What was Black Friday?
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The term refers to one of two Fridays in the second half of the 1800s when severe market drops precipitated financial crises in the United States. The first Black Friday was September 24, 1869: Financiers Jay Gould (1836–1892) and James Fisk (1834–1872) had conspired to raise the market price of gold by buying it in huge quantities (leaving less supply on the open market, which would, theoretically, increase demand and therefore price). Having caused the price to increase, the businessmen planned to sell their gold supplies at a profit. While they did make out handsomely, clearing some $11 million, a panic resulted when the price of gold rose sharply: Businesses that needed gold to meet their obligations were forced to pay exorbitant prices for it. The government responded to the crisis by selling off $4 million of its gold reserves, causing gold prices to tumble. Speculators were hit hard, but Gould and Fisk came out unscathed, selling off their gold supplies before the price plummeted.
Four years later, another Friday turned dark when the investment banking firm of Jay Cooke & Company failed after it had invested too heavily in railroad securities, which had since declined. When news of the company’s collapse was released on September 19, 1873, it affected the entire stock market, and prices fell sharply. The so-called Panic of 1873 signaled the beginning of a depression that persisted through most of the 1870s.