The Panic of 1901 was the first

stock market crash A stock market crash is a sudden dramatic decline of stock prices across a major cross-section of a stock market, resulting in a significant loss of paper wealth. Crashes are driven by panic selling and underlying economic factors. They often foll ...

on the

New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its liste ...

, caused in part by struggles between

E. H. Harriman Edward Henry Harriman (February 20, 1848 – September 9, 1909) was an American financier and railroad executive. Early life Harriman was born on February 20, 1848, in Hempstead, New York, the son of Orlando Harriman Sr., an Episcopal clergyman ...

, Jacob Schiff, and

J. P. Morgan John Pierpont Morgan Sr. (April 17, 1837 – March 31, 1913) was an American financier and investment banker who dominated corporate finance on Wall Street throughout the Gilded Age. As the head of the banking firm that ultimately became known ...

/ James J. Hill for the financial control of the

Northern Pacific Railway The Northern Pacific Railway was a transcontinental railroad that operated across the northern tier of the western United States, from Minnesota to the Pacific Northwest. It was approved by Congress in 1864 and given nearly of land grants, wh ...

. The stock cornering was orchestrated by

James Stillman James Jewett Stillman (June 9, 1850 – March 15, 1918) was an American businessman who invested in land, banking, and railroads in New York, Texas, and Mexico. He was chairman of the board of directors of the National City Bank. He forged alli ...

and

William Rockefeller William Avery Rockefeller Jr. (May 31, 1841 – June 24, 1922) was an American businessman and financier. Rockefeller was a co-founder of Standard Oil along with his elder brother John Davison Rockefeller. He was also part owner of the Anaconda ...

's First National City Bank financed with

Standard Oil Standard Oil Company, Inc., was an American oil production, transportation, refining, and marketing company that operated from 1870 to 1911. At its height, Standard Oil was the largest petroleum company in the world, and its success made its co- ...

money. After reaching a compromise, the moguls formed the

Northern Securities Company The Northern Securities Company was a short-lived American railroad trust formed in 1901 by E. H. Harriman, James J. Hill, J.P. Morgan and their associates. The company controlled the Northern Pacific Railway; Great Northern Railway; Chicago, ...

. As a result of the panic, thousands of small investors were ruined.

Key players

One of the key players in this was Harriman, who "by 1898…was chairman of the executive committee of the

Union Pacific The Union Pacific Railroad , legally Union Pacific Railroad Company and often called simply Union Pacific, is a freight-hauling railroad that operates 8,300 locomotives over routes in 23 U.S. states west of Chicago and New Orleans. Union Pac ...

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."

Causes

One of the causes of this stock market crash was Harriman's effort to gain control of Northern Pacific by buying up its stock. The panic began when the market crashed during the afternoon of May 8. Investors did not see it coming, but by 1:00 pm, 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 The Missouri Pacific Railroad , commonly abbreviated as MoPac, was one of the first railroads in the United States west of the Mississippi River. MoPac was a Class I railroad growing from dozens of predecessors and mergers. In 1967, the railroad ...

, and Union Pacific began to fall. Soon enough, the whole market was drowning. Investors who had once held on tightly to their stocks were selling out of panic. Others caught on and an overwhelming cry of "Sell! Sell! Sell!" was heard throughout the floor of the

. During the selling, a rumor spread among traders that Arthur Housman, broker for

J.P. Morgan JP may refer to: Arts and media * ''JP'' (album), 2001, by American singer Jesse Powell * ''Jp'' (magazine), an American Jeep magazine * ''Jönköpings-Posten'', a Swedish newspaper * Judas Priest, an English heavy metal band * ''Jurassic Par ...

, had died. Housman, the head of A.A. Housman & Company, was brought to the floor of the

to assure traders that

was still doing business.

Effects

Results

As a result of this crash, Harriman and Hill joined forces to form a holding company, the Northern Securities Company, to control the Northern Pacific, the

Great Northern Great Northern may refer to: Transport * One of a number of railways; see Great Northern Railway (disambiguation). * Great Northern Railway (U.S.), a defunct American transcontinental railroad and major predecessor of the BNSF Railway. * Great ...

, and the Burlington. olff 2003 This company was shortly shut down under the

Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...

of 1890American Experience , Streamliners , People & Events
/ref> (see ''

Northern Securities Co. v. United States ''Northern Securities Co. v. United States'', 193 U.S. 197 (1904), was a case heard by the U.S. Supreme Court in 1903. The Court ruled 5-4 against the stockholders of the Great Northern and Northern Pacific railroad companies, which had essential ...

'').

References

External links

FDIC Learning BankW. D. Gann's Forecasting Methods of Stocks and Bonds by D. K. BurtonAmerican Heritage.com/The American Heritage
* ttps://www.pbs.org/wgbh/amex/streamliners/peopleevents/p_hill.html American Experience: Streamliners - People and events {{DEFAULTSORT:Panic Of 1901 1901 in economics 1901 in New York City May 1901 events Economic crises in the United States

1901 Events January * January 1 – The British colonies of New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia federate as the Commonwealth of Australia; Edmund Barton becomes the first Prime Minist ...

Financial crises New York Stock Exchange