THE TRUTH ABOUT THE PANIC OF 1907
The Truth About the Panic of 1907 How the Way Was Prepared; How It Was Manipulated by a Few Powerful Men; and What it Por-tends, Was Disclosed in a Speech in the United States Senate in March,...
...This put operators caught short or long on the rack...
...The Consolidated Steamship Company had surrendered to Morgan, and at the same time the interests were disciplining the people...
...It was bad for the country, but the trust company was saved and Morgan was glorified...
...Harriman was buying back Union Pacific shorts, but still smashing the market...
...They steadily increased their call loans on the street, bestowing favor in a Way to promote their own interests, supplying their own private brokers, denying applications and forcing all other brokers to a cash basis wherever it would turn the balance their way...
...The cause of currency revision was not neglected for one moment...
...Up to this point the panic had been well in hand, but with the revelations following hard upon clearing-house investigations, it slipped its bridle, and the situation assumed a serious aspect...
...They were forced to sell their stocks for what they could get...
...They pursued the course of the speculating banker...
...It was printed day by day in their press...
...The Morse group had been disposed of...
...Did they give aid and support to the distressed merchant and manufacturer" Did they say to the bulls and bears, "You shall be denied the funds of our banks to still further stimulate existing excitement...
...This served two purposes—it made the country banks join in the cry for currency revision and it supplied the big operators with money to squeeze out investors and speculators at the very bottom of the decline, taking in the stock at an enormous profit...
...It consisted of twelve banks and two trust companies, a consolidated steamship company, the Heinzo United Copper Company, with his banking connections in New York and Butte, Montana...
...But back of the scenes Morgan and Still-man were in conference...
...and What it Por-tends, Was Disclosed in a Speech in the United States Senate in March, 1908 By ROBERTM...
...Both Standard Oil and Morgan were much in need of redemption With the general public...
...Wall Street was driven to a frenzy...
...But its steamship company was encroaching on Morgan's New York, New Haven and Hartford road in the coastwise traffic, and Heinze in a running fight had forced Standard Oil to buy him off at a cost reported at $10,000,000...
...We have record proof of their utter contempt for commercial interests, not only for the country generally, but for legitimate trade I in New York City as well...
...They had the money of the depositors of the banks of every State in the Union to the amount of five hundred million, nearly all of which was in the vaults of the big group banks...
...Morgan attacked Morse's Consolidated Steamship Company stocks and bonds, and Morse was ultimately forced to surrender his steamship company combine, which he did...
...The country banks were begging for their balances...
...They administered to the needs of Wall Street, quite deaf to the appeals of commerce...
...But not for one moment did Morgan or Standard Oil miss the opportunity offered...
...They curtailed their commercial loans in every possible way...
...The surrender was complete...
...Their course was that of men who were playing with the credit of the country for a purpose...
...Compared with the Standard Oil and Morgan groups it was a small factor...
...How real it all seemed...
...It is worth while in following the progress of the panic at this poiut to recall the admonitions of Professor Bullock, Mr...
...Morgan Bags Big Game CONFERENCES over the inside condition of this trust company, however, gave Morgan, owing to his group connections, information that the control of Tennessee Coal and Iron—stock control and pool stock— had been placed with the Trust Company of America by John W. Gates and his associates...
...Standard Oil interests were identical with Morgan's interests in this, and he made it a condition of saving the Trust Company of America that Gates and the Tennessee Coal and Iron pool sell to him at his price or the Trust Company of America should go on the rocks...
...Then, at precisely 2:15, the curtain went up with Morgan and Standard Oil in the center of the stage with money—real money, twenty-five millions of money —giving it away at 10 per cent "Oh...
...proportion...
...Standard Oil had settled with Heinze...
...The Westinghouse Company's experience affords another striking illustration of the useful purposes of a wellmanaged panic...
...Morgan seized the opportunity for United States Steel...
...They could discipline the country, arrest further railway legislation, State and National, prepare Congress for emergency currency legislation, put Consolidated Shipping out of business, and pick up Heinze and United Copper on the way...
...They were compelled to reorganize their directorships and substitute semi-dependent Standard Oil men as their successors...
...A carefully elaborated climax, with Morgan and the Standard Oilers as the central figures, would invest them with a halo of sell-sacrifice and public spirit almost sublime...
...Morse and Heinze were forced out...
...The increase of call loans on collateral aggregated over fifty millions...
...They had the whole country terrorized.They had the money of the depositors of the banks of every State in the Union to the amount of five hundred million, nearly all of which was in the vaults of the big group banks...
...Standard Oil had suffered a series of mortifying experiences and, exposures that were beginning to tell npon the iron nerves of the men who tor half a lifetime had seemed utterly hardened and indifferent to public condemnation...
...THE PANIC CAME...
...For a few years there had been developing a minor financial group, now known as the "Heinze-Morse-Thomas group...
...In a Wall Street panic there is always big game to be bagged...
...It all fitted together like a piece of mosaic...
...In the first place, Mr...
...Its distant relationship to the group was sufficient to save it in the end...
...The phenomenal interest rates were impressing the public in a way never to be forgotten...
...In this connection, the operations of Morgan and the Standard Oil furnish additional evidence of the character of this panic...
...A strong run was started...
...Though gold and bank notes were ostentatiously piled on the counters to impress depositors, and young Vanderbilt offered as an exhibit of resources and placed at the teller's window, the excited depositors persisted in demanding their money...
...The reporters were not invited to the conferences of the inner circles where sat the men who controlled not only the great banking organizations of New York, but the transportation and business of the country, the men who were behind the panic and would stay its progress when it had served its pur pose...
