On September 24, 1869, the price of gold in New York fell from about 162 to 133 in a few minutes after the Treasury telegraphed an order to sell four million dollars of it. The corner collapsed. Brokers who had bought on margin were wiped out before they could reach the exchange, several thousand businessmen were ruined, and the Tenth National Bank, which had been financing the speculation, suspended payment.
The corner had been built over about six weeks. Jay Gould and James Fisk, who between them controlled the Erie Railway, had been buying gold since August in the Gold Room on William Street, on the theory that a high gold price would make American grain cheap abroad and would ship more of it, which would fill the Erie's freight cars. Their buying had pushed the premium over greenbacks from about 30 to over 60.
They had also bought political cover. Fisk and Gould had made a business of cultivating Grant's brother-in-law Abel Corbin, who had been given a seat on the New York Stock Exchange and put on the payroll, and through Corbin they had met the president several times. Gould is said to have given Corbin 1.5 million dollars' worth of gold. Whether Grant understood what was going on is not settled; what is clear is that he met the speculators socially and that talk of him in the Gold Room was part of their pitch.
The government's policy was the thing they could not control. The Treasury under George Boutwell had been selling gold steadily to reduce the greenback premium and rebuild the currency reserve, and the president and his cabinet decided on September 23 that the price had gone too far. Grant and Boutwell met at the White House that evening, and the order to sell went to New York by telegraph the next morning.
What followed was the panic. The Gold Room, which was a small chamber with a marble and a shouting crowd, went silent when the order was read, and then everyone tried to sell at once. Prices fell through the floor, and the clearing house had to sort out contracts that could not be settled. The stock market fell about 20 per cent over the following weeks and the economy went into recession for the rest of 1869.
Nobody was punished. A congressional investigation in 1870 produced a Republican majority report that blamed the Treasury and a Democratic minority report that blamed the president, and neither went anywhere. Gould kept his money and went on to control the Union Pacific and about a sixth of the country's rail mileage. Fisk was shot dead by a business and romantic rival in January 1872.