House of Representatives Report, No. 31. Forty-first Congress, Second Session. Report of the Committee on Banking and Currency, in response to a Resolution of the House of Representatives, passed December 13, 1869, directing the Committee “to investigate the causes that led to the unusual and extraordinary fluctuations of Gold in the City of New York, from the 21st to the 27th of September, 1869 ”; accompanied by the Testimony collected by the Committee.
THE civil war in America, with its enormous issues of depreciating currency, and its reckless waste of money and credit by the government, created a speculative mania such as the United States, with all its experience in this respect, had never before known. Not only in Broad Street, the centre of New York speculation, but far and wide throughout the Northern States, almost every man who had money at all employed a part of his capital in the purchase of stocks or of gold, of copper, of petroleum, or of domestic produce, in the hope of a rise in prices, or staked money on the expectation of a fall. To use the jargon of the street, every farmer and every shopkeeper in the country seemed to be engaged in “carrying” some favorite security “ on a margin.” Whoever could obtain five pounds sent it to a broker with orders to buy fifty pounds’ worth of stocks, or whatever amount the broker would consent to purchase. If the stock rose, the speculator prospered ; if it fell until the five pounds of deposit or margin were lost, the broker demanded a new deposit, or sold the stock to protect himself. By means of this simple and smooth machinery, which differs in no essential respect from the processes of roulette or rouge-et-noir, the whole nation flung itself into the Stock Exchange, until the “ outsiders,” as they were called, in opposition to the regular brokers of Broad Street, represented nothing less than the entire population of the American Republic. Every one speculated, and for a time every one speculated successfully.
The inevitable reaction began when the government, about a year after the close of the war, stopped its issues and ceased borrowing. The greenback currency had for a moment sunk to a value of only 37 cents to the dollar. It is even asserted that on the worst day of all, the 11th of July, 1864, one sale of £20,000 in gold was actually made at 310, which is equivalent to about 33 cents in the dollar.(2) At this point, however, the depreciation stopped ; and the paper which had come so near falling into entire discredit steadily rose in value, first to 50 cents, then to 60, to 70, and within the present year to more than 90 cents. So soon as the industrious part of the public felt the touch of this return to solid values, the whole fabric of fictitious wealth began to melt away under their eyes. Thus it was not long before the so-called “ outsiders,” the men who speculated on their own account, and could not act in agreement or combination, began to suffer. One by one, or in great masses, they were made the prey of the larger operators ; their last margins were consumed, and they dropped down to the solid level of slow, productive industry. Some lost everything ; many lost still more than they had, and there are few families of ordinary connection and standing in the United States which cannot tell, if they choose, some dark story of embezzlement, or breach of trust, committed in these days. Some men, who had courage and a sense of honor, found life too heavy for them ; others went mad. But the greater part turned in silence to their regular pursuits, and accepted their losses as they could. Almost every rich American could produce from some pigeon-hole a bundle of worthless securities, and could show check-books representing the only remaining trace of margin after margin consumed in vain attempts to satisfy the insatiable broker. A year or two of incessant losses swept the weaker gamblers from the street.
But even those who continued to speculate found it necessary to change their mode of operations. Chance no longer ruled over the Stock Exchange and the gold market. The fate of a battle, the capture of a city, or the murder of a President, had hitherto been the influences which broke through the plans of the strongest combinations, and put all speculators, whether great or small, on fairly even ground ; but as the period of sudden and uncontrollable disturbing elements passed away, the market fell more and more completely into the hands of cliques which found a point of adhesion in some great mass of incorporated capital. Three distinct railways, with all their enormous resources, became the property of Cornelius Vanderbilt, who, by means of their credit and capital, again and again swept millions of dollars into his pocket by a process curiously similar to gambling with loaded dice. But Vanderbilt was one of the most respectable of these great operators. The Erie Railway was controlled by Daniel Drew, and while Vanderbilt at least acted in the interests of his corporations, Drew cheated equally his corporation and the public. Between these two men and the immense incorporated power they swayed, smaller operators, one after another, were crushed to pieces, until the survivors learned to seek shelter within some clique sufficiently strong to afford protection. Speculation in this manner began to consume itself, and the largest combination of capital was destined to swallow every weaker combination which ventured to show it itself in the market.
Thus, between the inevitable effect of a currency which steadily shrank the apparent wealth of the country, and the omnipotence of capital in the stock market, a sounder and healthier state of society began to make itself felt. Nor could the unfortunate public, which had been robbed with such cynical indifference by Drew and Vanderbilt, feel any sincere regret when they saw these two cormorants reduced to tearing each other. In the year 1867 Mr. Vanderbilt undertook to gain possession of the Erie Road, as he had already obtained possession of the New York Central, the second trunk line between New York and the West. Mr. Vanderbilt was supposed to own property to the value of some £10,000,000, all of which might be made directly available for stock operations. He bought the greater part of the Erie stock ; Drew sold him all he could take, and then issued as much more as was required in order to defeat Vanderbilt’s purpose. After a violent struggle, which overthrew all the guaranties of social order, Drew triumphed, and Mr. Vanderbilt abandoned the contest. The Erie corporation paid him a large sum to reimburse his alleged losses. At the same time it was agreed that Mr. Drew’s accounts should be passed, and he obtained a release in full, and retired from the direction. And the Erie Road, almost exhausted by such systematic plundering, was left in the undisturbed, if not peaceful, control of Mr. Jay Gould and Mr. James Fisk, Jr., whose reign began in the month of July, 1868.
Mr. Jay Gould was a partner in the firm of Smith, Gould, & Martin, brokers, in Wall Street. He had been engaged before now in railway enterprises, and his operations had not been of a nature likely to encourage public confidence in his ideas of fiduciary relations. He was a broker, and a broker is almost by nature a gambler, perhaps the very last profession suitable for a railway manager. In character he was strongly marked by his disposition for silent intrigue. He preferred as a rule to operate on his own account, without admitting other persons into his confidence, and he seemed never to be satisfied except when deceiving every one as to his intentions. There was a reminiscence of the spider in his nature. He spun huge webs, in corners and in the dark, which were seldom strong enough to resist a serious strain at the critical moment. His disposition to this subtlety and elaboration of intrigue was irresistible. It is scarcely necessary to say that he had not a conception of a moral principle. In speaking of this class of men it must be fairly assumed at the outset that they do not and cannot understand how there can be a distinction between right and wrong in matters of speculation, so long as the daily settlements are punctually effected. In this respect Mr. Gould was probably as honest as the mass of his fellows, according to the moral standard of the street ; but without entering upon technical questions of roguery, it is enough to say that he was an uncommonly fine and unscrupulous intriguer, skilled in all the processes of stock-gambling, and passably indifferent to the praise or censure of society.
James Fisk, Jr., was still more original in character. He was not yet forty years of age, and had the instincts of fourteen. He came originally from Vermont, probably the most respectable and correct State in the Union, and his father had been a pedler who sold goods from town to town in his native valley of the Connecticut. The son followed his father’s calling with boldness and success. He drove his huge wagon, made resplendent with paint and varnish, with four or six horses, through the towns of Vermont and Western Massachusetts ; and when his father remonstrated in alarm at his reckless management, the young man, with his usual bravado, took his father into his service at a fixed salary, with the warning that he was not to put on airs on the strength of his new dignity. A large Boston firm which had supplied his goods on credit, attracted by his energy, took him into the house ; the war broke out ; his influence drew the firm into some bold speculations which were successful ; in a few years he retired with some £20,000, which he subsequently lost. He formed a connection with Daniel Drew in New York, and a new sign, ominous of future trouble, was raised in Wall Street, bearing the names of Fisk & Belden, brokers.
