The Man Who Saved the Union (68 page)

But Abel Corbin continued to hope. He reflected at length on Gould’s theory of gold and commerce. “
I think it had become a sort of monomania with him,” Gould recalled. Speaking publicly to the congressional committee, Gould credited Corbin’s regard for the country in his embrace of easy money. “I think any idea of making money for himself had ceased to weigh with him.” Privately Gould knew better, for he had arranged for Corbin to participate in the effort to boost gold, buying $1.5 million in gold on Corbin’s behalf. If gold rose, Corbin would get rich. Corbin accordingly offered his good services again. “He was very anxious that I should come round,” Gould told the committee. “I did so, and met with Mr. Corbin and the president.”

Grant’s views appeared to have changed. “The president said then that he was satisfied the country had a very bountiful harvest; that there was to be a large surplus; that unless we could find a market abroad for that surplus it would put down prices here. And he remarked that the
government would do nothing during the fall months of the year to put down the price of gold or make money tight. On the contrary, they would do everything they could to facilitate the movement of breadstuffs. He seemed to take a very deep interest in it; it seemed to have been a matter of study with him. I was surprised at the clearness with which he seemed to comprehend the whole question.”

G
ould may not have been the most reliable witness on Grant’s views. During September 1869 Gould’s design to enhance the
Erie’s business by bulling
gold transmuted into something larger: a scheme to corner the gold market. Contracts for gold delivery were bought and sold daily by both speculators and merchants; at any given time the gold promised often exceeded the gold available, but the market always cleared by the delivery dates. Gould aimed to purchase contracts far in excess of the existing supply, thereby “cornering” the market and compelling the gold promisers to settle on his terms. He estimated the existing supply of gold and arranged for various brokers to purchase contracts—quietly and without the brokers knowing they were working together, lest the secret get out and the plan be spoiled.

It was a delicate operation, involving various imponderables, of which the most important was the attitude of the federal government. The Treasury’s gold could foil any attempted corner; at a word from the president the doors of the vaults would open, the gold would flood the market and the corner would be broken, with those holding contracts being bankrupted by the collapsing price. Grant’s initial opposition to a rise in gold—his belief that the bubble ought to be burst—naturally discouraged Gould; his apparent change of mind caused Gould to press ahead.

Gould’s testimony regarding Grant’s reversal received corroboration from a less interested source.
George Boutwell recalled Grant’s endorsing views such as Gould described. “
About the 4th day of September, I suppose, I think on the evening of the 4th of September, I received a letter from the president,” the Treasury secretary told the congressional committee. “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 upon my mind by the letter was that he had rather a strong opinion to that effect.… I saw from the letter that it was his opinion that the sale of gold in any considerable quantity might carry down the price of it, and that if the price were to fall the West would be embarrassed.”

Grant’s intention to let the market find its own level persisted into mid-September. He and Julia departed for a vacation in western Pennsylvania on September 12 and left a letter for Boutwell, who was traveling to New York. “
You will be met by the bulls and bears of Wall Street,” Grant warned, “and probably by merchants, too, to induce you to sell gold, or pay the November interest”—on the federal debt, in gold—“in advance, on the one side, and to hold fast, on the other. The fact is, a desperate struggle is now taking place, and each party want the government to help them out. I write this letter to advise you of what I think you may expect, to put you on your guard.” Grant wrote, as well, to indicate his own preference. “I think, from the lights before me, I would move on without change, until the present struggle is over.”

Grant held his ground as the struggle intensified. The task wasn’t easy. To bolster their argument that the government was on their side, the gold bulls circulated rumors that the president and other officeholders had a stake in the fight. “
The President was reported as having a large interest, as well as every member of his cabinet, especially the secretary of the Treasury,”
James Hodgskin, an officer of the gold exchange, the market where gold contracts were traded, remembered. “Also a large number of the members of Congress.” Hodgskin himself didn’t believe the rumors. “There is no doubt but that these stories were set afloat by these men themselves in order to frighten people into buying gold.” Yet the tales produced the desired effect on those who needed or wanted gold. “A great many became seriously alarmed, and began to buy back the gold they had sold. And a great many nervous people, who had no gold, and who had nothing to do with gold in a speculative way, fearing the country was going to wreck and ruin, also went and bought large amounts of gold.”

