stylistic:style_transfer, structural:scholar_edition
Business failures

In the 19th century, there were no federal presidential pensions, and the Grants' personal income was $6,000 a year. Grant's world tour had been costly, and he had depleted most of his savings. Wealthy friends bought him a house on Manhattan's Upper East Side, and to make an income, Grant, Jay Gould, and former Mexican Finance Secretary Matías Romero chartered the Mexican Southern Railroad, with plans to build a railroad from Oaxaca to Mexico City. Grant urged President Chester A. Arthur to negotiate a free trade treaty with Mexico. Arthur and the Mexican government agreed, but the United States Senate rejected the treaty in 1883. The railroad was similarly unsuccessful, falling into bankruptcy the following year.

At the same time, Grant's son Buck had opened a Wall Street brokerage house with Ferdinand Ward. A conniving man who swindled numerous wealthy men, Ward was at the time regarded as a rising star on Wall Street. The firm, Grant & Ward, was initially successful. In 1883, Grant joined the firm and invested $100,000 (~$ 2.78 million in 2023) of his own money. Ward paid investors abnormally high interest by pledging the company's securities on multiple loans in a process called rehypothecation (now regarded as a Ponzi scheme). Ward, in collusion with banker James D. Fish and kept secret from bank examiners, retrieved the firm's securities from the company's bank vault. When the trades went bad, multiple loans came due, all backed by the same collateral.

Historians agree that the elder Grant was likely unaware of Ward's intentions, but it is unclear how much Buck Grant knew. In May 1884, enough investments went bad to convince Ward that the firm would soon be bankrupt. Ward, who assumed Grant was "a child in business matters", told him of the impending failure, but assured Grant that this was a temporary shortfall. Grant approached businessman William Henry Vanderbilt, who gave him a personal loan of $150,000. Grant invested the money in the firm, but it was not enough to save it. The fall of Grant & Ward set off the Panic of 1884.

Vanderbilt offered to forgive Grant's debt entirely, but Grant refused. Impoverished but compelled by personal honor, he repaid what he could with his Civil War mementos and the sale or transfer of all other assets. Vanderbilt took title to Grant's home, although he allowed the Grants to continue to reside there, and pledged to donate the souvenirs to the federal government and insisted the debt had been paid in full. Grant was distraught over Ward's deception and asked privately how he could ever "trust any human being again." In March 1885, he testified against both Ward and Fish. After the collapse of Grant & Ward, there was an outpouring of sympathy for Grant.