Personally Mr. Fisk was coarse, noisy, boastful, ignorant ; the type of a young butcher in appearance and mind. Nothing could be more striking than the contrast between him and his future associate Gould. One was small and slight in person, dark, sallow, reticent, and stealthy, with a trace of Jewish origin. The other was large, florid, gross, talkative, and obstreperous. Mr. Fisk’s redeeming point was his humor, which had a strong flavor of American nationality. His mind was extraordinarily fertile in ideas and expedients, while his conversation was filled with unusual images and strange forms of speech, which were caught up and made popular by the New York press. In respect to honesty as between Gould and Fisk, the latter was, perhaps, if possible, less deserving of trust than the former. A story not without a keen stroke of satirical wit is told by him, which illustrates his estimate of abstract truth. An old woman who had bought of the elder Fisk a handkerchief which cost ninepence in the New England currency, where six shillings are reckoned to the dollar, complained to Mr. Fisk, Jr., that his father had cheated her. Mr. Fisk considered the case maturely, and gave a decision based on a priori principles. “No!” said he, “the old man would n’t have told a lie for ninepence ”; and then, as if this assertion needed some reasonable qualification, he added, “though he would have told eight of them for a dollar ! ” The distinction as regards the father may have been just, since the father seems to have held old-fashioned ideas as to wholesale and retail trade ; but in regard to the son even this relative degree of truth cannot be predicated with any confidence, since, if the Investigating Committee of Congress and its evidence are to be believed, Mr. Fisk seldom or never speaks truth at all.
An intrigue equally successful and disreputable brought these two men into the Erie Board of Directors, whence they speedily drove their more timid predecessor Drew. In July, 1868, Gould made himself President and Treasurer of the corporation. Fisk became Comptroller. A young lawyer, named Lane, became counsel. These three directors made a majority of the Executive Committee, and were masters of Erie. The Board of Directors held no meetings. The Executive Committee was never called together, and the three men — Fisk, Gould, and Lane — became from this time the absolute, irresponsible owners of the Erie Railway, not less than if it had been their personal property and plaything.
This property was in effect, like all the great railway corporations, an empire within a republic. It consisted of a trunk line of road 459 miles in length, with branches 314 miles in extent, or 773 miles of road in all. Its capital stock amounted to about £7,000,000. Its gross receipts exceeded £3,000,000 per annum. It employed not less than 15,000 men, and supported their families. Over all this wealth and influence, greater than that directly swayed by any private citizen, greater than is absolutely and personally controlled by most kings, and far too great for the public safety either in a democracy or in any other form of society, the vicissitudes of a troubled time placed two men in irresponsible authority ; and both these men belonged to a low and degraded moral and social type. Such an elevation has been rarely seen in modern history. Even the most dramatic of modern authors, even Balzac himself, who so loved to deal with similar violent alternations of fortune, or Alexandre Dumas, with all his extravagance of imagination, never have reached a conception bolder or more melodramatic than this, nor have they ever ventured to conceive a plot so enormous, or a catastrophe so original, as was now to be developed.
One of the earliest acts of the new rulers was precisely such as Balzac or Dumas might have predicted and delighted in. They established themselves in a palace. The old offices of the Erie Railway were in the lower part of the city, among the wharves and warehouses ; a situation, no doubt, convenient for business, but by no means agreeable as a residence ; and the new proprietors naturally wished to reside on their property. Mr. Fisk and Mr. Gould accordingly bought a huge building of white marble, not unlike a European palace, situated about two miles from the business quarter, and containing a large theatre or opera-house. They also purchased several smaller houses adjoining it. The opera-house cost about £140,000, and a large part of the building was at once leased, by the two purchasers, to themselves as the Erie corporation, to serve as offices. This suite of apartments was then furnished by themselves, as representing the corporation, at an expense of some £60,000, and in a style which, though called vulgar, is certainly not more vulgar than that of the President’s official residence, and which would be magnificent in almost any palace in Europe. The adjoining houses were connected with the main building ; and in one of these Mr. Fisk had his private apartments, with a private passage to his opera-box. He also assumed direction of the theatre, of which he became manager-in-chief. To these royal arrangements he brought tastes which have been commonly charged as the worst results of royal license. The atmosphere of the Erie offices was not supposed to be disturbed with moral prejudices ; and as the opera itself supplied Mr. Fisk’s mind with amusement, so the opera troupe supplied him with a permanent harem. Whatever Mr. Fisk did was done on an extraordinary scale.
These arrangements, however, regarded only the pleasures of the American Aladdin. In the conduct of their interests the new directors showed a capacity for large conceptions, and a vigor in the execution of their schemes, such as alarmed the entire community. At the annual election in 1868, when Gould, Fisk, and Lane, having borrowed or bought proxies for the greater part of the stock, caused themselves to be elected for the ensuing year, the respectable portion of the public throughout the country was astonished and shocked to learn that the new Board of Directors contained two names peculiarly notorious and obnoxious to honest men, — the names of William M. Tweed and Peter B. Sweeney. To English ears these commonplace, not to say vulgar, titles do not seem singularly alarming ; but to every honest American they conveyed a peculiar sense of terror and disgust. The State of New York in its politics is much influenced, if not controlled, by the city of New York. The city politics are so entirely in the hands of the Democratic party as to preclude even the existence of a strong minority. The party organization centres in a political club, held together by its patronage and the money it controls through a system of jobbery unequalled elsewhere in the world. And the Tammany Club, thus swaying the power of a small nation of several million souls, is itself ruled by William M. Tweed and Peter B. Sweeney, absolute masters of this terrible system of theft and fraud, and to American eyes the incarnation of political immorality.
The effect of this alliance was felt in the ensuing winter in the passage of a bill through the State legislature, and its signature by the Governor, abolishing the former system of annual elections of the entire board of Erie directors, and authorizing the board to classify itself in such a manner that only a portion should be changed each year. The principle of the bill was correct. Its practical effect, however, was to enable Gould and Fisk to make themselves directors for five years, in spite of any attempt on the part of the stockholders to remove them. The formality of annual re-election was spared them ; and so far as the stockholders were concerned, there was no great injustice in the act. The Erie Road was in the peculiar position of being without an owner. There was no cestui que trust, unless the English stockholders could be called such. In America the stock was almost exclusively held for speculation, not for investment ; and in the morals of Wall Street speculation means, or had almost come to mean, disregard of intrinsic value. In this case society at large was the injured party, and society knew its risk.
This step, however, was only a beginning. The Tammany ring, as it is called, exercised a power far beyond politics. Under the existing constitution of the State, the judges of the State courts are elected by the people. There are thirty-three such judges in New York, and each of the thirty-three is clothed with equity powers running through the whole State. Of these judges Tammany Hall elected several, and the Erie Railway controlled others in country districts. Each of these judges might forbid proceedings before any and all the other judges, or stay proceedings in suits already commenced. Thus the lives and the property of the public were in the power of the new combination ; and two of the city judges, Barnard and Cardozo, had already acquired a peculiarly infamous reputation as so-called “slaves to the ring,” which left no question as to the depths to which their prostitution of justice would descend.
