The Black Furiday Scandal

The railroad industry began to struggle when John D. Rockefeller built a pipeline to transport oil instead of the railroads causing many people to lose their jobs. As a result they rioted at Tom Scotts Pennsylvania railroad burning all his buildings trashing his livelihood. Andrew Carnegie felt this drove his mentor to his grave despite Scotts age.

There were so many people using the railroads that every penny they raised the prices was an exponential gain. Two highly noted “Robber Barons” were Cornelius Vanderbilt and Jay Gould, both of which became extremely wealthy through railroad ownership. However their railroad monopolies would soon come to an end. “This eventually led to the formation of the Interstate Commerce Commission, or ICC in 1887. Its mission was to regulate railroads, fix price ceilings, and generally prevent them from making a profit that would be considered excessive” (Railroads and the Market Economy). Even with regulated railroads, they continued to expand. The Interstate Commerce Act of 1887 got major backing from both of the political parties and was pressured to become a law by groups of all regions. These groups included farmers, merchants and even the occasional railroad manager. The Interstate Commerce Commission had the right to investigate all railroad operations. With that said it became the first federal independent regulatory commission to have judicial, legislative and executive powers.

Most of their success was contributed to laissez-faire’s economic system. The government played a large part in funding the accounts acting in the railroad industry. Document G exposes the bonds, grants, and money given out by the government to multiple railroad companies. This caused the citizens to have to pay a much higher tax in order for the government to contribute to railroad companies. Never the less in the 1870’s Congresses resolution was passed. This states “no subsidy in money, bonds, public lands, endorsement, or by pledges of the public credit, should be granted by Congress to associations or corporations engaged or proposed to engage in public or private enterprise” as seen in Document F. They were trying to limit certain aspects of the companies, directly contradicting the laissez-faire idea. After this resolution was passed the land was put on sale for 125-250 per acre. At this point the larger companies began to buy the land surrounding the railroads and selling it off piece by piece at much higher

The Credit Mobilier company was formed by George Francis Train Who was the vice president and in charge of publicity for the Union Pacific Railroad. The company was crated to limit the liability of its stockholders and to maximize the profits. The company gave cheap or free shares of stock to members of congress who would support additional funding. In 1872 the scandal was brought to the publics attention by Henry Simpson McComby. He claimed that $72 million in contracts had been given to the the mobilier company to build a railroad that only cost $53 million to create. The investors where left nearly bankrupt and it ruined the reputation of many of the congressmen who had accepted the bribes including James A. Garfield, Schuyler Colfax, James

Richard White’s 2011 book titled Railroaded: The Transcontinentals and the Making of Modern America is about the corrupt and mismanaged transcontinental railroads and bold arguments of the story how they came and went. In this book White describes how the construction of the transcontinental railroads across the US in the late nineteenth century would change America socially, economically, and politically. He also describes the companies that built these railroads and argues with three main points on why they were corrupt companies. First I’d like to go over the three different ways that the railroads would affect America, socially, economically, and politically.

In the late 1800, conflicts arose from farmers, workers, and railroad companies. These issues were resolved by significant battles among them, but never had an affect on the railroads. The railroads charged an extraordinary amount of money for transportation of products. This made farmers extremely outraged, and made them use their money more wisely than spend it on the transportation of their products. The railroad companies misused their money given by the government to gain profit of off land grants. The competition led to workers going on strike for their budgets being cut. These concepts show that railroads, in their wasteful competition, exploited farmers and workers because of budget cuts, transportation of products, and rates.(Introduction, Timeline)

During the building of the Transcontinental Railroad, the railroads themselves created a large market for the steel and iron industries.4 The steel and oil industries were booming and corruption was rampant. Andrew Carnegie had cornered the market in the steel industry and John D. Rockefeller had cornered the oil market. Rockefeller bought up his competition after essentially putting them out of business by flooding the market with refined oil bringing down prices and profits. He was determined to pay no one a profit because he wanted it all for himself. He created a plan called vertical integration which consolidated his businesses into one by creating The Standard Oil Trust.5 These two men became known as barons and got rich beyond belief. In 1890, the Government enacted the Sherman Anti-Trust Act to prevent large firms from controlling one single industry and finally put a stop to these monopolies and trusts, 6 but it was not rigorously enforced until the 1900’s. This act was designed to restore competition and

Along with promoting industry comes regulation. With railroads becoming more and more prevalent, problems were sure to ensue. Congress enacted laws to protect farmers and small business owners from the activities of railroads. Many people were frustrated with the big businesses taking advantage of workers and consumers. The laws that Congress passed were ones that ensured safety and fair prices in the economy. The Granger Movement would be a case in point. The farmers that were involved in this movement wanted the federal government to take action and regulate the railroad companies from charging unfair rates and carrying out their monopolistic powers in transportation. As a result, the Interstate Commerce Act was passed by Congress and the ICC was formed to regulate the railroads and their prices.

