Black Friday

Black Friday originally referred to September 24, 1869, when an attempt to corner the gold market led to a financial panic and depression. Today, it broadly denotes any significant drop in financial markets.
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Definition

Black Friday commonly refers to a sharp drop in financial markets. The term originated on September 24, 1869, when a group of financiers, including Jay Gould and James Fisk, attempted to corner the U.S. gold market, resulting in widespread panic and a subsequent depression. The term has since been used to describe any significant downturn or crisis in the financial markets.

Historical Context and Examples

Examples

  1. Original Black Friday (1869): The term was first used for the financial debacle on September 24, 1869, when Jay Gould and James Fisk attempted to control the price of gold. Their actions led to market panic and a severe drop in gold prices, causing a financial crisis.

  2. Panic of 1873: This event also began on a Friday and led to a severe economic depression, with numerous banks and businesses failing.

  3. Black Monday (1987): Although not named “Black Friday,” the stock market crash of October 19, 1987, shares characteristics with Black Friday events, noting a precipitous decline in market values.

Frequently Asked Questions

Q: What caused the original Black Friday in 1869? A: The original Black Friday was caused by an attempt by financiers Jay Gould and James Fisk to corner the U.S. gold market. Their actions caused a market panic and a severe drop in gold prices.

Q: Why do financial crises frequently occur on Fridays? A: Friday is significant because market activities on the last trading day of the week can often lead to heightened reactions, given that markets are closed for the next two days, leading to uncertainty.

Q: Are all significant market drops called Black Friday? A: No, not all market drops are referred to as Black Fridays. The term is typically reserved for historically significant crashes that lead to widespread panic and economic consequences.

  • Market Panic: A sudden, extensive decline in financial markets as investors quickly sell off assets in a reaction to a triggering event.

  • Economic Depression: A prolonged period of significant decline in economic activity across an economy, lasting longer than a recession.

  • Gold Market: A financial market in which gold is bought and sold, impacting both spot and futures prices.

  • Financial Market Crash: A rapid and often unanticipated drop in the stock or other financial markets.

  • Recession: A temporary period of economic decline during which trade and industrial activity are reduced.

Online Resources

  1. Investopedia’s Guide to Market Crashes: Investopedia

  2. Historical Financial Panics and Crashes: The Balance

  3. Economic History: Economic History Association

Suggested Books for Further Studies

  1. Manias, Panics, and Crashes: A History of Financial Crises by Charles Kindleberger and Robert Aliber
  2. Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor
  3. When Genius Failed: The Rise and Fall of Long-Term Capital Management by Roger Lowenstein

Fundamentals of Black Friday: Finance Basics Quiz

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Thank you for exploring the nuances and historical context of Black Friday in financial markets. Continue to enhance your understanding of financial history and market mechanisms!

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