The alliance between Tammany and Erie was thus equivalent to investing Mr. Gould and Mr. Fisk with the highest attributes of sovereignty ; but in order to avail themselves to the utmost of their judicial powers, they also required the ablest legal assistance. The degradation of the bench had been rapidly followed by the degradation of the bar. Prominent and learned lawyers were already accustomed to avail themselves of social or business relations with judges to forward private purposes. One whose partner might be elevated to the bench was certain to be generally retained in cases brought before this special judge; and litigants were taught by experience that a retainer in such cases was profitably bestowed. Others found a similar advantage resulting from known social relations with the court. The debasement of tone was not confined to the lower ranks of advocates ; and it was probably this steady demoralization of the bar which made it possible for the Erie ring to obtain the services of Mr. David Dudley Field as its legal adviser. Mr. Field, a gentleman of European reputation, in regard to which he is understood to be peculiarly solicitous, was an eminent law reformer, author of the New York Code, delegate of the American Social Science Association to the European International Congress, and asserted by his partner, Mr. Shearman, in evidence before a committee of the New York legislature, to be a man of quixotic sense of honor. Mr. Shearman himself, a gentleman of English parentage, had earned public gratitude by arraigning and deploring, with unsurpassed courage and point, the condition of the New York judiciary, in an admirable essay which will be found in the North American Review for July, 1867. The value of Mr. Field’s services to Messrs. Fisk and Gould was not to be measured even by the enormous fees their generosity paid him. His power over certain judges became so absolute as to impress the popular imagination ; and the gossip of Wall Street insists that he has a silken halter round the neck of Judge Barnard, and a hempen one round that of Cardozo. It is certain that he who had a year before threatened Barnard on his own bench with impeachment now appeared in the character of Barnard’s master, and issued as a matter of course the edicts of his court. One other combination was made by the Erie managers to extend their power, and this time it was credit that was threatened. They bought a joint-stock bank in New York City, with a capital of £200,000. The assistance thus gained was purchased at a very moderate price, since it was by no means represented by the capital. The great cliques and so-called “ operators ” of Wall Street and Broad Street carry on their transactions by a system of credits and clearing-houses with a very limited use of money. The banks certify their checks, and the certified checks settle all balances. Nominally and by law the banks only certify to the extent of bona fide deposits, but in reality the custom of disregarding the strict letter of the law is not unknown, and in regard to the bank in question, the Comptroller of the Currency, an officer of the National Treasury, testifies that on an examination of its affairs in April, 1869, out of fifteen checks deposited in its hands as security for certifications made by it, selected at hazard for inquiry, and representing a nominal value of £300,000, three only were good. The rest represented accommodation extended to brokers and speculators without security. As an actual fact it is in evidence that this same bank on Thursday, September 24, 1869, certified checks to the amount of nearly £1,500,000 for Mr. Gould alone. What sound security Mr. Gould deposited against this mass of credit may be left to the imagination. His operations, however, were not confined to this bank alone, although this was the only one owned by the ring.
Thus Mr. Gould and Mr. Fisk created a combination more powerful than any that has been controlled by mere private citizens in America or in Europe since society for self-protection established the supreme authority of the judicial name. They exercised the legislative and the judicial powers of the State ; they possessed almost unlimited credit, and society was at their mercy. One authority alone stood above them, beyond their control ; and this was the distant but threatening figure of the National Government.
Nevertheless, powerful as they were, the Erie managers were seldom in funds. The huge marble palace in which they lived, the theatre which they supported, the reckless bribery and profusion of management by which they could alone maintain their defiance of public opinion, the enormous schemes for extending their operations into which they rushed with utter recklessness, all required greater resources than could be furnished even by the wholesale plunder of the Erie Road. They were obliged from time to time to issue from their castle and harry the industrious public or their brother freebooters. The process was different from that known to the dark ages, but the objects and the results were equally robbery. At one time Mr. Fisk is said to have ordered heavy speculative sales of stock in an express company which held a contract with the Erie Railway. The sales being effected, the contract was declared annulled. The stock naturally fell, and Mr. Fisk realized the difference. He then ordered heavy purchases, and having renewed the contract the stock rose again, and Mr. Fisk a second time swept the street.(3) In the summer and autumn of 1869 the two managers issued and sold 235,000 new shares of Erie stock, or nearly as much as its entire capital when they assumed power in July, 1868. With the aid of the money thus obtained, they succeeded in withdrawing about £2,500,000 in currency from circulation at the very moment of the year when currency was most in demand in order to harvest the crops. For weeks the whole nation writhed and quivered under the torture of this modern rack, until the national government itself was obliged to interfere and threaten a sudden opening of the treasury. But whether the Erie speculators operated for a rise or operated for a fall, whether they bought or sold, and whether they were engaged in manipulating stocks, or locking up currency, or cornering gold, they were always a public nuisance and scandal.
In order to explain the operation of a so-called corner in gold to ordinary readers with the least possible use of slang or technical phrases, two preliminary statements are necessary. In the first place it must be understood that the supply of gold immediately available for transfers is limited within distinct bounds in America. New York and the country behind it contain an amount usually estimated at about £4,000,000. The national government commonly holds from £15,000,000 to £20,000,000, which may be thrown bodily on the market if the President orders it. To obtain gold from Europe or other sources requires time.
In the second place, gold in America is a commodity bought and sold like stocks in a special market or gold-room which is situated next the Stock Exchange in Broad Street and is practically a part of it. In gold as in stocks, the transactions are both real and speculative. The real transactions are mostly purchases or loans made by importers who require coin to pay customs on their imports. This legitimate business is supposed to require from £1,000,000 to £1,500,000 per day. The speculative transactions are mere wagers on the rise or fall of price, and neither require any actual transfer of gold, nor even imply its existence, although in times of excitement hundreds of millions nominally are bought, sold, and loaned.
Under the late administration Mr. McCulloch, then Secretary of the Treasury, had thought it his duty at least to guarantee a stable currency, although Congress forbade him to restore the gold standard. During four years gold had fluctuated little, and principally from natural causes, and the danger of attempting to create an artificial scarcity in it had prevented the operators from trying an experiment which would have been sure to irritate the government. The financial policy of the new administration was not so definitely fixed, and the success of a speculation would depend on the action of Mr. Boutwell, the new secretary, whose direction was understood to have begun by a marked censure on the course pursued by his predecessor.
Of all financial operations, cornering gold is the most brilliant and the most dangerous, and possibly the very hazard and splendor of the attempt were the reasons of its fascination to Mr. Jay Gould’s fancy. He dwelt upon it for months, and played with it like a pet toy. His fertile mind even went so far as to discover that it would prove a blessing to the community, and on this ingenious theory, half honest and half fraudulent, he stretched the widely extended fabric of the web in which all mankind was to be caught. This theory was in itself partially sound. Starting from the principle that the price of grain in New York is regulated by the price in London and is not affected by currency fluctuations, Mr. Gould argued that if it were possible to raise the premium on gold from thirty to forty cents at harvest-time, the farmers’ grain would be worth $1.40 instead of $1.30, and as a consequence the farmer would hasten to send all his crop to New York for export, over the Erie Railway, which was sorely in need of freights. With the assistance of another gentleman, Mr. Gould calculated the exact premium at which the Western farmer would consent to dispose of his grain, and thus distance the three hundred sail which were hastening from the Danube to supply the English market. Gold, which was then heavy at 34, must be raised to 45.
This clever idea, like all the other ideas of these gentlemen of Erie, seems to have had the single fault of requiring that some one, somewhere, should be swindled. The scheme was probably feasible ; but sooner or later the reaction from such an artificial stimulant must have come, and whenever it came some one must suffer. Nevertheless, Mr. Gould probably argued that so long as the farmer got his money, the Erie Railway its freights, and he himself his small profits on the gold he bought, it was of little consequence who else might be injured ; and, indeed, by the time the reaction came, and gold was ready to fall as he expected, Mr. Gould would probably have been ready to assist the process by speculative sales in order to enable the Western farmer to buy his spring goods cheap as he had sold his autumn crops dear. He himself was equally ready to buy gold cheap and sell it dear on his private account ; and as he proposed to bleed New York merchants for the benefit of the Western farmer, so he was willing to bleed Broad Street for his own. The patriotic object was, however, the one which for obvious reasons Mr. Gould preferred to put forward most prominently, and on the strength of which he hoped to rest his ambitious structure of intrigue.
