The Great Civil War Gold Hoax
Reports in 1864 that Lincoln had declared a new conscription sent Wall Street stocks plummeting and gold prices soaring. There was just one problem.
By Jim Knipfel
At about 3:30 a.m. on the morning of Wednesday, May 18, 1864, an Associated Press cable arrived at the offices of the New York World. Founded only three years earlier, the penny paper was considered a baby and a lightweight within the two-fisted arena of New York dailies with its breezy, populist editorial stance and it’s emphasis on religious stories. But they were trying.
The AP telegram arrived in the middle of that three-hour lag time after the proofreaders and editors of the night shift had gone home but before the day shift showed up. The only member of the editorial staff on hand at the time was the night foreman.
The AP dispatch was delivered by a young telegraph office courier. He announced that President Lincoln had just signed a proclamation calling for the conscription of another 400,000 Union soldiers. After a few weeks of good news about Union victories, hopeful Northerners were starting to get the sense the war, at long last, might finally be approaching its end. But Lincoln’s proclamation, citing recent defeats at Red River, a delay in Charlston and the bloody ongoing battles in Virginia, seemed to imply things weren’t going nearly as well as everyone had been led to believe. This was very big news, and it wasn’t good.
During that three-hour lag, the night foreman was charged with making any last minute editorial decisions he judged necessary. It was the only time of any given day that editorial decisions were made by a single person. There was nothing new or unique about early morning government dispatches like this, but when there were no fact-checkers on hand to confirm them, standard operating procedure was to at least send a courier around to the other papers to confirm they’d all received the same telegram. That morning, however, there was no time for that; the other papers’ offices were too far away to get word back in time for the morning edition. Considering the gravity of the AP story, The World’s foreman called the composition room and told them to re-work the front page to include news about the Presidential proclamation.
Later that morning, when the front pages of both The World and The New York Journal of Commerce trumpeted Lincoln’s bad news, the public reaction was predictable. A call for more conscription implied the war might well drag on for several more years. That was a grim forecast for an already shaky economy: More able-bodied workers would be sent off to fight a seemingly endless war. Share prices plunged as investors yanked their money out of stocks. They put much of that money into gold, a more stable, much safer investment. As a result, gold prices soared ten percent early that Wednesday morning.
But then there was a collective “Hey, wait a minute…” moment, as people around New York started to notice something. With news this big, shouldn’t every newspaper in the city be screaming about it? Why did it only appear in The World and The Journal of Commerce? You’re telling me The World scooped The Trib, The Times and The Herald?
What if the story wasn’t true? You could almost forgive The World, being the newbie no one took that seriously anyway. But The Journal was another story. A venerable and serious daily that over the past quarter-century had become an invaluable resource for investors and shopkeepers alike.
By 11 a.m. that morning, an angry and suspicious mob of local businessmen — including presidential candidate and former Union commander general George McClellan — gathered in front of The Journal of Commerce’s offices, demanding a few answers. In their own defense, The Journal editors produced the AP telegram in question. It sure looked like the real thing, didn’t it? They had no reason to doubt it was true.
Within a matter of minutes, the Associated Press issued a statement insisting no such dispatch had ever been sent. By 12:30, Secretary of State William Seward had released another official statement declaring that every word of any such presidential proclamation was a complete and utter hoax. The President had made no such decision.
As law enforcement set out to investigate who might be responsible for the dangerous prank, President Lincoln, who was mighty pissed about the whole thing, ordered federal troops to shut down both offending papers, taking the editorial staffs into custody. He then ordered troops, for reasons that made no logical sense, to also close down the local telegraph office which had delivered the bogus dispatch. This open assault on the free press would remain one of the ugliest and most disturbing episodes of his presidency.
Three days after the fake AP dispatch was sent out, a young Brooklyn Eagle reporter named Frank Mallison was taken into custody. While admitting he was involved with the scheme, he insisted he was merely an errand boy, pointing law enforcement officials toward his boss, Brooklyn Eagle city editor Joseph Howard Jr., who, Mallison claimed, was the one who’d concocted the plan from the start, as well as the one who profited from it.
Howard, a thin, balding 35-year-old man with a mustache, was likewise arrested without incident and quickly offered up a full confession.
In the past Howard had been chastised for running fake, if harmless, stories about Lincoln, but this took things to a whole new level. As media pranks go, it was a work of flawed genius, if a bit complicated.
Howard, as a seasoned newspaperman, knew all the ins and outs of how the other papers in town operated. He knew about that three-hour downtime every morning, and he knew the role played by the night foreman whenever an official news dispatch arrived. He also knew a thing or two about the stock market, namely that bad news about the war effort tended to send shares falling. He could also make a pretty fair guess as to what all those people who sold off their stocks would be doing with their money.
On Tuesday, May 17, he invested a bundle in gold. Then, using official Associated Press letterhead, he composed the text of a believable (if patently untrue) presidential proclamation about the conscription of an additional 400,000 Union troops. He then sent Mallison off to the telegraph office with orders to wire the fake dispatch to nearly every paper in town, making sure it arrived shortly after the night editors and proofreaders had gone home.
It’s that “nearly” that was the kicker. While the night foremen at The World and The Journal of Commerce, facing tight deadlines, opted to skip that step of confirming that other city papers had received the same telegram, the other papers didn’t. After checking around and learning that not every daily had received notice of the proclamation, the city’s other night foremen decided to play it safe, holding the story for the later edition so it could be properly fact checked first. It’s a good thing, too; Lincoln might have decided to close down every newspaper in New York.
Still, The World and The Journal were enough for Howard’s purposes. As expected, the market began to tumble shortly after the opening bell, with jittery investors dumping all their money into gold. As word began to spread the whole thing was a hoax, but before the market could react to the news, Howard sold his gold shares and made a tidy profit, which he quietly gloated about for three days. Then, on Saturday afternoon, some humorless men knocked on the door of his Brooklyn home.
Howard pleaded guilty and was shipped off to Fort Lafayette. Located on a barren island off the southern tip of Bay Ridge, Brooklen — “The American Bastille,” as it was known—had housed federal political prisoners until the Civil War broke out, at which point it was converted into a POW camp. So, as punishment for his greed, his understanding of human psychology, and his efforts to use the press as a tool to fraudulently manipulate the public for his own personal benefit, Howard was sentenced to spend a few years locked away with hardened Confederate soldiers from North Carolina and Georgia.
In the meantime, both The World and The Journal of Commerce reopened and resumed publishing. The Journal eventually folded in the 1890s, with The World following suit in the early years of the Great Depression.
A mere three months after being taken into custody and locked away in Fort Lafayette, on August 22, Lincoln ordered that Howard be released. Some say this came about after famed abolitionist clergyman Henry Ward Beecher, a man who had Lincoln’s ear, intervened on Howard’s behalf, being an old friend of the Howard family. That may well be the case, but it’s curious that on July 18, a month before Howard’s release, Lincoln signed a (real) proclamation ordering the conscription of 500,000 additional union soldiers to continue the war effort. Maybe the President felt a bit sheepish about his overreaction to a journalist whose unconscionable fake news story turned out to be true. Just a little early.
Jim Knipfel is the author of three memoirs, five novels, a short story collection and a volume of pop cultural sociology. His most recent book is Residue (Red Hen Press). He lives in Brooklyn.
Production DetailsV. 1.0.0
Last edited: July 7, 2019
Author: Jim Knipfel
Editor: Alexander Zaitchik
Illustration: The New York Journal of Commerce / public archives
