a matter among the traders and for the government to step in well why should the government step in because you know the price the rise in the price of gold this seems to be moving products but furthermore grant realizes that to intervene would take the part of one side against the other and he strongly tempted to just remain on the sidelines and let the market sort things out but as the price of gold gets higher and higher it begins to threaten the the ordinary economy there were the speculators who wanted the price of gold to go up or down but there were all the ordinary users of gold people for example who had foreign transactions the dollar wasn't any good overseas you had to deal in gold there were people who had to have gold to pay their taxes one of the curious exclusions in the legal tender aspect and it was called by the legal by the way the legal tender act that created the greenbacks was that these notes were legal tender for all debts public and private except for paying your taxes the government insisted on being paid in gold rather than its own money a nice exception so there were all these people who had to pay their taxes in gold and they typically didn't buy the gold to pay the taxes until right before the taxes were due but now the price of gold was going through the roof and they were in dire straits so grant finds himself in a situation where on the one side his philosophical view is that what the kind of what he needs to do is just stay out let the markets do what markets do on the other hand he's hearing cries of pain from ordinate we'll just call them ordinary honest business people who need to have gold to conduct their business and they're being squeezed out so what does the president do he knows and Gould knows and Fiske knows and everybody knows that if the government decides to enter the market the government has enough gold in the vault in New York to break any attempt at a corner the corner will work simply because there's not enough gold to cover all the futures contracts but Gould has based his calculation on the knowledge of how much gold is in private hands and it's a guess because nobody knows exactly how much gold is in private hands but Gould knows Fisk knows grant knows that there is enough gold in that US Treasury vault in New York that if grant gives the orders to open the vault doors if the government sells gold it will break the corner so grant has to decide what to do and he's thinking about this and he is hearing on the one hand from his brother-in-law Abel Corbin that you know the government just ought to stay out the government ought to let the private market do what the private market does but then then it begins to wonder why is Abel Corbin so interested in this what is it to Abel Corbin grant knows Corbin only vaguely this is his new brother-in-law and so he's thinking to himself what's Corbin yet to do he begins to inquire and he learns that Corbin has a connection to Jay Gould this is something new grant didn't know this and he suspects that Corbin is in on the gold scheme and so he gives the order grant gives the order to his secretary of the Treasury George Boutwell that the government will sell gold the government will break the corner now this is where things get very interesting because in 1869 there was no Standard Time in the United States and now we have East time central time Mountain Time Pacific time there were no standard time zones in 1869 do you know why by the way we have standard time zones for the railroads the railroads needed to know when the trains are going even when they're gonna arrive the railroads did not yet have that kind of clout they didn't span the continent yet and so every city had its own local time and so the time in New York was twelve minutes ahead of the time in Washington it's just that much farther east and the way they normally did is they just said it by when the Sun goes overhead and that's noon and the Sun was 12 minutes ahead in New York from what it is in Washington now this is a critical element of this 12 minute difference is critical in well not so much in what happened at the time but how somebody like me coming along later is trying to unravel what happened because there is a telegram that is sent from Washington DC from Boutwell goes from grants from the White House to his office in the Treasury and sends a telegram to New York the telegram is I think that the telegram is time stamped in Washington at something like 11:50 in the morning and it arrives in New York at 12:07 or something like this now when I first saw this and I've seen the the telegrams okay I thought that's kind of a long time lag to telegraphy is more or less instantaneous and then I'll wait there's the difference in the time okay and so that will account for some of it but for the rest of it there's just a few minutes that were on the counted for now it turns out that the word that the Treasury was going to sell gold there was good there was the official announcement and the official announcement occurred as soon as the Treasury's office in New York got the word but before the Treasury's office in New York got the word somehow the gold room in New York got the word four or five minutes ahead of when the announcement was made and this goes back to what I was saying last night and again this morning about how the speculators had their own and I think maybe last night I called them spies what apparently happened is that Gould as I told you Jay Gould did not want the government to do anything he didn't even want Abel Corbin to do anything except except to give word that if the government was going to do something because if the government's going to do something there was only one thing the government would be doing and that would be selling gold the government would mean buying gold the other will be selling gold so at some point Corbin got the word to güell that the government was going to start selling gold and as a result of this Gould himself