Gould and Fisk had bought huge amounts of gold, driving its price up, and hoped to stop the government from selling any by working through Abel Corbin, who was married to Grant's sister. When Grant realized what was happening, he ordered the sale. Within minutes of the announcement shortly after noon, the price of gold fell from about $160 to around $133. Many investors were ruined, stock prices dropped, and farm prices fell. Congress investigated, but Gould and Fisk escaped punishment.
After the Civil War, the United States used paper greenbacks that could not be exchanged for gold, and gold traded freely in the New York Gold Room. Jay Gould, a railroad financier, calculated that if gold prices rose, American grain would be cheaper abroad and more freight would travel on his lines. The key was to keep the Treasury from selling its gold reserves. Corbin introduced Gould to Grant, and Gould pressed the president on the subject.
Through September, Gould and his partner James Fisk bought gold, pushing up its price. Grant became suspicious and had his wife write to his sister asking Corbin to get out. Gould quietly began selling while Fisk kept buying. On Friday, September 24, the price rose past $160. Then word arrived that the Treasury would sell $4 million in gold. The price collapsed, and brokers and investors who had borrowed to buy were wiped out. Crowds besieged the Gold Room.
Fisk and Gould had their brokers repudiate their contracts and hid behind lawyers and hired guards. A congressional investigation, led by James Garfield, embarrassed Grant but found no evidence that he had profited.
Key people: Jay Gould, James Fisk, Ulysses S. Grant, Abel Corbin