Jay Gould didn’t believe the rumors either, at least as they related to Grant. Whether Gould started the rumors himself or simply benefited from them, he never said. But he did declare that they were unfounded regarding Grant. Summarizing his discussions with the president, Gould told the congressional committee: “
Nothing ever occurred to me in any
of these interviews that did not impress me that the president was a very pure, high-minded man; that if he was satisfied what was the best thing to do, that was what he would do.”

Gould went on to explain that as the battle between the bulls and bears grew hotter,
Corbin became nervous that Grant might change his mind. Corbin wrote a letter to Grant, then in Pennsylvania. The gist of the letter, subsequently destroyed, was that the two sides in the gold battle would try to sway the president. Grant should stick to his decision to keep out of the fight.

Gould’s partner
Fisk arranged for a messenger,
William Chapin of the
Erie Railroad, to carry the letter to Pennsylvania. Chapin took a train to Pittsburgh and hired horses and a driver and rode through the night toward the village of Washington, Pennsylvania. “
We started, lost our way once on the trip, but finally got there,” Chapin told the congressional committee. “I think it was about nine o’clock in the morning.” Chapin went to the house where Grant was staying. The woman of the house said that Grant had gone to another house, in the country. Chapin hired a second team of horses and drove on. “A lady came to the door,” he said of the country house. “I told her I had a letter from Mr. Corbin which I was to deliver to the president in person. She showed me into the parlor. General Grant was playing croquet on the lawn, he and General Porter”—Grant’s secretary, his former military aide
Horace Porter. The croquet duly ended and Grant came to the house. “I told him I had a letter from Mr. Corbin, and delivered it to him,” Chapin recalled. “General Grant broke his letter open, started down to the window of the parlor facing me, and read it. He seemed to be reading some of it twice.”

A servant approached and said that Mrs. Grant wished to see the president. Grant went out, then returned some fifteen minutes later. “He still had the letter in his hand,” Chapin testified. “I was waiting, expecting all the time he would give me some instructions, or send a message by me in return. He seemed to wait so long that, as I wanted to get back, I said to him, ‘Is it all satisfactory?’ or something like that. He says, ‘Yes.’ I asked him if there was any reply. He said, ‘No, nothing,’ and he wished me a good morning. I drove straight back to Pittsburgh and telegraphed to New York that the letters”—Corbin’s letter and a letter of introduction of Chapin—“were delivered all right.”

A committee member asked about the message to New York. “Did you mean by your telegram to say that the president answered that the contents of the letter”—Corbin’s letter—“were all right?”

“No,” Chapin replied. “I did not know anything about the contents of the letter. I meant to say that he had received the letters and read them; that they had been delivered all right.”

The wording of Chapin’s telegram became important as soon as it was delivered; in the meantime Horace Porter puzzled over the identity of the messenger. “
Who is that man?” he asked Grant as Chapin drove away.

“I don’t know,” Grant responded. “Why?”

“I merely asked on account of the peculiarity of the letter of introduction which he brought to me. His name is not mentioned in it.”

“Letter of introduction from whom?” Grant asked.

“From Mr. Corbin of New York.”

“Is that messenger from New York?”

“He appears to be.”

Grant frowned. Porter recalled: “He seemed quite surprised, and was silent for a few moments.” He told Porter he had supposed the messenger was from the local post office, which frequently sent a courier with the mail.

