Nov 26, 2021

Black Friday: A tradition with dark roots

Ahd Emad
Minted™
Ahd Emad

For many people, Black Friday means staying up late or getting up really early to stand in long lines, and take advantage of heavily discounted deals at their favourite stores. But other than the fact that it's shoppers' favourite day of the year, have you ever thought about what actually happened on the real Black Friday? Sure, it's now known as the craziest shopping day of the year, but you might be surprised to learn that it has a much more interesting backstory. To help you understand the history of that dramatic Friday, this article will explain what conspired and why it has become an iconic day. 

P.S: We guarantee that by the end of this article, you'll have a greater appreciation for one of the busiest (but still amazing) times of the year.


Although the term "Black Friday" is now solely associated with happy holiday shopping, it was actually first used to describe a financial crisis specifically, the crash of the U.S. gold market on September 24, 1869. 

The story stars Jay Gould and Jim Fisk, two notoriously ruthless Wall Street financiers, who spun a web aimed at conquering what was perhaps the most audacious target in the American financial system: the gold market. They formed the "Gold Ring" to buy up as much of the nation as they could until they had "cornered" the market. From there, they could drive up the price sky-high and sell for astronomical profits.

In fact, they were powerful men who had contacts with the most powerful men in the country. And not just Wall Street power, but the president's power. Gould and Fisk were friends with President Ulysses S. Grant at the time. Their plan was to gain access to information about the government's gold policy—and even prevent the sale of gold—and thus manipulate the market. It unsurprisingly worked, eventually resulting in a scandal that harmed both the national economy and Grant's presidency. In fact, in addition to using their insider information, Gould and Fisk used their personal appearances with Grant to gain clout and trust on Wall Street.

How did they do it?

During the first week of September, Grant's Secretary of the Treasury, George S. Boutwell, received a letter from Grant in which he stated that gold sales would be damaging to Western farmers. Ofcourse it was just a fake notion planted by Gould and Fisk, ultimately leading Boutwell to put an end to Treasury gold sales. Simultaneously, Gould and Fisk began purchasing all the gold they could get their hands on through New York City's Gold Room, driving up the price of gold. They each owned $60 million in gold, which was three times the amount of gold circulating in New York. 

Eventually, the gold rush had reached a fever pitch by September 24, 1869, the day that would become known as "Black Friday." Journalists and reporters gathered near Wall Street, stunned that gold had closed the previous day at

£144,12 but had jumped to $160 shortly after trading resumed. Unaware that the game was about to end, Fisk continued to buy like a madman, boasting that gold would soon top $200. In fact, Gould's shopping spree continued unabated until September 22, when he discovered that the president had figured them out.

President Grant instructed Corbin to sell his gold holdings after learning the nature of their scheme, before ordering the release of $4 million in government gold on September 24. Grant's action immediately drove down the price of gold, squeezing the Gold Ring's market share. This ruthless plan caused a panic on Wall Street, and the country experienced months of economic turmoil. However, Grant's efforts, as well as those of his administration, prevented a national depression.

The Bottom Line

The economic ramifications of "Black Friday" lasted for several years and marred the rest of Ulysses S. Grant's presidency. Despite this, Jay Gould and Jim Fisk managed to escape the disaster unscathed. Despite multiple allegations of wrongdoing and an official congressional investigation, the two used their political connections and a slew of attorneys to avoid spending a single night in jail. Fisk even walked away from his massive losses, claiming that the trades were executed by third-party brokers without his knowledge. 

 

The intentions of Jay Gould and Jim Fisk are still unclear to this day, but we assume it’s the love for gold. 

Speaking of gold, Minted made buying and selling gold simple and secure.

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