In the operation of raising the price of gold from 133 to 145, there was no great difficulty to men who controlled the resources of the Erie Railway. Credit alone was needed, and of credit Mr. Gould had an unlimited supply. The only serious danger lay in the possible action of the national government, which had not taken the same philanthropic view of the public good as was peculiar to the managers of Erie. Secretary Boutwell, who should have assisted Mr. Gould in “bulling” gold, was gravely suspected of being a bear, and of wishing to depress the premiums to nothing. If he were determined to stand in Mr. Gould’s path, it was useless even for the combined forces of Erie and Tammany to jostle against him ; and it was therefore essential that Mr. Gould should control the government itself, whether by fair means or foul, by persuasion or by purchase. He undertook the task; and now that his proceedings in both directions have been thoroughly drawn into light, it is well worth while for the public to see how dramatic and how artistically admirable a conspiracy in real life may be, when slowly elaborated from the subtle mind of a clever intriguer, and carried into execution by a band of unshrinking scoundrels.
The first requisite for Mr. Gould’s purpose was some channel of direct communication with the President ; and here he was peculiarly favored by chance. Mr. Abel Rathbone Corbin, formerly lawyer, editor, speculator, lobby-agent, familiar, as he claims, with everything, had succeeded, during his varied career, in accumulating from one or another of his hazardous pursuits a comfortable fortune, and he had crowned his success, at the age of sixty-seven or thereabouts, by contracting a marriage with General Grant’s sister, precisely at the moment when General Grant was on the point of reaching the highest eminence possible to an American citizen. To say that Mr. Corbin’s moral dignity had passed absolutely pure through the somewhat tainted atmosphere in which his life had been spent, would be flattering him too highly ; but at least he was now no longer engaged in any active occupation, and he lived quietly in New York, watching the course of public affairs, and remarkable for an eminent respectability which became the President’s brother-in-law. Mr. Gould enjoyed a slight acquaintance with Mr. Corbin, and he proceeded to improve it. He assumed, and he asserts that he really felt, a respect for Mr. Corbin’s shrewdness and sagacity. It is amusing to observe that Mr. Corbin claims to have first impressed the famous crop theory on Mr. Gould’s mind ; while Mr. Gould testifies that he himself indoctrinated Mr. Corbin with this idea, which became a sort of monomania with the President’s brother-in-law, who soon began to preach it to the President himself. On the 15th of June, 1869, the President came to New York, and was there the guest of Mr. Corbin, who urged Mr. Gould to call and pay his respects to the Chief Magistrate. Mr. Gould had probably aimed at precisely this result. He called ; and the President of the United States not only listened to the president of Erie, but accepted an invitation to Mr. Fisk’s theatre, sat in Mr. Fisk’s private box, and the next evening became the guest of these two gentlemen on their magnificent Newport steamer, while Mr. Fisk, arrayed, as the newspapers reported, “in a blue uniform, with a broad gilt cap-band, three silver stars on his coat-sleeve, lavender gloves, and a diamond breast-pin as large as a cherry, stood at the gangway, surrounded by his aids, bestarred and bestriped like himself,” and welcomed his distinguished friend.
It had been already arranged that the President should on this occasion be sounded in regard to his financial policy ; and when the selected guests — among whom were Mr. Gould, Mr. Fisk, and others — sat down at nine o’clock to supper, the conversation was directed to the subject of finance. “ Some one,” says Mr. Gould, “asked the President what his view was.” The “some one” in question was, of course, Mr. Fisk, who alone had the impudence to put such an inquiry. The President bluntly replied, that there was a certain amount of fictitiousness about the prosperity of the country, and that the bubble might as well be tapped in one way as another. The remark was fatal to Mr. Gould’s plans, and he felt it, in his own words, as a wet blanket.
Meanwhile the post of assistant-treasurer at New York had become vacant, and it was a matter of interest to Mr. Gould that some person friendly to himself should occupy this position, which, in its relations to the public, is second in importance only to the secretaryship of the treasury itself. Mr. Gould consulted Mr. Corbin, and Mr. Corbin suggested the name of General Butterfield, — a former officer in the volunteer army. The appointment was not a wise one ; nor does it appear in evidence by what means Mr. Corbin succeeded in bringing it about. There is a suggestion that he used Mr. A.T. Stewart, the wealthy importer, as his instrument for the purpose ; but whatever the influence may have been, Mr. Corbin appears to have set it in action, and General Butterfield entered upon his duties towards the 1st of July.
The elaborate preparations thus made show that some large scheme was never absent from Mr. Gould’s mind, although between the months of May and August he made no attempt to act upon the markets. But between the 20th of August and the 1st of September, in company with Messrs. Woodward and Kimber, two large speculators, he made what is known as a pool, or combination, to raise the premium on gold, and some ten or fifteen millions were bought, but with very little effect on the price. The tendency of the market was downwards, and it was not easily counteracted. Perhaps under ordinary circumstances he might have now abandoned his project ; but an incident suddenly occurred which seems to have drawn him headlong into the boldest operations.
Whether the appointment of General Butterfield had any share in strengthening Mr. Gould’s faith in Mr. Corbin’s secret powers does not appear in evidence, though it may readily be assumed as probable. At all events, an event now took place which would have seemed to authorize an unlimited faith in Mr. Corbin, as well as to justify the implicit belief of an Erie treasurer in the corruptibility of all mankind. The unsuspicious President again passed through New York, and came to breakfast at Mr. Corbin’s house on the 2d of September. He saw no one but Mr. Corbin while there, and the same evening at ten o’clock departed for Saratoga. Mr. Gould declares, however, that he was told by Mr. Corbin that the President, in discussing the financial situation, had shown himself a convert to the Erie theory about marketing the crops, and had “ stopped in the middle of a conversation in which he had expressed his views, and written a letter ” to Secretary Boutwell. This letter is not produced ; but Secretary Boutwell testifies as follows in regard to it : —
“ I think on the evening of the 4th of September I received a letter from the President dated at New York, as I recollect it ; I am not sure where it is dated. I have not seen the letter since the night I received it. I think it is now in my residence in Groton. In that letter he expressed an opinion that it was undesirable to force down the price of gold. He spoke of the importance to the West of being able to move their crops. His idea was that if gold should fall, the West would suffer, and the movement of the crops would be retarded. The impression made on my mind by the letter was that he had rather a strong opinion to that effect...... Upon the receipt of the President’s letter on the evening of the 4th of September, I telegraphed to Judge Richardson [Assistant Secretary at Washington] this despatch : ‘ Send no order to Butterfield as to sales of gold until you hear from me.’”
Mr. Gould had therefore succeeded in reversing the policy of the national government ; but this was not all. He knew what the government would do before any officer of the government knew it. Mr. Gould was at Corbin’s house on the 2d of September ; and although the evidence of both these gentlemen is very confused on this point, the inference is inevitable that Gould saw Corbin privately, unknown to the President, within an hour or two after this letter to Mr. Boutwell was written, and that it was at this interview, while the President was still in the house, that Mr. Corbin gave him the information about the letter ; perhaps showed him the letter itself. Then followed a transaction worthy of the French stage. Mr. Corbin’s evidence gives his own account of it : —
“ On the 2d of September (referring to memoranda) Mr. Gould offered to let me have some of the gold he then possessed... He spoke to me as he had repeatedly done before, about taking a certain amount of gold owned by him. I finally told Mr. Gould that for the sake of a lady, my wife, I would accept of $500,000 of gold for her benefit, as I shared his confidence that gold would rise..... He afterwards insisted that I should take a million more, and I did so on the same conditions for my wife. He then sent me this paper.”
The paper in question is as follows : —
“ Smith, Gould, Martin, & Co., Bankers,
11 Broad Street, New York,
September 2, 1869.
“ Mr. ——
Dear Sir : we have bought for your account and risk —
500,000, gold, 132, R.
1,000,000, gold, 1335/8, R.
which we will carry on demand with the right to use.
