Panic of 1901
From Wikipedia, the free encyclopedia
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.[1]
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.
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[edit] 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.”[2] 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.[3]
[edit] 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.[4]
[edit] 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.
[edit] 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.[5]
[edit] See also
[edit] Further reading
- Wolff, David A. (2003). Industrializing the Rockies: Growth, Competition, and Turmoil in the Coalfields of Colorado and Wyoming 1868-1914. University Press of Colorado, 158-159. ISBN 0870817477.
[edit] References
[edit] External links
- FDIC Learning Bank
- W. D. Gann's Forecasting Methods of Stocks and Bonds by D. K. Burton
- American Heritage.com/The American Heritage
- Cosmic Cointelpro events for 1901
- The History Box: The Panic of 1901-Market Fails, Panic Reigns-Part I
- American Experience: Streamliners - People and events
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