During the American Civil War, the United States government issued a large amount of money that was backed by nothing but credit. After the war ended, people commonly believed that the U.S. Government would buy back the "greenbacks" with gold.
In 1869, a group of speculators, headed by Jay Gould and James Fisk, sought to profit off this by cornering the gold market. Gould and Fisk first recruited Grant's brother-in-law, a financier named Abel Corbin. They used Corbin to get close to Grant in social situations, where they would argue against government sale of gold, and Corbin would support their arguments.
Grant, however, became suspicious of Corbin's sudden interest in the gold market and uncovered the plot. He then ordered the sale of $4 million in government gold.
On September 20, 1869, Gould and Fisk started hoarding gold, driving the price higher. On September 24, the price of an ounce of gold was $30 higher than when Grant took office. But when the government gold hit the market, the price of gold plummetted within minutes. Investors scrambled to sell their holdings, and many of them, including Corbin, were ruined.
Fisk and Gould escaped financial harm. Subsequent Congressional investigation into the scandal was limited because Virginia Corbin and First Lady Julia Grant were not permitted to testify. However, Butterfield was removed from his post.