“ SMITH, GOULD, MARTIN, & CO.”
This memorandum meant that for every rise of one per cent in the price of gold Mr. Corbin was to receive £3,000, and his name nowhere to appear. If the inference is correct that Gould had seen Corbin in the morning and had learned from him what the President had written, it is clear that he must have made his bargain on the spot, and then going directly to the city, he must in one breath have ordered this memorandum to be made out and large quantities of gold to be purchased, before the President had allowed the letter to leave Mr. Corbin’s house.
No time was lost. On this same afternoon, Mr. Gould’s brokers bought large amounts in gold. One testifies to buying $1,315,000 at 1341/8. On the 3d the premium was forced up to 36 ; on the 4th, when Mr. Boutwell received his letter, it had risen to 37. Here, however, Mr. Gould seems to have met a check, and he describes his own position in nervous Americanisms as follows : —
“ I did not want to buy so much gold. In the spring I put gold up from 32 to 38 and 40, with only about seven millions. But all these fellows went in and sold short, so that in order to keep it up I had to buy, or else to back down and show the white feather. They would sell it to you all the time. I never intended to buy more than four or five millions of gold, but these fellows kept purchasing it on, and I made up my mind that I would put it up to 40 at one time...... We went into it as a commercial transaction, and did not intend to buy such an amount of gold. I was forced into it by the bears selling out. They were bound to put it down. I got into the contest. All these other fellows deserted me like rats from a ship. Kimber sold out and got short..... He sold out at 37. He got short of it, and went up ” ( or, in English, he failed).
It was unfortunate that the bears would not consent to lie still and be flayed, but this was unquestionably the fact. They had the great operators for once at a disadvantage, and they were bent on revenge. Mr. Gould’s position was very hazardous. When Mr. Kimber sold out at 37, which was probably on the 7th of September, the market broke ; and on the 8th the price fell back to 35. Nor was this all. At the same moment, when the “pool ” was ended by Mr. Kimber’s desertion, Mr. Corbin, with his eminent shrewdness and respectability, told Mr. Gould “ that gold had gone up to 37,” and that he “ should like to have this matter realized,” which was equivalent to saying that he wished to be paid something on account. This was on the 6th ; and Gould was obliged this same day to bring him a check for £5,000, drawn to the order of Jay Gould, and indorsed in blank by him with a touching regard for Mr. Corbin’s modest desire not to have his name appear. There are few financiers in the world who will not agree that this transaction does great credit to Mr. Corbin’s sagacity. It indicates at least that he was acquainted with the men he dealt with. Undoubtedly it placed Mr. Gould in a difficult position ; but as Mr. Gould already held some fifteen millions of gold and needed Mr. Corbin’s support, he preferred to pay £5,000 outright rather than allow Corbin to throw his gold on the market. Yet the fabric of Gould’s web had now been so seriously injured that, for a whole week, from the 8th to the 15th of September, he was at a loss what to do, unable to advance and equally unable to retreat without very severe losses. He sat at his desk in the opera-house, silent as usual, and tearing little slips of paper which he threw on the floor in his abstraction, while he revolved new combinations in his mind.
Down to this moment Mr. James Fisk, Jr., has not appeared in the affair. Gould had not taken him into his confidence ; and it was not until after the 10th of September that Gould appears to have decided that there was nothing else to be done. Fisk was not a safe ally in so delicate an affair, but apparently there was no choice. Gould approached him ; and, as usual, his touch was like magic. Mr. Fisk’s evidence begins here, and may be believed when very strongly corroborated :
“ Gold having settled down to 35, and I not having cared to touch it, he was a little sensitive on the subject, feeling as if he would rather take his losses without saying anything about it..... One day he said to me, ‘ Don’t you think gold has got to the bottom ?’ I replied that I did not see the profit in buying gold unless you have got into a position where you can command the market. He then said he had bought quite a large amount of gold, and I judged from his conversation that he wanted me to go into the movement and help strengthen the market. Upon that I went into the market and bought. I should say that was about the 15th or 16th of September. I bought at that time about seven or eight millions, I think.”
The market responded slowly to these enormous purchases ; and on the 16th the clique was still struggling to recover its lost ground.
Meanwhile Mr. Gould had placed another million and a half of gold to the account of General Butterfield, and notified him of the purchase. So Mr. Gould swears in spite of General Butterfield’s denial. The date of this purchase is not fixed. Through Mr. Corbin a notice was also sent by Gould about the middle of September to the President’s private secretary, General Porter, informing him that half a million was placed to his credit. General Porter instantly wrote to repudiate the purchase, but it does not appear that Butterfield took any notice of Gould’s transaction on his account. On the 10th of September the President had again come to New York, where he remained his brother-in-law’s guest till the 13th ; and during this visit Mr. Gould appears again to have seen him, although Mr. Corbin avers that on this occasion the President intimated his wish to the servant that this should be the last time Mr. Gould obtained admission. “ Gould was always trying to get something out of him,” he said ; and if he had known how much Mr. Gould had succeeded in getting out of him, he would have admired the man’s genius, even while shutting the door in his face. On the morning of the 13th the President set out on a journey to the little town of Washington, situated among the mountains of Western Pennsylvania, where he was to remain a few days. Mr. Gould, who now consulted Mr. Corbin regularly every morning and evening, was still extremely nervous in regard to the President’s policy ; and as the crisis approached, this nervousness led him into the fatal blunder of doing too much. The bribe offered to Porter was a grave mistake, but a greater mistake yet was made by pressing Mr. Corbin’s influence too far. He induced Mr. Corbin to write an official article for the New York press on the financial policy of the government, an article afterwards inserted in the New York Times through the kind offices of Mr. James McHenry, and he also persuaded or encouraged Mr. Corbin to write a letter directly to the President himself. This letter, written on the 17th under the influence of Gould’s anxiety, was instantly sent away by a special messenger of Fisk’s to reach the President before he returned to the capital. The messenger carried also a letter of introduction to General Porter, the private secretary, in order to secure the personal delivery of this important despatch.
We have now come to the week which was to witness the explosion of all this elaborately constructed mine. On Monday, the 20th, gold again rose. Throughout Tuesday and Wednesday Fisk continued to purchase without limit, and forced the price up to 40. At this time Gould’s firm of Smith, Gould, & Martin, through which the operation was conducted, had purchased some $50,000,000 ; and yet the bears went on selling, although they could only continue the contest by borrowing Gould’s own gold. Gould, on the other hand, could no longer sell and clear himself, for the very reason that the sale of $50,000,000 would have broken the market to nothing. The struggle had become intense. The whole country was looking on with astonishment at the battle between the bulls and the bears. All business was deranged, and all values unsettled. There were indications of a panic in the stock market ; and the bears in their emergency were vehemently pressing the government to intervene. Gould now wrote to Mr. Boutwell a letter so inconceivably impudent that it indicates desperation and entire loss of his ordinary coolness. He began : —
“ Sir, — There is a panic in Wall Street, engineered by a bear combination. They have withdrawn currency to such an extent that it is impossible to do ordinary business. The Erie Company requires eight hundred thousand dollars to disburse....... Much of it in Ohio, where an exciting political contest is going on, and where we have about ten thousand employed, and the trouble is charged on the administration. Cannot you, consistently, increase your line of currency ? ”
From a friend such a letter would have been an outrage ; but from a member of the Tammany ring, the principal object of detestation to the government, such a threat or bribe — whichever it may be called — was incredible. Mr. Gould was, in fact, at his wits’ end. He dreaded a panic, and he felt that it could no longer be avoided. The scene now shifts for a moment to the distant town of Washington, among the hills of Western Pennsylvania. On the morning of the 19th of September, President Grant and his private secretary, General Porter, were playing croquet on the grass, when Fisk’s messenger, after twenty-four hours of travel by rail and carriage, arrived at the house, and sent in to ask for General Porter. When the President’s game was ended, General Porter came, received his own letter from Corbin, and called the President, who entered the room and took his brother-in-law’s despatch. He then left the room, and after some ten or fifteen minutes’ absence returned. The messenger, tired of waiting, then asked, “Is it all right” “All right,” replied the President ; and the messenger hastened to the nearest telegraph station, and sent word to Fisk, “Delivered ; all right.”