started selling gold before the word got out and Gould did it this just goes to show there's no honor among thieves Gould started selling gold behind the back of Jim Fisk his own partner and Fisk was out there bidding up the price of gold and Gould was silently tearing little pieces of paper and given the orders whose guys to sell gold well when the news hit the market and and other people found out that the government was going to sell gold because there were everybody had spies and there were people watching the White House to see who went in and out of the White House and they saw that the Treasury Secretary went into the White House on that morning so they had one ear to the ground in New York what's going on in the Gold Room and then they're watching the White House and the Treasury Secretary goes into the White House and the Treasury secretary comes out of the White House and he goes to his office in the Treasury Department the street and they follow him to the Treasury Department and then they see a courier going from the Treasury Department to the local western union office and they assume this can mean only one thing now one of the things we can't know at least nobody's been able to figure out is whether and to what extent people in the western union office were in on the scheme because it was the most natural thing in the world for speculators to want to get advanced notice from the Treasury from the Western Union operators because they would know what the content of the message was it was a clue in itself that a message was being sent because the message could have said hold on or sell gold the Western Union guys would know exactly what it was being said and if they would you know one would think that for a tip of 200 dollars they just said you know this is what it says or another thing they could do is perhaps delay the message for just a minute or two while sending another message on there is something coming out expect an announcement from the Treasury Department in any of it nobody knows exactly how that happened but when the news hit the Gold Room there was a financial panic and the Bulls who had been seeing great riches just within their grasp all of a sudden had those riches taken away from them and the Bears whose lives have been passing before their eyes are trying to explain figure out how they're going to survive this all of sudden they breathe this great sigh of relief and the Bears are cheering the Bulls are running and the Bulls are angry and they decide that the focus of their problem the person that they're going to take it to this out on the pea - people are Jim Fisk and Jay Gould and so Gould and Fisk literally have to run for their lives because there's this mob of angry speculators chasing them down Wall Street and they take refuge in their offices at the office of the Erie Railroad was in a place called the Grand Opera House why it was in the Grand Opera House well this is because Jim Fisk wanted to make Josie Mansfield his girlfriend into an actor and so he bought her this Opera House and he set her on stone just around the corner from the Opera House and besides Jim Fisk thought it was great to run an opera it was the equivalent of being a Hollywood producer in those days oh well the other thing is that aside from Josie it gave him he gave him access to all those aspiring actresses and so he's anyway thought it's cool to have this office it would be it was the equivalent of having the I mean what would it be it was sort of like having the offices of ExxonMobil in a real high-class brothel but anyway oh but Gould and Fisk also had this small army of thugs hired from the Five Points district in the Bowery in other parts of New York who were their enforcers and their protectors in this case and as there's army if the small group of speculators began chasing up the street they took refuge behind the heavy oak doors of the Erie offices in the Opera House and then this big cordon of thugs just formed a human wall and these the angry spectators come in they just sort of bounce off the wall and they mill around not knowing what to do well this was Black Friday the financial panic with the price the fall in the price of gold spread to the stock market because credit had been flowing back and forth and stocks swooned and the economy was pitched into a nosedive over the course of the next several months Congress did investigations because somebody had been tampering with the money supply with the gold supplying all this stuff and everybody who was involved was invited required to come testify and Jay Gould was brought up and he explained everything that he had done and his testimony was fairly honest he didn't say that he had bribed Abel Corbin somebody else had to say that he didn't say that he had bribed the assistant Treasury secretary who was based in New York that had to come out from another source Jay Fiske went before the committee and he was happy to give the testimony Fisk was happy for any kind of any kind of stage he could get and when asked where all the money went because there was all sorts of money circulating around and at the end of the time nobody could find out where the money went and Gould was I mean Fisk was very good with he said the money went where the Woodbine twineth now I'm still trying to figure out exactly what that meant what that means except um maybe some of you have a better notion maybe that resonates more with you but Woodbine's have this way of twined a thing down sort of gutter holes and down to where the sewer pipes go so this is what Fisk was talking about and when asked it became obvious in the course of the investigations that Gould had been selling while Fisk was still buying and there was this double-cross between the two of them the striking thing was that Fisk didn't take this amiss at all and one wonders about this he was a very good-natured guy some people thought well maybe maybe Fisk and Gould had a deal whereby they would just pool their gains