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A large crowd of men, many wearing hats gathered in the street in front of a building with awnings and a sign that says United Cigar Stores Co
Brokers signalling, curb market, New York City, Harris & Ewing.

United Copper, Wall Street, and the Panic of 1907

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WALL STREET STOCKS CONTINUE DOWN WARD COURSE AT OPENING Coppers Lead in the Decline, but Majority of Leading Railroad Shares Follow Them Closely.
Evening Star & Newark Advertiser, 19 Oct. 1907.

The Panic of 1907 sometimes called the Bankers’ Panic, is one of those historic business events that many may not know about, but which had a major impact on the economy, banking, and money in the United States.

The story begins in October 1907 with the Heinze brothers, F. Augustus Heinze, who was one of the Copper Kings of Butte, Montana, founder and president of the Mercantile National Bank, and founder of United Copper, and his two brothers Otto and Arthur P., who owned a trading firm. They joined forces with Charles W. Morse, a New York businessman and speculator known as the “Ice King,” in an effort to corner the market on the stock of United Copper. The failure of the plan triggered the panic.

The panic on Wall Street led to runs by depositors on the banks associated with these men, including the Knickerbocker Trust Company, whose president, Charles T. Barney, was friendly with Morse. The bank was forced to close, but after their assets were bought they became the Columbia-Knickerbocker Trust Company. The New York Stock Exchange fell almost 50% from its peak of the previous year and things were precarious.

Financier J. P. Morgan stepped in and was able to stabilize the situation by pledging his own money, and he convinced other New York bankers to do the same. However, Morgan didn’t stop there. He also bought New York City bonds because it was clear that the city was at risk of becoming insolvent. Eventually, the Treasury Department was able to deposit money into bank coffers, and banks in turn assisted the New York Stock Exchange. While the immediate threat was contained, the ripples continued to affect the economy.

panoramic photograph of a crowd of men milling around in the street in front of the stock exchange
Curb Market, 1902.

The panic did spread and there were problems at other firms and companies. The price of the stock of the Tennessee Coal, Iron and Railroad Company plummeted and Morgan’s U.S. Steel Corporation stepped in for an emergency takeover. Many of those involved in the initial scheme were tried, including Charles W. Morse who was jailed for violating federal banking laws (he faked serious illness and was released). United Copper lasted a few more years, but failed in 1913 and F. Augustus Heinze died the next year.

There had been growing discomfort with the power of people like Morgan and with Wall Street in general, and the events of 1907 and the problems they spawned just added more fuel to the fire. This culminated in the passage of the Aldrich–Vreeland Act, which created the National Monetary Commission. The Commission, led by Senator Nelson W. Aldrich, was to investigate the crisis and propose solutions. The investigation wasn’t the last word, because a few years later in 1912 and 1913, the Money Trust Investigations (also known as the Pujo Committee) convened and some of the biggest names in business testified, including J.P. Morgan. Eventually, what the Commission learned led to the creation of the Federal Reserve.

If you are looking to understand what happened in 1907, there are books about the topic, including a review of events written by Alvan Brown just a few years later. For those who can’t get to a library and use their print resources, there are options on the Internet. The St. Louis Federal Reserve’s FRASER project has already curated a list of articles from the Commercial and Financial Chronicle. They have also digitized many banking and economic publications, including material related to the Money Trust Investigation and some papers from Senator Nelson W. Aldrich.

The Library’s Chronicling America would be a great resource for looking at events as they unfolded, because it includes papers from all over the country. Since newspapers may not use the phrase the Panic of 1907, it might be much easier to find articles by searching for the names of the men and the companies. We have found a few articles for each below.

F Augustus Heinz seated at his desk
F. Augustus Heinz. New-York Tribune, 18 Oct. 1907.

F. Augustus Heinze and his brothers Otto and Arthur P. Heinze

Charles W. Morse

United Copper

knickerbocker trust building at 34th street and 5th avenue
Knickerbocker Trust. New-York Tribune, 23 Oct. 1907.

Mercantile National Bank

Knickerbocker Trust Company

If you want to learn more about the history of the stock exchanges, we have created a guide and also have more resources about the Federal Reserve.


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