Panic of 1901

The Panic of 1901 was a stock market crash on the New York Stock Exchange caused in part by struggles between E. H. Harriman, Jacob Schiff, and J. P. Morgan/James J. Hill for the financial control of the Northern Pacific Railroad. The stock cornering was orchestrated by James Stillman and William Rockefeller's First National City Bank financed with Standard Oil money. After reaching a compromise, the moguls formed the Northern Securities Company. As a result of the panic thousands of small investors were ruined. [ [http://www.fdic.gov/about/learn/learning/when/19-1919.html FDIC: Learning Bank ] ]

On May 17th, 1901 the stock market crashed on the New York Stock Exchange for the first time. This crash was a result of the struggle over control of the Northern Pacific Railroad.

Key players

One of the key players in this was Edward Henry Harriman who “by 1898…was chairman of the executive committee of the Union Pacific and he ruled without dissent. But he speculated heavily with Union Pacific holdings, and his attempt to monopolize the Chicago rail market led to the Panic of 1901.” [ [http://www.americanheritage.com/articles/magazine/ah/1998/6/1998_6_56.shtml AmericanHeritage.com / The American Heritage ] ] The struggle over control of Northern Pacific was fought out between this man and James J. Hill. Hill had allied himself with infamous financier J.P. Morgan. [ [http://www.cassiopaea.org/cass/cosmic_cointelpro_1901.htm Cosmic COINTELPRO events for 1901 ] ]

Causes

One of the causes of this stock market crash was the fact that Harriman was buying up the stocks of Northern Pacific in order to gain control. The panic began when the market crashed during that afternoon in May. Investors did not see it coming so shortly before 1:00pm, the decline in the market was beginning to show. First came the gradual decline in Burlington stock. It had been high all morning but suddenly a sharp weakness came about. Prices of stocks such as St. Paul, Missouri Pacific, and Union Pacific began to fall. Soon enough the whole market was drowning. Investors that had once held on tightly to their stocks were selling out of pure panic. Others caught on and an overwhelming cry of “Sell! Sell! Sell!” was heard throughout the floor of the New York Stock Exchange. [ [http://www.thehistorybox.com/ny_city/panics/panics_article12a.htm The History Box | The Panic Of 1901-Market Fails, Panic Reigns-Part I ] ]

Effects

Some of the affected stocks were St. Paul, Union Pacific, Missouri Pacific, Amalgamated Copper, Sugar, Atchison, and United States Steel. However, not all stocks finished the day out on a rough note. Northern Pacific had not only avoided a decline, but it had also seen a net advance of 16 1/2 points.

Results

As a result of this crash, “Harriman also helped organize the Northern Securities Company with the hope of controlling the Northern Pacific, the Great Northern, and the Burlington.” [Wolff 2003] The panic caused Harriman and Hill to join forces and form this holding company. It controlled the Hill Lines and the Burlington. However it was shortly shut-down by the Sherman Antitrust Act of 1890. [ [http://www.pbs.org/wgbh/amex/streamliners/peopleevents/p_hill.html American Experience | Streamliners | People & Events ] ]

ee also

*Great Depression

Further reading

*cite book | last = Wolff | first = David A. | authorlink = | title = Industrializing the Rockies: Growth, Competition, and Turmoil in the Coalfields of Colorado and Wyoming 1868-1914 | publisher = University Press of Colorado | date = 2003 | pages = 158-159 | isbn = 0870817477

References

External links

* [http://www.fdic.gov/about/learn/learning/when/19-1919.html FDIC Learning Bank]
* [http://www.lind-waldock.com/edu/newsletter/406/nl_406_art04.shtml W. D. Gann's Forecasting Methods of Stocks and Bonds by D. K. Burton]
* [http://www.americanheritage.com/articles/magazine/ah/1998/6/1998_6_56.shtml American Heritage.com/The American Heritage]
* [http://www.cassiopaea.org/cass/cosmic_cointelpro_1901.htm Cosmic Cointelpro events for 1901]
* [http://www.thehistorybox.com/ny_city/panics/panics_article12a.htm The History Box: The Panic of 1901-Market Fails, Panic Reigns-Part I]
* [http://www.pbs.org/wgbh/amex/streamliners/peopleevents/p_hill.html American Experience: Streamliners - People and events]