Prices quoted are how much in fiat (greenbacks) it took to buy five double eagle $20 gold coins ($100 in hard money)
144 years ago, on September 24, 1869, the original "Black Friday" hit the stock markets, triggered by an attempt by "robber barons" Jay Gould and James Fisk to corner the U.S. gold market.
Since Lincoln had introduced the fiat "greenback" paper dollar and stopped the redemption of paper money for equal amounts of gold money in 1862, the greenback had traded at a discount to U.S. tender gold coins. Instead of being traded in "dollars per ounce", since the U.S. was on the gold standard, gold was traded on the New York Gold Exchange as "the amount of paper dollars to buy $100 in gold dollars".
During the height of the war in 1863, with a Union victory uncertain, it took $250 in greenbacks to buy $100 in gold coins. In 1869, when Fisk and Gould started their scheme, it took around $130 in greenbacks to buy five double eagle $20 gold coins. This works out to about $26.87/oz.
Although the total amount of the gold market was only around $15 million, no one could corner the market and drive the price up because of the U.S. government. The Treasury had approximately $95 million in gold reserves, and bought and sold gold on the open market to keep prices near the official gold standard. The government would sell gold in exchange for greenbacks, then use the paper money to buy Treasury bonds off the open market. This helped reduce the government debt. If the money supply became too restricted, the government would buy gold using greenbacks.
Jay Gould realized that he needed some way to convince the government to refrain from selling gold, or lacking that, advance notice that the government was about to sell. He began by recruiting Abel Corwin, the husband of President Ulysses S Grant's sister, into the scheme. Corwin invited Gould and Fisk to New York social functions which the President attended, and they expounded on how the government should allow the (unregulated) open market set the price of gold. Additionally, they touted high gold prices as helping U.S. farmers export the over-abundant harvest that year.
Corwin also helped Gould and Fisk get a former Union general, Daniel Butterfield, appointed as Assistant Secretary of the Treasury in charge of buying and selling gold for the government. In return for a $10,000 bribe, Butterfield agreed to lobby against government gold sales, and to tip off Gould if any were planned. The band even attempted to bribe President Grant's personal secretary and his wife(!) but were rebuffed.
Now that the pieces were in place, Gould and Fisk set about making millions. After convincing Grant to halt gold sales, they began in early September buying up all the gold they could. By September 16, they had nearly $10 million (2/3 of the total market) either in physical bullion on in calls. By September 23rd, it took $144 in greenbacks to buy $100 in gold ($29.77/oz) and the amount of gold the conspirators held equaled total U.S. gold reserves. International commerce, which depended on gold bullion, was being strangled, with businesses forced to pay whatever they had to in order to get gold. Hundreds of speculators jumped in, borrowing heavily. By 11:30 the morning of September 24, the price was $162 per $100 in gold ($33.59/oz), and the economy was on the brink of collapse.
Alerted by Secretary of the Treasury Boutwell, Grant found out about the attempted bribery of his wife and secretary. Butterfield caught wind of what was happening, and sent an urgent message to Gould, who started selling into the rally. Grant telegraphed Boutwell, and told him to dump $4 million of U.S. gold reserves into the market immediately and buy $4 million in bonds. Word got out around noon that day, and the rout for the exit began Gold dropped from $162 to $133 in less than an hour.
Fisk had been kept in the dark about Butterfield's warning, and was merrily buying as much gold as he could, crowing that he would send the price to $200. But Gould was selling faster than Fisk was buying, liquidating their entire position plus any that Fisk bought before the rug was totally pulled out from under the market. Gould had needed Fisk to keep buying publicly, to pretend the market was still cornered while he dumped their holdings.
It worked. They dumped their holdings for approximately $150 per contract, netting around $15 million dollars (almost $255 million today). They spent $2 million on buying a New York judge from their friend "Boss" Tweed at Tammany Hall, and hiring lawyers to fend off hundreds of lawsuits, leaving $10 million between them. Even Congressional investigations, led by Congressman (and future President) James A. Garfield, failed to punish them. For, after all, their market activities were completely legal.
Others weren't so lucky. Most speculators were extremely leveraged, and had to sell stock holdings into the resulting panic to meet their calls. The stock market fell 20%. The prices of agricultural exports were chopped in half. By some reports, 50 Wall St brokerages collapsed, and another 150 were insolvent. The entire U.S. economy was affected, and it took months for things to return to normal for those who had survived.