Last week we took you through how Gould and Corbin formed a gold trading pool to bull the price. This week we are talking about how Gould and Fisk were blamed for the gold scandal.
Gould was being called Mephistopheles, Gould and Fisk were called public enemies. Public opinion was solidly against them. Fisk decided to take matters into his own hands, and launched a public opinion campaign against Grant. While Gould and Fisk knew that Grant was innocent, that he had refused to be bribed, the public did not, and the duo were counting on swaying public opinion against Grant, hoping that this would deflect attention from them.
Fisk approached The Sun, which was struggling financially as a newspaper. The paper printed what Fisk told Crouch, a freelance journalist, for a fee. This put Grant in the spotlight, although without evidence of his wrongdoing. He gave a statement that he had no financial interest in gold. But the damage had been done.
An investigation was called for. Gould was called to give a statement. Gould admitted that he had lobbied Grant, and that he had no evidence linking Grant to the scheme and that he had acted alone. When Fisk gave testimony, he said he had been fooling around when he said that gold would go to $200 when he entered the Gold Exchange. He produced a letter that stated he was the broker for Belden and not vice versa. Belden however, did not stick to the script, he was terrified that he would perjure himself. He said he had bought gold on Fisk’s orders.
A broker called Henry Enos who had been hired by Gould’s brokers to execute Gould’s orders on the trading floor, stated that Gould had instructed him to raise the price of gold to $150. Fisk had also told him the same thing Enos said. Both Gould and Fisk stated that they had acted independently of each other. The committee indicted Corbin for corruption, Butterfield for bad judgement, exonerated President Grant and put the blame squarely on Gould, Fisk and Belden. No charges were brought because the President wanted the matter to die down from public discourse.
The matter was dragged on for a decade and then dropped from the public gaze. Was Gould solely to blame? While some of the things he did were wrong, bribing a treasury official, corrupting the judiciary, the fact remained that he had been pushed to the wall by James Brown and the others who went short. To quote him, “I did not want to buy so much gold, but all these fellows went in and sold it short. I had to buy or else back down and show the white feather.”
American Rascal: How Jay Gould Built Wall Street’s Biggest Fortune by Greg Steinmetz, published by Simon & Schuster August 2022
Kirit Manral is a professional trader, and has been running a mentorship program in trading since 2019, with mentees from around the globe. He can be found on Twitter at @KiritManral