The messenger was, however, altogether mistaken. Not only was all not right, but all was going hopelessly wrong. The President, it appears, had at the outset supposed the man to be an ordinary post-office agent, and the letter an ordinary letter which had arrived through the post-office. Nor was it until Porter asked some curious question as to the man, that the President learned of his having been sent by Corbin merely to carry this apparently unimportant letter of advice. The President’s suspicions were at once excited ; and the same evening, at his request, Mrs. Grant wrote a hurried note to Mrs. Corbin, telling her how greatly the President was distressed at the rumor that Mr. Corbin was speculating in Wall Street, and how much he hoped that Mr. Corbin would “instantly disconnect himself with anything of that sort.”
This letter, subsequently destroyed or said to have been destroyed by Mrs. Corbin, arrived in New York on the morning of Wednesday the 22d, the same day on which Gould and his enemies the bears were making their simultaneous appeals to Secretary Boutwell. Mrs. Corbin was greatly excited and distressed by her sister-in-law’s language. She at once carried the letter to her husband, and insisted that he should instantly abandon his interest in the gold speculation. Mr. Corbin, although he considered the scruples of his wife and her family to be highly absurd, assented to her wish ; and when Mr. Gould came that evening as usual, with $50,000,000 of gold on his hands, and extreme anxiety on his mind, Corbin read to him two letters : the first, written by Mrs. Grant to Mrs. Corbin ; the second, written by Mr. Corbin to President Grant, assuring him that he had not a dollar of interest in gold. The assurance of this second letter was, at any sacrifice, to be made good.
Mr. Corbin proposed that Mr. Gould should give him a check for £20,000, and take his $1,500,000 off his hands. A proposition more calmly impudent than this can scarcely be imagined. Gould had already paid Corbin £5,000, and Corbin asked for £20,000 more, at the very moment when it was clear that the £5,000 he had received had been given him under a misunderstanding of his services. He even had the impudence to represent himself as doing Gould a favor by letting him have a million and a half more gold at the highest market price, at a time when Gould had fifty millions which it was clear he must sell or be ruined. What Gould might, under ordinary circumstances, have replied, may be imagined ; but at this moment he could say nothing. Corbin had but to show this note to a single broker in Wall Street, and the whole fabric of Gould’s speculation would have fallen to pieces. Gould asked for time and went away. He consulted no one. He gave Fisk no hint of what had happened. The next morning he returned to Corbin, and made him the following offer : —
“ ‘ Mr. Corbin, I cannot give you anything if you will go out. If you will remain in, and take the chances of the market, I will give you my check [for £20,000].’ ‘ And then,’ says Mr. Corbin, ‘ I did what I think it would have troubled almost any other business man to consent to do, — refuse one hundred thousand dollars on a rising market. If I had not been an old man married to a middle-aged woman, I should have done it (of course with her consent) just as sure as the offer was made. I said, ‘ Mr. Gould, my wife says ” No ! “ Ulysses thinks it wrong, and that it ought to end.’ So I gave it up.... He looked at me with an air of severe distrust, as if he was afraid of treachery in the camp. He remarked, ‘ Mr. Corbin, I am undone if that letter gets out.’..... He stood there for a little while looking very thoughtful, exceedingly thoughtful. He then left and went into Wall Street,.... and my impression is that he it was, and not the government, that broke that market.’ ”
Mr. Corbin was right ; throughout all these transactions his insight into Mr. Gould’s character was marvellous.
It was the morning of Thursday, the 3d ; Gould and Fisk went to Broad Street together, but as usual Gould was silent and secret, while Fisk was noisy and communicative. There was now a complete separation in their movements. Gould acted entirely through his own firm of Smith, Gould, & Martin, while Fisk operated principally through his old partner, Belden. One of Smith’s principal brokers testifies : —
“ ‘ Fisk never could do business with Smith, Gould, & Martin very comfortably. They would not do business for him. It was a very uncertain thing of course where Fisk might be. He is an erratic sort of genius. I don’t think anybody would want to follow him very long. I am satisfied that Smith, Gould, & Martin controlled their own gold, and were ready to do as they pleased with it without consulting Fisk. I do not think there was any general agreement.... None of us who knew him cared to do business with him. I would not have taken an order from him nor had anything to do with him.’ Belden was considered a very low fellow. ‘ I never had anything to do with him or his party,’ said one broker employed by Gould. ‘ They were men I had a perfect detestation of ; they were no company for me. I should not have spoken to them at all under any ordinary circumstances.’ Another says, ‘ Belden is a man in whom I never had any confidence in any way. For months before that, I would not have taken him for a gold transaction.’ ”
And yet Belden bought millions upon millions of gold. He himself says he had bought twenty millions by this Thursday evening, and this without capital or credit except that of his brokers. Meanwhile Gould, on reaching the city, had at once given secret orders to sell. From the moment he left Corbin, he had but one idea, which was to get rid of his gold as quietly as possible. “ I purchased merely enough to make believe I was a bull,” says Gould. This double process continued all that afternoon. Fisk’s wild purchases carried the price up to 144, and the panic in the street became more and more serious as the bears realized the extremity of their danger. No one can tell how much gold which did not exist they had contracted to deliver or pay the difference in price. One of the clique brokers swears that on this Thursday evening the street had sold the clique one hundred and eighteen millions of gold, and every rise of one per cent on this sum implied a loss of more than £200,000 to the bears. Naturally the terror was extreme, for half Broad Street and thousands of speculators would have been ruined if compelled to settle gold at 150 which they had sold at 140.
It need scarcely be said that by this time nothing more was heard in regard to philanthropic theories of benefit to the Western farmer. Mr. Gould’s feelings can easily be imagined. He knew that Fisk’s reckless management would bring the government upon his shoulders, and he knew that unless he could sell his gold before the order came from Washington he would be a ruined man. He knew, too, that Fisk’s contracts must inevitably be repudiated. This Thursday evening he sat at his desk in the Erie offices at the opera-house, while Fisk and Fisk’s brokers chattered about him.
“ I was transacting my railway business. I had my own views about the market, and my own fish to fry. I was all alone, so to speak, in what I did, and I did not let any of those people know exactly how I stood. I got no ideas from anything that was said there. I had been selling gold from 35 up all the time, and I did not know till the next morning that there would probably come an order about twelve o’clock to sell gold.”
He had not told Fisk a word in regard to Corbin’s retreat, nor his own orders to sell.
When the next day came, Gould and Fisk went together to Broad Street, and took possession of the private back office of a principal broker, “without asking the privilege of doing so,” as the broker observes in his evidence. The first news brought to Gould was a disaster. The government had sent three men from Washington to examine the bank which Gould owned, and the bank sent word to Mr. Gould that it feared to certify for him as usual, and was itself in danger of a panic, caused by the presence of officers, which created distrust of the bank. It barely managed to save itself. Gould took the information silently, and his firm redoubled sales of gold. His partner, Smith, gave the orders to one broker after another, — “Sell ten millions !” “ The order was given as quick as a flash, and away he went,” says one of these men. “ I sold only eight millions.” “ Sell, sell, sell ! do nothing but sell ! — only don’t sell to Fisk’s brokers,” were the orders which Smith himself acknowledges. In the gold-room Fisk’s brokers were shouting their rising bids, and the packed crowd grew frantic with terror and rage as each successive rise showed their increasing losses. The wide streets outside were thronged with excited people ; the telegraph offices were overwhelmed with messages ordering sales or purchases of gold or stocks ; and the whole nation was watching eagerly to see what the result of this convulsion was to be. All trade was stopped, and even the President felt that it was time to raise his hand. No one who has not seen the New York gold-room can understand the spectacle it presented ; now a perfect pandemonium, now silent as the grave. Fisk, in his dark back office across the street, with his coat off, swaggered up and down, “ a big cane in his hand,” and called himself the Napoleon of Wall Street. He really believed that he directed the movement, and while the street outside imagined that he and Gould were one family, and that his purchases were made for the clique, Gould was silently flinging away his gold at any price he could get for it.
