The Big Short of the 1860s

James Fisk was a corpulent and flamboyant American financier who came into a fortune in the 1860s. Much like Michael Burry and other figures in Michael Lewis’ contemporary classic, The Big Short , he made his fortune short selling an asset class that crashed. Also, like Citadel and other hedge funds in another of Michael Lewis contemporary classics, the Flash Boys, he made a fortune by improving a telecommunication network so that he could be the first to trade on the latest news.

Fisk is regarded as one of robber barons of the nineteenth century – yet while he was alive, his showmanship and good humor earned him the adoration of the public. When he was murdered in 1872 at the age of 36 years, an estimated 100,000 New Yorkers lined the streets for his funeral procession.

In his early years, he was a poor student. At the age of 15, he joined a touring circus for three years, then worked for the next 20 years as a waiter, traveling salesman, wholesale agent, stockbroker and executive. When the Civil War broke out, he went to Washington and landed deals to supply the Union army with cotton shirts and woolen blankets. He became wealthy by traveling to areas of the South under federal control, where he bought up large quantities of cotton for shipping back to the North.

Fisk then went to Wall Street in the middle of the Civil War to work as a stockbroker and enlarge his fortune. The speculations ruined him. But as the momentum in the Civil War shifted to the North, he came up with an idea to regain his wealth: short sell Confederate bonds trading in London.

He gathered capital from several sources to implement his plan. He then hung out at a New York telegraph office waiting for word of the Union army overcoming the Confederate army defending the capital city of the South. When it came, Fisk paid a telegraph operator to give priority to sending his message to Halifax, Nova Scotia. It had just one word: “Go.”

To make sure the message got through, Fisk had earlier paid a team of laborers to work day and night to rebuild 50 miles of an unreliable part of the line. It was finished just in time. The recipient of the one-word message, a fellow stockbroker, jumped on a ship to Britain. By using one of the fastest steamers and departing from Halifax (the closest port in North America to Britain) he had a five-day lead on the New York ship leaving for Britain with news of the South’s loss.

Once in Britain, five days was enough time for Fisk’s partner to short the Confederate bonds before anyone in Britain knew the South had lost the war. When the news arrived in London, the prices of the bonds plunged to pennies on the dollar, and Fisk’s short positions were closed out for gains of more than US$15 million in today’s money.

In his following years, Fisk and other partners battled for control of the Erie Railroad and he became one of the directors. He and a partner also cornered the gold market in 1869 for a handsome profit - and a scandal.

When his mistress took up with a business partner of his, Fisk ended the partnership and was going to have him arrested for questionable business practices. Disgruntled, the jilted business partner cornered Fisk at a hotel in 1872 and shot him twice. Fisk died the next day, after identifying his killer. 

(This is a condensed version of various accounts of Fisk’s life and business dealings, including David K. Thomson’s “Jubilee Jim Fisk and the great Civil War score,” published in the Boston Globe April 22, 2020).