New York Gold Exchange
| Company type | Exchange |
|---|---|
| Industry | Finance |
| Founded | 1862 |
| Defunct | 1897 |
| Headquarters | New York City , United States |
Key people | James Boorman Colgate, Levi P. Morton, J. P. Morgan, Samuel Spahr Laws |
| Products | Gold trading, greenback trading |
The New York Gold Exchange was established shortly after the outbreak of the American Civil War to facilitate an open marketplace for trading gold and the government-issued greenback. Founded in 1862, the exchange operated until its closure in 1897.
During Civil War
Created in 1862 within a basement on New Street, the exchange arose amidst the American Civil War when the Union government introduced paper currency to finance the conflict. Initially, gold trading was prohibited at the New York Stock Exchange, which regarded it as unpatriotic speculation during wartime.[1][2] As Confederate successes elevated gold prices relative to greenbacks, traders at the Exchange often reacted enthusiastically to news favoring the Confederacy.[2] President Abraham Lincoln notably expressed strong opposition to those speculating on gold.[3]
Although banned, gold transactions swiftly relocated to various basements along Wall Street, William Street, and Broad Street.[2] The trading venue moved from a dimly lit space known as the Coal Hole to Gilpin's News Room, also referred to as Gilpin's Gold Room.[2][1]
On June 17, 1864, Congress enacted legislation forbidding gold trading except within brokers' offices, temporarily halting exchange operations. Nonetheless, informal street trading continued unabated, driving gold prices higher. This law was repealed two weeks afterward.[3]
Later that year, Gilpin's resumed operations under the name "New York Gold Exchange,"[1] and was formally incorporated on October 14, 1864.[4] Its premises at William Street and Exchange Place became known as the Gold Room.[2][5] This elegant setting reflected expectations for the forthcoming Gilded Age.[6]
Among its founders and presidents was businessman James Boorman Colgate;Cite error: The opening <ref> tag is malformed or has a bad name other key figures included Levi P. Morton, a young J. P. Morgan, and several leading Wall Street personalities.[3] The manager Samuel Spahr Laws developed the Laws Gold Indicator—a forerunner of the ticker tape machine—that displayed real-time gold prices to both traders and the public.Cite error: The opening <ref> tag is malformed or has a bad name Membership dues escalated rapidly from $25 to $2,500.[4]
While gold trading played an essential role in U.S. international commerce, much of its volume was speculative.[1] Historian John Steele Gordon observed that alongside merchants hedging currency exposure, many participants were pure speculators.[3] Business historian Robert Sobel characterized it as "the most informal and wildest market in American history," marked by dramatic profit fluctuations, frequent insolvencies, and challenges such as short-changing and delayed deliveries.[5] After several high-profile gold thefts, brokers introduced private certificates backed by deposits at the Bank of New York, which became the country's second-largest custodian of gold after the federal government.[4][5] In 1865, a significant forgery scandal involving Edward "E. B." Ketchum prompted the creation of a Gold Exchange Bank that issued daily reserve reports and implemented anti-fraud protocols.[4][5]
Post–Civil War Period
In 1865, the New York Gold Exchange was incorporated into the New York Stock Exchange. This exchange played a pivotal role during the financial crisis known as Black Friday in 1869, which was instigated by Jay Gould and James Fisk's efforts to monopolize the gold market. Subsequent legal battles ensued, featuring notable attorneys who represented both Fisk and the various exchanges involved.
With the stabilization of the market leading to diminished profits from gold trading, the Exchange ultimately discontinued its operations on January 1, 1897, coinciding with the resumption of specie payments.
See also
- List of former stock exchanges in the Americas
- List of stock exchange mergers in the Americas
- List of stock exchanges
- Economy of New York City
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