The Gold Hoax

May 18, 1864 – A forged presidential proclamation was sent to the press in an effort to drive up the price of gold. This caused an uproar throughout the North.

President Abraham Lincoln | Image Credit: CivilWarDailyGazette.com

At 4 a.m., the seven daily newspapers of New York City received an Associated Press dispatch supposedly from President Abraham Lincoln. It stated that May 26 would be set aside “as a day of fasting, humiliation and prayer,” and it announced that “with a heavy heart, but an undiminished confidence in our cause,” another 400,000 men would be drafted into the army due to “the situation in Virginia, the disaster at Red River, the delay at Charleston, and the general state of the country.”

Five dailies hesitated publishing the declaration out of suspicion that it could be a forgery. But two dailies–the New York World and the Journal of Commerce–published it, and it caused an immediate panic on Wall Street. The price of gold shot up 10 percent before traders began realizing that the proclamation might be bogus. Bulletins soon appeared denying the announcement’s validity, and the panic quickly subsided.

When news of this story and its impact reached Washington, it “angered Lincoln more than almost any other occurrence of the war period.” He directed Secretary of War Edwin M. Stanton to “take possession by military force” the offices of the two newspapers and the Independent Telegraph Company (which had allegedly wired the dispatch). Major General John A. Dix, commanding the Department of the East, was ordered to imprison all suspects in the scheme. Although he believed that many of the suspects were innocent, Dix reluctantly complied.

Journalist Adams S. Hill was apprehended on suspicions that he masterminded the “gold hoax” to discredit the Associated Press. Hill worked for the AP’s competitor, the Independent News Room, which used the Independent Telegraph Company for service because the AP monopolized the superior American Telegraph Company. Charges against Hill were dropped when the real perpetrator was revealed on the 20th.

Joseph Howard, Jr., city editor of the Brooklyn Eagle, had concocted the plot after boasting that he would soon reap enormous profits in the stock market as a result. Howard immediately named one of his reporters, Francis A. Mallison, as a co-conspirator who wrote the declaration in Lincoln’s name and style. Howard also explained that the two newspapers and the Independent Telegraph Company had nothing to do with the scheme.

In reality, Lincoln had planned to issue a draft call as reported, but the outrage caused by the hoax forced him to delay the call for two months. The newspaper editors endured three days of jail, while Howard and Mallison were imprisoned at Fort Lafayette in New York Harbor.

The Lincoln administration was excoriated once again for suppressing free speech and the press. New York Governor Horatio Seymour, who had battled Lincoln on civil liberties the previous year, directed the district attorney to file suit against General Dix and the Federal government for unlawfully arresting and imprisoning citizens. Seymour declared:

“In the month of July last, when New York was a scene of violence, I gave warning that ‘the laws of the State must be enforced, its peace and order maintained, and the property of its citizens protected at every hazard.’ The laws were enforced at a fearful cost of blood and life. The declaration I then made was not intended merely for that occasion, or against any class of men. It is one of an enduring character, to be asserted at all times, and against all conditions of citizens without favor or distinction. Unless all are made to bow to the law, it will be respected by none. Unless all are made secure in their rights of person and property, none can be protected.

The court case was finally resolved in July, when a grand jury declined to press charges against Dix or his officers. The Federal government provided no compensation for the loss of business sustained by the suspension of the two newspapers, seizure of the telegraph offices, or the imprisonment of innocent people. Howard and Mallison were finally released from confinement after Reverend Henry Ward Beecher appealed to Lincoln for mercy.

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References

Davis, Jefferson, The Rise and Fall of the Confederate Government: All Volumes (Heraklion Press, Kindle Edition 2013, 1889), Loc 19792-805; Donald, David Herbert, Lincoln (Simon & Schuster, Kindle Edition, 2011), Loc 10669-81; Foote, Shelby, The Civil War: A Narrative: Volume 3: Red River to Appomattox (Vintage Civil War Library, Knopf Doubleday Publishing Group, Kindle Edition, 2011), Loc 7879-99; Long, E.B. with Long, Barbara, The Civil War Day by Day (New York: Da Capo Press, Inc., 1971), p. 504; Stanchak, John E., Historical Times Illustrated Encyclopedia of the Civil War (New York: Harper & Row, 1986, Patricia L. Faust ed.), p. 360; Wert, Jeffry D., Historical Times Illustrated Encyclopedia of the Civil War (New York: Harper & Row, 1986, Patricia L. Faust ed.), p. 313-14, 372-73; White, Howard Ray, Bloodstains, An Epic History of the Politics that Produced and Sustained the American Civil War and the Political Reconstruction that Followed (Southernbooks, Kindle Edition, 2012), Q264

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