United Copper

Infobox Defunct company
company_name = United Copper
company_
slogan =
company_type = Public (trade on the curb)
fate = Placed in receivership
Predecessor =
successor =
foundation = 1902
defunct = 1913
location = Incorporated in New Jersey
industry = Copper mining
products =
key_people = F. Augustus Heinze
num_employees =
parent =
subsid = The United Copper Company was a short-lived United States copper concern in the early 20th century that played a pivotal role in the Panic of 1907.

United Copper was incorporated in 1902 by F. Augustus Heinze, a copper magnate who had tussled for years with Amalgamated Copper for lucrative copper mines in Butte, Montana. The firm was incorporated in New Jersey with an authorized capital of $80,000,000. United Copper combined Heinze interests in the Montana Ore Purchasing Company, Nipper Consolidated Copper Company, Minnie Healey Copper Mining Company, Cobra-Rock Island Copper Mining Company, and the Belmont Copper Mining Company.Cite news | url = http://query.nytimes.com/mem/archive-free/pdf?res=9C04E5D6103BE733A2575AC2A9629C946397D6CF | title = The United Copper Company Incorporated | date = April 29, 1902 | work = The New York Times Retrieved on September 16, 2008.]

Upon consolidation, United Copper was capable of producing about 42,000,000 pounds of copper a year, as compared to 143,000,000 per year for Amalgamated Copper.

United Copper was literally traded "on the curb" outside the New York Stock Exchange (NYSE). "On the curb" trading was later formalized as the American Stock Exchange (AMEX).

In 1907, after its legal battles with Amalgamated had finally been settled, [Cite news | url = http://query.nytimes.com/mem/archive-free/pdf?res=9500E5D8103EE733A2575BC1A9649C946797D6CF | title = Copper Merger May Get the Rich Clark Mines | date = February 18, 1906 | work = The New York Times Retrieved on September 16, 2008.] United Copper again found itself the center of scandal. In October F. Augustus Heinze's brother, Otto Heinze, devised a scheme to corner the market in United Copper stock. The Heinzes owned a large share of the company and Otto believed that many of these shares had been loaned out to investors hoping to short sell the stock.

Short sellers borrow, or make arrangements to borrow, the stock of a company, which they then sell at current prices. If prices later drop, they repurchase shares of the company, now at a cheaper price, to replace the borrowed stock. The difference is pocketed. Heinze's plan was to move aggressively to purchase the stock of United Copper. The price would soar. Then, with prices high, and Heinze controlling most of the stock, he would force the short-sellers to repay the borrowed stock. The short-sellers would have no option but to settle with Heinze for high prices.

But Otto Heinze overestimated how much of the company the family controlled. When he forced the borrowers to buy back stock they were able to get it from other sources. When the market realized his corner had failed, the stock price of United Copper collapsed. So shocking was the collapse, that depositors rushed to pull the money out of the banks of F. Augustus Heinze. From there panic spread, as people pulled money out of banks associated with Heinze, and then from trust companies associated with those banks ("see" Panic of 1907).

In 1908, F. Augustus Heinze was indicted for his role in the corner. [Cite news | title = F.A. Heinze Indicted for Overcertifying | work = The New York Times | url = http://query.nytimes.com/mem/archive-free/pdf?res=950DE3DE1639E333A2575BC0A9679C946997D6CF | date = January 8, 1908 Retrieved on September 16, 2008.] The share price of United Copper, meanwhile, never recovered. In 1913 the company was placed into receivership, so its assets could be unwound. [Cite news | url = http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9402E4DB133BE633A25752C1A9649C946296D6CF | title = United Copper Co. Passes to Receivers | date = February 11, 1913 | work = The New York Times Retrieved on September 16, 2008.] [Cite news | url = http://query.nytimes.com/mem/archive-free/pdf?res=9D07E2DF1F3AE633A25757C0A9659C946296D6CF | title = Heinze Asks $30 Million; Arthur P. Is Suing Amalgamated and Others for This Amount | work = The New York Times | date = March 4, 1913 Retrieved on September 16, 2008.]

References