Whether Fisk really expected to carry out his contract, and force the bears to settle, or not, is doubtful ; but the evidence seems to show that he was in earnest, and felt sure of success. His orders were unlimited. “Put it up to 150,” was one which he sent to the gold-room. Gold rose to 150. At length the bid was made — “ 160 for any part of five millions,” and no one any longer dared take it. “ 161 for five millions,” “162 for five millions.” No answer was made, and the offer was repeated, — “ 162 for any part of five millions.” A voice replied, “ Sold one million at 62.” The bubble suddenly burst, and within fifteen minutes, amid an excitement without parallel even in the wildest excitements of the war, the clique brokers were literally swept away, and left struggling by themselves, bidding still 160 for gold in millions which no one would any longer take their word for ; while the premium sank rapidly to 135. A moment later the telegraph brought from Washington the government order to sell, and the result was no longer possible to dispute. Mr. Fisk had gone too far, while Mr. Gould had secretly weakened the ground under his feet.
Gould, however, was saved. His fifty millions were sold ; and although no one yet knows what his gains or losses may have been, his firm was now able to meet its contracts and protect its brokers. Fisk was in a very different situation. So soon as it became evident that his brokers would be unable to carry out their contracts, every one who had sold gold to them turned in wrath to Fisk’s office. Fortunately for him it was protected by armed men whom he had brought with him from his castle of Erie ; but nevertheless the excitement was so great that both Mr. Fisk and Mr. Gould thought it best to retire as rapidly as possible by a back entrance leading into another street, and to seek the protection of the opera-house. There nothing but an army could disturb them ; no civil mandate was likely to be served without their permission within these walls, and few men would care to face Fisk’s ruffians in order to force an entrance.
The subsequent winding up of this famous conspiracy may be stated in few words. But no account could possibly be complete which failed to reproduce in full the story of Mr. Fisk’s last interview with Mr. Corbin, as told by Fisk himself.
“ I went down to the neighborhood of Wall Street, Friday morning, and the history of that morning you know. When I got back to our office, you can imagine I was in no enviable state of mind, and the moment I got up street that afternoon I started right round to old Corbin’s to rake him out. I went into the room, and sent word that Mr. Fisk wanted to see him in the dining-room. I was too mad to say anything civil, and when he came into the room, said I, ‘ You damned old scoundrel, do you know what you have done here, you and your people ?’ He began to wring his hands, and, ‘ Oh !’ he says, ‘ this is a horrible position. Are you ruined ? ’ I said I did n’t know whether I was or not ; and I asked him again if he knew what had happened ? He had been crying, and said he had just heard ; that he had been sure everything was all right ; but that something had occurred entirely different from what he had anticipated. Said I, ‘ That don’t amount to anything ; we know that gold ought not to be at 31, and that it would not be but for such performances as you have had this last week ; you know damned well it would not if you had not failed.’ I knew that somebody had run a saw right into us, and said I, ‘ This whole damned thing has turned out just as I told you it would.’ I considered the whole party a pack of cowards, and I expected that when we came to clear our hands they would sock it right into us. I said to him, ‘ I don’t know whether you have lied or not, and I don’t know what ought to be done with you.’ He was on the other side of the table, weeping and wailing, and I was gnashing my teeth. ‘ Now,’ he says, ‘ you must quiet yourself.’ I told him I did n’t want to be quiet. I had no desire to ever be quiet again, and probably never should be quiet again. He says, ‘ But, my dear sir, you will lose your reason.’ Says I, ‘ Speyers [a broker employed by him that day] has already lost his reason ; reason has gone out of everybody but me.’ I continued, ‘ Now what are you going to do ? You have got us into this thing, and what are you going to do to get out of it ?’ He says, ‘ I don’t know. I will go and get my wife.’ I said, ‘ Get her down here !’ The soft talk was all over. He went up stairs and they returned, tottling into the room, looking older than Stephen Hopkins. His wife and he both looked like death. He was tottling just like that. [Illustrated by a trembling movement of his body.] I have never seen him from that day to this.”
This is sworn evidence before a committee of Congress ; and its humor is perhaps the more conspicuous, because there is every reason to believe that there is not a word of truth in the story from beginning to end. No such interview ever occurred, except in the unconfined apartments of Mr. Fisk’s imagination. His own previous statements make it certain that he was not at Corbin’s house at all that day, and that Corbin did come to the Erie offices that evening, and again the next morning. Corbin himself denies the truth of the account without limitation ; and adds, that when he entered the Erie offices the next morning Fisk was there. “ I asked him how Mr. Gould felt after the great calamity of the day before.” He remarked, “ O, he has no courage at all. He has sunk right down. There is nothing left of him but a heap of clothes and a pair of eyes.” The internal evidence of truth in this anecdote would support Mr. Corbin against the world.(4)
In regard to Mr. Gould, Fisk’s graphic description was probably again inaccurate. Undoubtedly the noise and scandal of the moment were extremely unpleasant to this silent and impenetrable intriguer. The city was in a ferment, and the whole country pointing at him with wrath. The machinery of the gold exchange had broken down, and he alone could extricate the business community from the pressing danger of a general panic. He had saved himself, it is true ; but in a manner which could not have been to his taste. Yet his course from this point must have been almost self-evident to his mind, and there is no reason to suppose that he hesitated.
His own contracts were all fulfilled. Fisk’s contracts, all except one, in respect to which the broker was able to compel a settlement, were repudiated. Gould probably suggested to Fisk that it was better to let Belden fail, and to settle a handsome fortune on him, than to sacrifice something more than £1,000,000 in sustaining him. Fisk therefore threw Belden over, and swore that he had acted only under Belden’s order ; in support of which statement he produced a paper to the following effect : —
“ September 24.“ DEAR SIR, — I hereby authorize you to order the purchase and sale of gold on my account during this day to the extent you may deem advisable, and to report the same to me as early as possible. It is to be understood that the profits of such order are to belong entirely to me, and I will, of course, bear any losses resulting.
“ Yours,“ JAMES FISK, JR.”
“ WILLIAM BELDEN.
This document was not produced in the original, and certainly never existed. Belden himself could not be induced to acknowledge the order ; and no one would have believed him if he had done so. Meanwhile the matter is before the national courts, and Fisk may probably be held to his contracts : but it will be far more difficult to execute judgment upon him, or to discover his assets.
One of the first acts of the Erie gentlemen after the crisis was to summon their lawyers, and set in action their judicial powers. The object was to prevent the panic-stricken brokers from using legal process to force settlements, and so render the entanglement inextricable. Messrs. Field and Shearman came, and instantly prepared a considerable number of injunctions, which were sent to their judges, signed at once, and immediately served. Gould then was able to dictate the terms of settlement ; and after a week of complete paralysis, Broad Street began at last to show signs of returning life. As a legal curiosity, one of these documents, issued three months after the crisis, may be reproduced, in order to show the powers wielded by the Erie managers : —
“ SUPREME COURT.
H.N. SMITH, JAY GOULD, H.H. MARTIN, and J.B. BACH, Plaintiffs,
against
JOHN BONNER and ARTHUR L. SEWELL, Defendants,
Injunction by order.
