Thursday, November 28, 2019

All that glistens isn't gold on Black Friday

Shoppers browse the aisles during a Black Friday sale at a Target store in 2018. 
AP Photo/John Minchillo

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“A man will never love you or treat you as well as a store. If a man doesn’t fit, you can’t exchange him seven days later for a gorgeous cashmere sweater.” (Sophie Kinsella)

Like trucks driving down the highway stuffed with turkeys for Thanksgiving meals, stores across our nation are loading up with “too good to be true” deals for a dubious tradition, Black Friday; the day after Thanksgiving. People across the U.S. have been preparing a wish list before, during and after Thanksgiving church services and meals. They hope to get a “steal of a deal” on everything, on the busiest shopping day of the year. Black Friday is the only day in the entire world that people trample over others for sales exactly one day after giving thanks for everything they already have.

Black Friday has not always been a great day for consumers. The term Black Friday once marked the crash of the U.S. gold market in 1869. Two notoriously ruthless Wall Street financiers, Jim Fisk and Jay Gould, conspired to purchase as much of the nation’s gold as they could buy. Their vision was to drive the price through the roof and resell it for huge profits. On the Friday that their sinister connivance unraveled, it sent the stock market reeling and bankrupted everyone from Wall Street to farmers. It took the U.S. economy over a decade to fully recover from their apocalyptic scheme.

At the time when Fisk and Gould concocted their plan, the currency of trade was gold. But America had gone off the gold standard during the Civil War and printed millions in government greenbacks to fund the war. Competing currencies of gold and greenbacks were tendered and Wall Street had formed a Gold Room where they were traded. Gould calculated that if he could buy enough gold he’d be in control of the market. Then he and his crooked gang could resell it for an astronomic profit.

“There are magicians’ skills to be learned on Wall Street, and I mean to learn them.” (Jay Gould)

Gould knew the only thing standing between him and making a killing on the gold market was the White House. Since the beginning of President Ulysses S. Grant’s tenure in office, the Treasury used its extensive gold reserves to buy greenbacks from a willing public. Therefore the government controlled the value of gold. When it sold gold, the price went down, but when they hoarded it the price went up. If anyone tried to manipulate the market, the Treasury could derail them by selling large quantities of gold to keep prices low. Gould had to find a way to hoodwink the U.S. Treasury.

Gould heard opportunity knock the day he met Abel Corbin, a D.C. insider who was married to one of Grant’s sisters. Corbin was a small time speculator that Gould knew could be persuaded to join him in executing his diabolical plan. Gould deposited $1.5 million in Corbin’s trading account. Then Corbin used his fraternal influence with Grant to help get Daniel Butterfield appointed as the new sub-treasurer in the exchange. Gould then put $1.5 million in Butterfield’s personal account. Corbin was designated to convince Grant to keep gold prices high so they could pull off their cheme.

“If I denied all the lies circulated about me I should have no time to attend to business.” (Jay Gould)

Gould and his comrades had been buying small amounts of gold for months. But the day he told his conspirators the fix was in, he and his army of robber barons opened up their pocket books and executed with a “Midas touch”! Jim Fisk, Gould’s number one confidant, quickly dropped a cool $7 million in the gold market. Within hours, gold’s value climbed higher than Ben Franklin’s kite flew in 1752. Within a few weeks the price of gold spiked to $160. Wall Street speculators and gold traders were caught in Wall Street with their pants down. Rumors spread rapidly about Gould’s hyjinks as traders and citizens called for the Treasury to intervene and sell off more of its gold reserves. Fisk and Gould owned a combined $60 million in gold; three times as much as the state of New York.

Bob Dylan wrote, “If you live outside the law you must be honest.” Like most “swindlers,” Gould’s greed was his demise. Corbin assured Gould that Grant would let the crisis work its course and do nothing. But with the public crying foul and his numbers tanking, Grant told the Treasury officers to investigate his brother-in-law and Gould. Like any true conman, Gould never told Fisk or the other crooks. He started selling a little gold each day while most of his mob was sent to jail.

“Whenever I am obliged to get into a fight, I always wait and let the other fellow get tired first.” (Jay Gould)

President Grant finally interceded and demanded Treasury Secretary George Boutwell to open his vaults and flood the market. The news sent Wall Street into a tailspin. Within minutes, the inflated gold prices plummeted to $133. The stock market dropped 20 points and severely damaged many of Wall Street’s most venerable firms. Thousands of investors were financially ruined. Foreign trade came to a standstill. Many corn and wheat farmers saw the value of their harvests dip by 50 percent. Yet both Gould and Fisk avoided spending a single night in jail by leveraging their political connections.

For years, the fateful day Gould and Fisk hijacked the U.S. gold market was known as Black Friday.

In 1952, a New York City Management Manual resurrected the term to describe workers who called in sick the day after holidays. It resurfaced in 1961 when a newsman quipped, “The disruptive pedestrian traffic at the ‘after Thanksgiving sales’, was worse than the chaos on ‘Black Friday’.” This phrase was soon adopted by retailers to promote sales and sell off inventory the day after Thanksgiving.

"Whoever said money can't buy happiness, simply didn't know where to go shopping." (Bo Derek)

Today, Black Friday is the biggest shopping day of the year. Despite attempts to control the crowds of shoppers, injuries are common. People are trampled during stampedes when doors first open. In 2008, an anxious crowd of 2,000 at a New York Wal-Mart broke the door down and crushed an employee to death. In 2010, a Wisconsin woman was arrested at a Toys 'R' Us because she shot at a woman who had cut in front of her in line. Outside a Wal-Mart in Southern California, a man was fatally wounded during a Black Friday sale in 2011 for flipping off another shopper. A woman was killed at a Macy's store in New Jersey by another shopper in 2016 when they argued over a “one only” sale appliance.

To consumers, Black Friday is synonymous with huge sales. But they soon find out “all that glistens isn’t gold.” According to NerdWallet, this is the worst day of the year to shop. Deal hunters wait for hours only to discover there are no “deals” at all. Stores advertise loss-leaders but only a few are in stock. Others lure customers in for deals that never arrive. Crowds are treacherous, and store help cannot be found. People end up buying poor quality junk they don’t need. Most of the time, people go home loaded with regularly priced products, simply so to justify they wasted their entire day off.

“Only the fools buy in early. A wise trader avoids bad investments by being patient.” (Jay Gould)

P. T. Barnum said, "There's a sucker born every minute." The first Black Friday was a bad day for consumers in 1869. Today it is a bad day for them too. For all those who feel compelled to brave the crowds the day after Thanksgiving, keep in mind the antics of Jim Fisk and Jay Gould on that first Black Friday. Only a few crooks profited from their too good to be true scheme, at the expense of American investors. It was caveat emptor then, and it is caveat emptor now. So this Friday let’s all remember:

“A bargain is something you can't use at a price you can't resist.” (Franklin Jones)

Contributing Columnist William Haupt III is a retired professional journalist, author, and citizen legislator in California for over 40 years. He got his start working to approve California Proposition 13.