“The Battle of Bulls and Bears”

September 10, 1864

artist unknown

“The Battle of Bulls and Bears”

Business, Stock Market; Civil War, Finances; New York City, Business; Symbols, Stock Market Bulls and Bears; U.S. Economic Policy, Money Question; Wars, American Civil War;

Chase, Salmon P.;

New York City;

"Humpty Dumpty on a wall,

"Humpty Dumpty got a fall?"

Overall, the Northern economy was stimulated by the Civil War, and great wealth was accumulated through the stock market and other investments.  Yet, the profitability of stocks and gold fluctuated widely since they were closely related to the ups and downs of results on the battlefield.  This cartoon reveals one of the periodic downturns in the volatile market, where gold, pork, flour, and other items plummet, while the bears and bulls fight each other on Wall Street.

To finance the extraordinarily expensive Union war effort, Treasury Secretary Salmon P. Chase and Congress borrowed millions of dollars from a consortium of private American banks, reorganized the banking system, imposed a new set of internal taxes, printed paper currency ("greenbacks") not backed by gold, and issued government bonds.  These policies increased the self-interest of the financial community in the success of the Union cause, enhanced its influence in government affairs, and inaugurated a wartime economic boom. 

Those with money to invest looked to Wall Street, where margin buying (sometimes as low as 3% of a stock's cash value) helped fuel a roaring bull market.  In January 1862, the New York Tribune reported on the great excitement among investors, "The intense desire to buy almost any kind of securities amounted almost to insanity. ... The oldest members of the Board cannot remember such a day of rampant speculation."  By the next year, stockbrokers were earning unprecedented commissions of $3000 weekly. 

In 1863, an association of brokerage firms funded construction of a permanent home for the New York Stock Exchange, which had moved several times since its founding in 1792.  The building was completed in early 1865, shortly before the war ended.  In 1864, a cadre of stockbrokers opened the Long Room on Broad Street to take advantage of the expanding market.  They replaced the auction system with continuous trading during business hours, thereby allowing hundreds of transactions to occur at once.  The more daring became "curb brokers," setting up shop on the street to deal stocks in the waning sunlight after the New York Stock Exchange closed for the day.  An Evening Stock Exchange was also established, which traded 24-hours, six days a week.  

The frenzied market opened the door for abuse and deceit.  In order to gain approval for a Broadway Railroad, Cornelius Vanderbilt secretly sold large amounts of stock in his Harlem Railroad to New York City councilmen.  The stock price soared, but the councilmen decided to sell short, expecting the stock to drop, and to rescind Vanderbilt's franchise.  He learned of the scheme, however, and bought all the stock, which continued to rise, resulting in deep losses for the councilmen and a healthy profit for Vanderbilt.

Perhaps most controversial of all was gold trading.  Union losses undercut confidence in the federal government and thus decreased the value of the government-printed greenbacks.  The decline of greenbacks, though, meant people turned to gold, forcing its value to elevate.  Gold investors, therefore, had a stake in Confederate victories and were known to sing "Dixie" when such news reached the floor of the New York Stock Exchange.  In reaction, the Exchange banned gold trading, but gold brokers simply moved to other premises, soon establishing the Gold Exchange.  In 1864, the price of gold reached an all-time high, compelling Secretary Chase to sell $11 million of the government's surplus gold in mid-April.  The price of gold dropped temporarily, but quickly rebounded.

Despite the overall upward trend, the market fell when the Union suffered losses, and rose when it triumphed.  At the time this post-dated cartoon hit the newsstands on September 1, progress of the Union military throughout the summer of 1864 had stagnated, thus producing a dip in the market.  The message conveyed by the cartoon, though, is more ambiguous. The toppling of gold, the question in the caption, and the uncertain outcome of the bears and bulls battle seem to indicate that the Union victory in August at Mobile Bay had an adverse affect on gold, but was not enough to improve the other markets.  Later in September, however, the fall of Atlanta to the Union and victories in the Shenandoah Valley of Virginia revived the stock market, as well as the Union cause and President Lincoln's reelection hopes.

Robert C. Kennedy

“The Battle of Bulls and Bears”
July 14, 2024

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