Grant may or may not originally have questioned Corbin’s intentions in marrying his sister, but the letter and its mode of transmission definitely made him doubt Corbin’s good faith on the
gold issue. He went back to Julia’s room, where he found her writing a note to Jennie. He thought for a moment, then told her: “
Write this: ‘The General says, if you have any influence with your husband, tell him to have nothing whatever to do with Jay Gould. If he does, he will be ruined, for come what may, he (your brother) will do his duty to the country and the trusts in his keeping.’ ”

Jennie got the letter the next day and shared it with her husband, who shuddered at Grant’s words. “
I was very much excited,” Corbin told the committee. “And my wife still more so.… Engaged in buying and selling gold—what a terrible thing! The world is about to come to an end immediately!…I must get out instantly—instantly!” Corbin related his and Jennie’s distress to Gould. “When Mr. Gould came in that night, I at once read to him the substance of this letter.… I told Mr. Gould, at once, that I
must
get out of this matter; that it had created a great deal of feeling in my own family, as well as on the part of the president, and that the matter must now end.”

Gould urged Corbin to reconsider. “I did not want to throw his gold on the market at that time,” Gould told the committee. Corbin testified
that Gould offered to indemnify him against losses. “If you remain in and take the chances of the market, I will give you my check for $100,000,” Gould said, according to Corbin. “He looked at me with a look 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.’ ”

G
rant returned to the capital the next day, Thursday, September 23.
George Boutwell had been monitoring the situation from his office in the Treasury. “
I became satisfied that the matter was very serious,” he told the committee. “Gold was reported that day at about 145, and I was apprehensive from what I heard that it might advance to a still higher price the next day.” Boutwell expressed his concerns to Grant. “I went that evening to see the president and told him what the state of the market appeared to be from the information I had received. We had a consultation about it, the result of which was that if gold advanced materially the next day, it would be our duty to sell, not for the purpose of forcing down the price of gold as a primary and specific object, but because we thought the business of the country was in danger.” Boutwell remembered the
panic of 1857 and feared a repetition. “I left the president without any specific understanding as to what should be done, except in a general way that if the excitement continued and gold advanced, it would be our duty to sell.”

The excitement did continue. Gould’s bribe kept Grant’s warning to Corbin from reaching other investors; Friday, September 24, dawned with the gold bulls believing that the government still would not intervene. The price leaped upward at the opening bell; it shot past 150, then 155, then 160. The gold bears were in a frenzy, as were merchants who needed gold in their businesses and found the prices ruinous.

Boutwell at the Treasury read the telegraphed reports from Wall Street. No indication appeared of a pause in the price rise—no profit taking, no breath catching. Just after eleven he returned to the White House. “
I went over to the President and told him what the state of the market was, upon the information that I had,” he explained to the committee. “I went over with the idea of saying to him that I thought the time had come when we must interfere. I had a very strong conviction upon that point. I stated to him the condition of the market.… He expressed the opinion, almost at the beginning of the conversation, that we ought to sell $5 million. I recollect expressing the opinion that we should sell
$3 million, because that was the amount that I had in my mind when I left the office, and I thought it would be sufficient for the purpose. We had very little conversation beyond that. I returned almost immediately, without saying to him whether I would order the sale of $5 million or $3 million, or of any other sum, except that it was agreed that gold should be sold. Upon going back to my office, I came to the conclusion that I should advertise the sale of $4 million.”

The order was telegraphed to New York. The effect was instantaneous. Within minutes the price fell from 160 to 135. The gold corner was broken. The gold bears and the merchants swooned with relief; the gold bulls bellowed as their dreams of instant wealth evaporated.

But damage had been done. The gold gyrations jolted the stock market, where panic afflicted many who had nothing directly to do with gold. For weeks Wall Street’s affairs were in chaos. “
It was each man drag out his own corpse,” Jim
Fisk told the committee. “Get out of it as well as you can.” The troubles didn’t travel much beyond the Hudson and East Rivers, sparing the nation’s economy as a whole, but dark memories of “Black Friday” persisted among the investing classes.