Reminiscences of Sixty Years in Public Affairs, Vol. 2

by George S. Boutwell

For the moment, the condition of Wall Street and the Gold Exchange seemed to justify the statement of the person whose language has just been quoted. As a matter of fact, however, many of the people involved recovered from the panic, and were able to meet their obligations. Some were gainers, probably, by the proceedings of the month of September, and some were losers. As I have already said, I had no purpose to help anybody or to hurt anybody, and I interfered in Wall Street only when the operations that were going on there involved innocent parties who were engaged in legitimate business, and also imposed upon the Government a sacrifice in the loss of revenue.

Following the downfall of the combination, there appeared in the newspapers statements and imputations which reflected upon the President and his family as to their relations to the gold operations. All these statements were without foundation. Mr. Corbin's connection was established beyond controversy, but the evidence which established his relations to the parties engaged in the gold speculation was also conclusive as to the fact that the President had no connection with it, and that he was not in any way interested in any policy calculated to advance the interests of the combination.

The apprehensions that were entertained on the evening of the 24th and on the 25th of September as to the extent of the disaster to business and to individuals engaged in gold speculation were not realized in full. My special correspondent in New York said in a letter dated September 25: "Many of the houses hurt and reported failed yesterday are likely to recover." Again he said: "The demoralization in the street was never equaled, and it must take several days at least before matters get fairly straightened. There is a wholesome dread against making any obligations. Smith, Gould and Martin are just reported as paying in full."

In a letter dated September 27 at 6:30 P. M., the assistant treasurer at New York wrote me: "From the best evidence to be gathered in the excitement here, it is safe to infer that the Gold Exchange Bank will suffer losses to the extent of its capital and surplus at least, and perhaps more." To the contrary of that prediction, it is to be said that the Gold Exchange Bank was able to meet all its obligations.

In a letter written by Mr. Grinnell, then collector of the port of New York, under date of September 24, after the announcement of the sale of gold had been made, I find this statement: "Had you not taken the course which you did, I believe a large proportion of our most reliable merchants and bankers would have been obliged to suspend before three o'clock to-day, as confidence was entirely gone and the panic was becoming universal."

Following the break in the price of gold, there were persons who became apprehensive that the rate would fall to a point which would affect their interests unfavorably, and I received a letter, dated after business hours on the 24th, in which the writer said: "It is not impossible that, in view of the largeness of the amount of gold to be sold to-morrow, there may be a combination to procure it at a low price, and you will therefore excuse a suggestion that, as the effect of your intervention has already been realized, it might be well to protect the Government by making it known that you will reject all unacceptable bids."

These extracts from letters received previous to and during the crisis may lead to the conclusion that it is not safe to trust to persons engaged in large business and commercial transactions as guides for the administration of the Government in financial matters. Indeed, one may go still further, and say that it is not safe to trust the guidance of the Government in financial affairs to men whose life business it has been to convert information into gold.

The most unpleasant incident of the gold speculation of 1869 was the fact that General Butterfield, the assistant treasurer in the city of New York, was so far involved as to lead the President to ask for his resignation. That request did not arise from any evidence that General Butterfield was in any way concerned in the movement or combination, which led to the advance in gold. Indeed, the evidence was conclusive to the contrary. This fact, however, did appear—that during the period of the excitement he had made some purchases and sales of gold and bonds. The suspicions that existed in the city of New York as to his connection with the gold movement were largely exaggerations of the actual facts. There was no evidence which impeached his official or personal integrity in business. His resignation was requested upon the ground that it was essential to the proper administration of the office that the person holding the important place of assistant treasurer in the city of New York, should not be engaged in business transactions which might give rise to the conjecture that he had advantages over others in consequence of his connection with the Government.

It ought to be said the Mr. Gould, in his testimony before the committee, which was given at great length and with singular clearness of statement, denied expressly the existence of any combination. In fine, he claimed, what may have been the truth, and upon the whole probably was the truth, that it was not part of his purpose to carry the price of gold above forty or forty-five per cent premium. He attributed the excessive and rapid advance of the price of gold to the persons who had sold short and who, becoming alarmed, attempted to cover their sales by making purchases, and by bidding against each other carried the price from about 140 to 160.

The same statement was made by Mr. Fisk as to the cause of the excessive rise in the price of gold. He said: "It went up to sixty, for the reason that there were in that market a hundred men short of gold. There were banking houses which had stood for fifty years, and who did not know but what they were ruined. They rushed into the market to cover their shorts. I think it went from forty-five to sixty without the purchase of more than $600,000 or $700,000 of gold. It went there in consequence of the frightened bear interests. There was a feeling that there was no gold in the market and that the Government would not let any gold go out."