Often considered as the most unscrupulous of the robber barons, Jay Gould was involved with Tammany Hall and William “Boss” Tweed from the initial stages of his business career. Shortly after hurting his reputation in a gold speculation that induced the Black Friday panic 1in 1869, he went on to gain control of western railroads such as the Union Pacific and Missouri Pacific railroads. By 1882, Gould had a firm grip on 15% of the United States’ total trackage. Although many of his contemporaries feared him because of his ability to influence the market, he was recognized by other magnates as a rather skilled businessman. From his rather corrupt business practices, Jay Gould built up and ultimately established his reputation in the 19th century through his involvement with the Erie railway, the panic of Black Friday, and Tammany Hall which reassured his position as one of the leading robber barons during the Industrial Revolution.

The Black Friday scandal also has another name it goes by people sometimes call it " Deadly Friday. " Two men tried to control the gold market of New York's gold exchange, these men were James Fisk and Jay Gould.The Black Friday scandal had another name as well it also went by the name of " Fisk-Gould Scandal. " The U.S. Government during the civil war gave out greenback which were backed out by nothing but credit. After the civil war most people believed that they could buy back the greenbacks with gold. Fisk and Gould tried to profit from this by cornering the gold market. They hired Abel Corbin Ulysses S. Grant's brother-in-law, and they hired him to get closer to Ulysses S. Grant to argue against him when the government discussed

The gilded age was full of scandal and corrupt politics. During this era, there was corruption at all levels of government. One of the most elaborate scandals involved a firm called the Crédit Mobilier whose relationship with the Union Pacific Railroad was

This company was given contracts to build railroads. Congressmen were then offered great shares in the construction which allowed the congressmen to approve federal payments without paying attention to the expenses. This meant that the railroad builders made large amount of profit, but had no idea how they were affecting the railroad. The railroad companies were entirely impoverished by the end of the whole process. Those involved in the scandals realized through time that much more money could be gained from construction contracts than from operating the completed road. The vice president at the time, Schuyler Colfax, who was then Speaker of the house, had even bought shares. When the scandal became a public matter, James Blaine appointed an investigation committee ran by Representative Luke Poland in 1872. Mr. Blain said that, "A charge of bribery is the gravest that can be made in a legislative body. It seems to me... that this charge demands prompt, thorough, and impartial investigation.". Several of those officials involved, however, were implicated but not punished. They claimed that the payment was a gift and not in any way a bribe. Another angered Justice rephrased a passage of scripture, saying, '"Let him that has not betrayed the trust of the people , and is without stain, cast the first stone.". That quote was directed at the press who were enraged because of the scandal. The Justice was in a way pointing out that the press has manipulated and twisted the view of the public on many occasions. In that case, the press is without room to place blame and

Broad economic imbalance in the cities calls for a new political system because the political structure of late nineteenth era demonstrates the industrial revolution commitment to business and not to the needs of the poor and working class of the country (Schultz 2014,pp 302). The business commitment influences the decline attention of political behavior of American politics towards the African American that impact the politics of reconstruction. The introduction of pro-business agenda in United State politics, Business interest became a main campaign in the nation’s political system which is along side with payment. Political corruption was on high side during the late nineteenth century industrial revolution in national and local level because businessmen exchange cash or stock to obtain land grants, protective tariffs, tax relief, and political support. This exchange led to outburst of public scandals. For instance the Credit Mobilier Scandal of 1832 where representatives from union pacific offered Federal lawmakers stocks in Credit Mobilier Company in exchange of surplus subsidies and land grants for their railroad. The scandal led to taint and investigation of leading politicians of that era.

The origin of this phrase has its roots in the 20th century. The first mention of Black Friday appeared for the first time in 1951 in a newspaper referring to the habit of workers to call-in sick after thanksgiving, in order to earn a four-day weekend. After approximately 10 years, the term has come to be used by the Philadelphia police to describe the chaos caused by pedestrians, shoppers and traffic jams on the day after Thanksgiving.

This became the stock market crash. This day, October 24, 1929, became known as Black Tuesday. In the crash, people lost ten times as much as they put in. After all that everyone lost there trust in the economy. Many people wanted to take their money out of the bank. Banks were running out of money. Because of the cash shortage many banks got closed down.