Monday, September 24, 2012

September 24, 1869 - Grant Holds onto Federal Gold

The great expense of the Civil War and Reconstruction had prompted the federal government to pay expenses with bonds backed by credit alone.  With such patriotic times, the public had no worry trusting the government to repay the bonds with gold upon maturity, solidifying not only the government's books but also its good name.

Speculators, however, saw a chance to make off with millions of dollars in the market.  James Fisk and Jay Gould led a group of investors in cornering the gold market, buying up every ounce they could collect.  The price of gold shot up, topping a 30% increase in less than a year.  Meanwhile, Fisk and Gould came into contact with Abel Corbin, President Ulysses Grant's brother-in-law, who took them into Grant's social circle.  There, they argued against sale of federal gold (saving it for rainy days and continuing the controversial use of greenbacks), planting the seeds of thought into Grant's head.  Corbin, meanwhile, brought in Daniel Butterfield, a former general, as a suggested assistant to the Treasury.  Grant agreed to his appointment, and Butterfield promised to give advance word of the inevitable sale.

According to biographers, Grant became wary of the issue of gold sometime around September 20.  Initially, he was outraged by men attempting to profit out of the shadows, but Corbin (who himself was deeply invested in gold) convinced the President that it would be for good.  The businessmen could use the money to invest and diversify, which would help the general economy by building more infrastructure and capital.  The wealth would "trickle down", and it would help the average American overall by providing jobs and wider markets.  Grant begrudgingly and bewilderedly agreed.

Speculators made millions by selling just before the announcement of the huge federal sale.  By the time the gold was sold, the government earned a significantly smaller amount than they would have and was forced to sell more to make the dollar-benchmark set.  Word gradually went out about the sale and enraged the populace.  Already fed up with the paternal system of back-patting among engrained Republicans as well as the "moiety" through which bureaucrats became wealthy, such as Tax Commission Officer Chester A. Arthur of New York making a salary of $10,000 while receiving upwards of $50,000 from kickbacks and trimming underling's salaries for granting choice assignments.

Scandal rocked the Republican Party, and an investigation led by Congressman James A. Garfield of Ohio indicted the president.  Grant resigned, and the new President Schuyler Colfax prompted Congress to dismantle the political corruption known as the "Era of Good Stealings."


In reality, when Grant learned of the gold speculation, he ordered $4 million worth of gold sold out of the US Treasury.  The price of gold plummeted in minutes on what became known as Black Friday, Sept 24, 1869.  Investors in the plot, such as Corbin, lost whole fortuntes.  Fisk and Gould, however, escaped unscathed, as would many in what Twain nicknamed "The Gilded Age."

Friday, September 7, 2012

September 7, 1695 - Piracy Ends India-UK Relations

Henry Every, captain of the Fancy (formerly Charles II), and his crew of pirates raided the Indian Ocean after mutinying against England's ally, Spain. After a year of good hauls, Every joined up with other pirates to prey on the pilgrimage fleet of Grand Mughal Aurangzeb. There he took the greatest prize in pirating history: the Ganj-i-Sawai treasure ship, valued at between £325,000 and £600,000 (over $100,000,000 in 2011) in gold, silver, and gemstones. After seizing the great wealth, Every and his crew disappeared into history with only twenty-four ever being captured.

Also on board was "something more pleasing than jewels", believed to be Aurangzeb's daughter. She, too, was taken with rumors claiming she went willingly with the daring pirate captain. Aurangzeb was furious and announced an end to the treaties and trade that had grown up with the British East India Company. Despite Company efforts to pay the insured amount for the lost ship, Mughal forces marched on Bombay and chased the English out of India.

With an enormous market at stake, the East India Company made efforts to strike back into India, but Aurangzeb turned to another European power, France. Frenchman Francois Bernier had served as his physician for twelve years, and the Mughal offered the new vacuum in Bombay to the French East India Company, which happily seized profits and ended the expansive British control there.  As Mughal power began to fade in the eighteenth century, French domination expanded.

The British, meanwhile, began to focus more on holdings in the Caribbean and expanding into further markets in the Pacific such as China and Japan, which were opened by force. Colonies continued to trade hands with war, but India remained under French influence and served as a conduit to expand French colonial control into the Middle East and Southeast Asia.


In reality, though the East India Company had records suggesting a relative of Aurangzeb was on board the Ganj-i-Sawai, there is no solid evidence as to it being his daughter. He later agreed to the East India Company's apologies (agents pleaded prostrate before the emperor) and £600,000 repayment. The Company battled with French influence for decades as Mughal power waned, eventually coming to control India as the jewel of the British Empire.

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