and losses and so that even it up later but Fisk's comment at the end of this was yes it was one of those disastrous days where it was each man dragged out his own corpse and so that was the end of that story now I'm gonna finish up - that was gonna I was going to give you this grand sort of theoretical explanation of the Gilded Age and the rise of capitalism the challenges to democracy and I'll I'll go in that direction if you want me to but I do have to tell you sort of the end of the Fisk because it does give me an opportunity to plug my next book and my next book is fact in is not the book about Ulysses Grant that's coming out next year but I've got a book that's coming out this spring and the title of the book sort of gives away what the story is the title of book is the murder of Jim Fisk for the love of Josie Mansfield and the story that I've begun to describe of the relationship between Fisk and Mansfield gets more complicated because Josie Mansfield 23 years old has won the heart of Jim Fisk who is this big hearted character big living character married but nonetheless he falls head-over-heels for Josie and Josie likes Fisk's money but isn't that crazy about Fisk Fisk is not a particularly handsome guy now Ned Stokes on the other hand Ned Stokes came from he was I'm trying to think of he was the oh the Clark Gable type there are photographs of Ned Stokes and what he's a darkly dangerously handsome guy and Josie falls for Ned she still wants Fisk's money so she lives with Fisk while carrying on this affair with Stokes this complicates the fast as she's living with Fisk and Fisk is married to his wife in Boston and it's sort of to semi-open secret but mrs. Fisk apparently either doesn't know she doesn't read the papers from New York and she doesn't heed the gossips because she knows that the gossips they say all sorts of things and she's quite happy for her marriage to Jim Fisk II take place it at a distance well Jim Fisk is the one who his heart is broken when Josie finally runs off with Ned with Ned Stokes now one would think Jim Fisk the one who he's a speculator he's a gambler he's cheating on his wife but he seems to have fallen in love with Josie and when Josie throws him over for Ned Stokes he's horribly upset and he decides oh well if Josie had simply had the honor sort of of breaking it off with this then he probably would have said oh well that's the way it goes but while she was carrying on with Stokes she still continued to take Fisk's money and fish thought this was a little bit too far so and he also fought in fist the you know the way who knows the way of the heart this didn't blame Josie he blamed Ned Stokes his rival and love for somehow turning Josie's had Stokes had had some business dealings with fists which was the beginning of Stokes's downfall because Stokes did not have the head for business the head for speculation the head for cheating and skullduggery that fist did so Fisk decides that he's going to get back at Stokes by ruining Stokes financially and Stokes with something of an innocent when it came to the speculative games at Fisk played and so Stokes finds himself ruined by Jim Fisk and there are suits and countersuits oh the story gets complicated by the fact that Josie has Fisk's love letters she has kept the love letters and although he is a very canny guy in business he's just pouring his heart out in these letters you know the kind of snookums dear and all this stuff that he's going to be embarrassed that the world will see and she's got the letters and she has threatened to take the letters to a newspaper and sell them to the newspaper and they will love to print them because this will boost circulation so Fisk Sue's to have the letters embargo so that there will be an injunction the letters cannot be published it gets more interesting than because one of Fisk's friends one of the friends who comes to Fisk's box at the Grand Opera is none other than William tweed William tweed is boss tweed of New York William tweed is up to his neck in dirty deals and it is assumed with some good basis in fact that the letters that Fisk has sent Josie have damaging material not simply on the state of Fisk's heart but on the finances of boss tweed so boss tweed gets involved the letters must not be published in order to prevent the letters from being published tweed and Fisk managed to bribe judges in New York justice in New York is fully for sale to the highest bidder and they're the highest bidder and they get injunctions against Stokes not only to prevent the publication of the letters but to get Stokes put away in prison for trumped-up charges Stokes becomes outraged by this and he oh my gosh there's there's no way out of this so Stokes Ned Stokes goes to the Grand Central Hotel in New York the finest new hotel on what's now lower broader it's Broadway at about 20 that's no longer there and lies in wait Jim Fisk enters the hotel as he's coming up the stairway of the Grand Central Hotel Stokes pulls out a small pistol and shoots him twice bang bang this is astonished fist has known that speculation and even rivalries and love can be sometimes bitter but deadly and he falls with his astonished look on his face he is carries a big man he's carried into one of the adjacent hotel rooms where he bleeds to death and dies meanwhile Stokes has tried to make his escape he's running out of the hotel and he's throwing people off by saying somebody shot that guy back there well but somebody sees him and they tackle him just as he's about to escape he is arrested and a series of murder trials ensue the first murder trial ends in a hung jury the second murder trial well I can't tell you the end of this story because you wouldn't buy the book then I'll leave it there okay anyway I'll be happy to take questions if you haven't you

Channel: Adam Bradway

Views: 9,581

Rating: 4.8208957 out of 5

Keywords: brands, eberhard

Id: p0pMNqlHO2c

Length: 64min 29sec (3869 seconds)

Published: Wed Jun 01 2011