September, 1872.—Erie was cornered. The Gould-Smith clique was short of it. The stock first became scarce on purchases by German brokers for foreign account. Then Drew became a heavy purchaser. At the same time the German brokers were long of gold, and with the double idea of punishing them and compelling those carrying Erie to sell out the Gould-Smith clique endeavored to lock up money. This plan was defeated by the refusal of two banks to pay out legal tenders on certified checks. Just then, too, the Government bought $5,000,000 bonds and sold the same amount of gold. This completely broke the speculative manipulation of money, and a panic was averted. During the height of the panic there were no quotations for money. Among the failures of the week were Northrup, Chick & Co., bankers, the Glenham Woolen Manufacturing Co., Paton & Co., dry goods, George Bird, Grinnell & Co., stock brokers, Hoyt, Sprague & Co. and A. & W. Sprague. The banks suspended their weekly statements, and they were not resumed until late in November.
November, 1872.—Jay Gould was arrested on criminal charges based on his management of the Erie Railroad. He surrendered securities, the face value of which was more than $9,000,000, in December.—Northwestern was cornered. It opened Nov. 20 at 83¾ and closed at 95. On Thursday it sold at 100, and at the close on Friday 200 was bid. On Saturday buying in under the rule ran the price up to 230. The settlement was made on the following Tuesday, when the price declined to par, the highest bid made being 85. Jay Gould, Horace F. Clark and Augustus Schell conducted the corner, while the cornered were Drew and Henry N. Smith. It was one of the most profitable corners ever made in Wall Street.
February, 1873.—There was a noted corner in Northwestern.
April, 1873.—The preliminary panic of the year occurred in this month. The stock market was uneasy. The failure of a firm of silk importers was followed by that of Barker & Allen, the members of which were related to Vanderbilt. Three other firms also failed. Confidence returned and quiet prevailed until the 26th, when the Atlantic Bank failed. This brought about another depression, which was followed by a quick rally.
May, 1873.—Heavy break in Pacific Mail. The further retirement of greenbacks was prohibited by Congress.
August, 1873.—Fraud was discovered in the issue of certain bonds of the New York Central & Hudson River Railroad.
September, 1873.—The New York Warehouse & Security Company failed on the 8th; Kenyon, Cox & Co., in which Daniel Drew was a special partner, on the 13th; Jay Cooke & Co. on the 18th, and Fisk & Hatch on the 19th. Innumerable brokers failed. There were runs on the Fourth National Bank and the Union Trust Company. The secretary of the company was a defaulter to the extent of $500,000, and its doors were closed. The Bank of the Commonwealth failed. There was a panic in the stock market, and the excitement ran so high that the Governing Committee closed the Exchange at 11 o’clock on Saturday, the 20th. The Gold Exchange Bank was unable to effect all the clearances, and dealers were unable to get their balances. The result was the temporary suspension of some dozen firms. The Gold Exchange Bank having been enjoined by the courts from making the clearances, the Bank of New York undertook the job and failed in it. Next a committee of 20 was appointed to do the work, but it failed also, because Smith, Gould & Martin refused to render a statement to it. The final settlements were made between members themselves. Smith, Gould & Martin, with contracts amounting to $9,000,000, settled on a basis of 135. Business was resumed on Sept. 30.
December, 1873.—The Credit Mobilier was organized for the construction of the Union Pacific Railroad. It was composed of stockholders of the railway company, and had a capital of $3,750,000. Profits were large, and the stock was quoted at 400. Certain Congressmen were given stock at par on their personal notes, the object being to gain their favor in case adverse legislation was proposed. Oakes Ames, of Massachusetts, was expelled from the House for his connection with the bribery, and James Brooks, of New York, for accepting bribes. Other Congressmen were censured. A proposition to impeach Vice-President Colfax was reported against by the Judiciary Committee.
January, 1874.—The value of the pound sterling was fixed by Congress at $4.86.65.
February, 1874.—Two letters, purporting to come from the Wabash and Western Union companies, were received by the Stock Exchange, announcing an increase of stock by the directors. The market went off three points before it was discovered that the letters were forgeries.