“ It appearing satisfactorily to me by the complaint duly verified by the plaintiffs that sufficient grounds for an order of injunction exist, I do hereby order and enjoin.... That the defendants, John Bonner and Arthur L. Sewell, their agents, attorneys, and servants, refrain from pressing their pretended claims against the plaintiffs, or either of them, before the Arbitration Committee of the New York Stock Exchange, or from taking any proceedings thereon, or in relation thereto, except in this action.
“ GEORGE G. BARNARD, J.S.C.
“ NEW YORK, December 29, 1869.”
Mr. Bonner had practically been robbed with violence by Mr. Gould, and instead of his being able to bring the robber into court as the criminal, the robber brought him into court as criminal, and the judge forbade him to appear in any other character. Of all Mr. Field’s distinguished legal reforms and philanthropic projects, this injunction is beyond a doubt the most brilliant and the most successful.(5)
The fate of the conspirators was not severe. Mr. Corbin went to Washington, where he was snubbed by the President, and at once disappeared from public view, only coming to light again before the Congressional Committee. General Butterfield, whose share in the transaction is least understood, was permitted to resign his office without an investigation. Speculation for the next six months was at an end. Every person involved in the affair seemed to have lost money, and dozens of brokers were swept from the street. But Mr. Jay Gould and Mr. James Fisk, Jr., continued to reign over Erie, and no one can say that their power or their credit was sensibly diminished by a shock which for the time prostrated all the interests of the country.
Nevertheless it is safe to predict that sooner or later the last traces of the disturbing influence of war and paper money will disappear in America, as they have sooner or later disappeared in every other country which has passed through the same evils. The result of this convulsion itself has been in the main good. It indicates the approaching end of a troubled time. Messrs. Gould and Fisk will at last be obliged to yield to the force of moral and economical laws. The Erie Railway will be rescued, and its history will perhaps rival that of the great speculative manias of the last century. The United States will restore a sound basis to its currency, and will learn to deal with the political reforms it requires. Yet though the regular process of development may be depended upon, in its ordinary and established course, to purge American society of the worst agents of an exceptionally corrupt time, there is in the history of this Erie corporation one matter in regard to which modern society everywhere is directly interested. For the first time since the creation of these enormous corporate bodies, one of them has shown its power for mischief, and has proved itself able to override and trample on law, custom, decency, and every restraint known to society, without scruple, and as yet without check. The belief is common in America that the day is at hand when corporations far greater than the Erie — swaying power such as has never in the world’s history been trusted in the hands of mere private citizens, controlled by single men like Vanderbilt, or by combinations of men like Fisk, Gould, and Lane, after having created a system of quiet but irresistible corruption — will ultimately succeed in directing government itself. Under the American form of society, there is now no authority capable of effective resistance. The national government, in order to deal with the corporations, must assume powers refused to it by its fundamental law, and even then is always exposed to the chance of forming an absolute central government which sooner or later is likely to fall into the very hands it is struggling to escape, and thus destroy the limits of its power only in order to make corruption omnipotent. Nor is this danger confined to America alone. The corporation is in its nature a threat against the popular institutions which are spreading so rapidly over the whole world. Wherever there is a popular and limited government this difficulty will be found in its path, and unless some satisfactory solution of the problem can be reached, popular institutions may yet find their very existence endangered.
* From the Westminster Review, for October, 1870.
2 See Men and Mysteries of Wall Street, by James K. Medbery, pp. 250, 251.
3 Men and Mysteries of Wall Street, p. 168.
4 Mr. Fisk to the Editor of the Sun : —
Erie Railway Company, Comptroller’s Office,
NEW YORK, October 4, 1869.
To THE EDITOR OF THE SUN.
Dear Sir,—.... Mr. Corbin has constantly associated with me ;.... he spent more than an hour with me in the Erie Railway Office on the afternoon of Saturday, September 25th, the day after the gold panic..... I enclose you a few affidavits which will give you further information concerning this matter.
I remain your obedient servant,
JAMES FISK, JR.
“ State of New York, City and County of New York, ss.
“ C.W. Pollard, being duly sworn, says : ‘ I have frequently been the bearer of messages between Mr. James Fisk, Jr., and Mr. Abel R. Corbin, brother-in-law of President Grant..... Mr. Corbin called on me at the Erie building on Thursday, 23d September, 1869, telling me he came to see how Messrs. Fisk and Gould were getting along..... He called again on Friday, the following day, at about noon ; appeared to be greatly excited and said he feared we should lose a great deal of money. The following morning, Saturday, September 25, Mr. Fisk told me to take his carriage and call upon Mr. Corbin and say to him that he and Mr. Gould would like to see him (Corbin) at their office. I called and saw Mr. Corbin. He remarked upon greeting me : “ How does Mr. Fisk bear his losses ? ” and added, “ It is terrible for us.” He then asked me to bring Mr. Fisk up to his house immediately, as he was indisposed, and did not feel able to go down to his (Fisk’s) office. I went after Mr. Fisk, who returned immediately with me to Mr. Corbin’s residence, but shortly after came out with Mr. Corbin, who accompanied him to Mr. Fisk’s office, where he was closeted with him and Mr. Gould for about two hours.....’”
There are obvious inconsistencies among these different accounts, which it is useless to attempt to explain. The fact of Saturday’s interview appears, however, to be beyond dispute.
5 These remarks on Mr. Field’s professional conduct as counsel of the Erie Railway have excited a somewhat intemperate controversy, and Mr. Field’s partisans in the press have made against the authors of the “ Chapters of Erie ” a charge which certainly has the merit of even exaggerated modesty on the part of the New York bench and bar, namely, that these writers “ have indelicately interfered in a matter alien to them in every way ”; the administration of justice in New York being, in this point of view, a matter in which Mr. Field and the Erie Railway are alone concerned. Mr. Field himself has published a letter in the Westminster Review for April, 1871, in which, after the general assertion that the passages in the “New York Gold Conspiracy” which relate to him “ cover about as much untruth as could be crowded into so many lines,” he proceeds to make the following corrections :
First, he denies, what was never suggested, that he was in any way a party to the origin or progress of the Gold Conspiracy ; until (secondly) he was consulted on the 28th of September ; when (thirdly) he gave an opinion as to the powers of the members of the Gold and Stock Exchanges. Fourthly, he denies that he has relations of any sort with any judge in New York, or any power over these judges, other than such as English counsel have in respect to English judges. Fifthly, he asserts that out of twenty-eight injunctions growing out of the gold transactions, his partners obtained only ten, and only one of these ten, the one quoted above, from Justice Barnard. Sixthly, that this injunction was proper to be sought and granted. Seventhly, that Mr. Bonner was not himself the person who had been “robbed with violence,” but the assignee of the parties.
On the other hand it does not appear that Mr. Field denies that the injunction as quoted is genuine, or that he is responsible for it, or that it did, as asserted, shut the defendants out of the courts as well as out of the Gold Exchange Arbitration Committee, or that it compelled them to appear
only as defendants in a case where they were the injured parties.
In regard to the power which Mr. Field, whether as a private individual or as Erie counsel, has exercised over the New York bench, his modest denial is hardly calculated to serve as a final answer. And in regard to Mr. Bonner, the fact of his being principal or representative scarcely affects the character of
Mr. Field’s injunction. Finally, so far as the text is concerned, after allowing full weight to all Mr. Field’s corrections, the public can decide for itself how many untruths it contains. The subject has, however, ceased to be one of consequence even to Mr. Field since the subsequent violent controversy which arose in March, 1871, in regard to other points of Mr. Field’s professional conduct, and in another month after his letter was written he would perhaps have thought the comments of the Westminster Review so comparatively trifling in importance as not to deserve his attention.