...Railway valuation would be "dropped or so modified as to be harmless...
...It was reported that the President had concluded to revise his message to Congress...
...They knew just how much it would be...
...They let great commercial houses, great manufacturing concerns, like the Westinghouse Company, down to ruin and dishonor, while they protected their speculative patrons...
...It spelled ruin...
...Alas, no...
...Still they waited...
...The Terrible Climax HOW perfect the stage setting...
...LA FOLLETTE (Concluded from last week...
...Pratt, and other economic and financial authorities, of the consequences which might result from concentration of banking power coupled with speculation and possible collusion...
...The raid on Heinze, Morse, Barney, et al., and the latter's directorate connections with the Trust Company of America, caused public suspicion to fall upon it...
...The banks refused credit to old customers—all business to new customers...
...Morgan was ready to show an affectionate interest in Morse, and Standard Oil was quietly lying in wait for Heinze...
...Members of the boards of directors of the Standard Oil banks were in position to exert some influence at the critical moment most harmful to Westinghouse, and he went to the wall...
...It had been scheduled to arrive...
...Morgan gave out, as reported in Wall Street, that the Knickerbocker would be supported if it met the demands of the depositors who had started a run upon it There was nothing in subsequent events to indicate that there was any sincerity in that promise, but an analysis of every step is convincing to the contrary...
...Morgan, whose plaudits have been sounded here in this Chamber, was in a position to follow carefully every step and phase of this proceeding...
...In the midst of a Wall Street fight, when fear supersedes reason, it is difficult for those who are in it, but not directing it, to determine how much is real, how much is sham...
...They waited...
...They pursued the course of the speculating banker...
...It portrayed the great financiers hurrying to and fro, setting a prop here, a prop there, holding midnight meetings in Morgan's library, seeking some way to avert the calamity that threatened prosperity and a nation's honor...
...The men who had created the money stringency, who had absorbed the surplus capital of the country with promotions and reorganization schemes, who had deliberately forced a panic and frightened many innocent depositors to aid them by hoarding, who had held up the country banks by lawlessly refusing to return their deposits, never lost sight of one of the chief objects to be attained...
...Five minutes passed—ten minutes past 2 o'clock...
...But they held it...
...Northern Pacific and other stocks went down in like HOW beautifully it all worked out...
...Doubtless, never suspecting the source, Heinze, through his brother, a member of the stock exchange, and through brokers, bought and bought until United Copper went out of sight, carrying down Heinze's brother, one firm of his brokers, and involving the Morse-Heinze banks in the crash...
...It would be a great stroke of business to wind this panic up with these gentlemen as the saviors of public credit...
...The stock broke badly...
...Interest rates which had for several days ranged from 20 to 50 per cent began to climb higher...
...Two o'clock came, and interest ran to 150 per cent The smashing of the market became terrific...
...By their fruits ye shall know them...
...Business was being held up...
...Woodlock, Mr...
...Support was not given...
...Those who were directing it were not the men to miss anything in their way as it advanced...
...Had there been bankers with high ideals, bankers with devotion to commercial interests and patriotism for their country, in control of the centralized banks of New York City, the financial mistress of a continent, with a serious panic on, real in character, which had spread throughout the great business houses of the metropolis and to the centers of trade in the nation, bankers having to deal with that crisis, and pressed on the commercial side for money with which to protect the interests and the commercial honor of the country on the one hand, while the bulls and bears of Wall Street clamored for loans to enable them to speculate off of the fears and misfortunes of their fellows on the curb and in the stock exchange—confronted, I say, with that dual appeal from the commerce of the country upon the one hand, and the speculators upon the other, bankers who were commercial bankers and not underwriting bankers, promoting bankers, and operating bankers would have cared first of all for the merchant, the manufacturer, and the commerce of the country...
...Money must be forthcoming, or the close of the business day would see Wall Street a mass of ruins and banks and trust companies on the brink of collapse...
...They administered to the needs of Wall Street, quite deaf to the appeals of commerce...
...Union Pacific declined 10 1-2 points in ten sales...
...That is one of the uses of a panic...
...It was a thrilling picture, but it was false...
...Interest rates soared...
...The way had been prepared...
...Breaking" Heinze and Morse SUDDENLY, in the first days of October, somebody (to use a Wall Street phrase) began to "smash United Copper on the curb...
...This served two purposes—it made the country banks join in the cry for currency revision and it supplied the big operators with money to squeeze out investors and speculators at the very bottom of the decline, taking in the stock at an enormous profit...
...The floor of the stock exchange was chosen as the scene for the closing act, October 24 the time...
...The press set it all forth as it appeared on the surface...
...No better evidence could be asked to establish the character of this panic or the character of the men who were in command...
...Did they say to the bulls and bears, "You shall be denied the funds of our banks to still further stimulate existing excitement...
...They had the whole country terrorized...
...This was not on the program, but as the Vanderbilts, allies of the Standard Oil, were represented on the directorate of the Trust Company of America, Standard Oil was bouna to offer some assistance...
...We have record proof of their utter contempt for commercial interests, not only for the country generally, but for legitimate trade in New York City as well...
...The stock market had gone to smash...
...Alas, no...
...some are loaded with powder and ball to kill...
...Morse and Heinze were caught between the big groups...
...For the first time since the panie began 11:30 a. m. arrived with everybody on the floor of the stock exchange wildly seeking money at any price...
...Settlement must be made before 3 o'clock...
...High interest rates should be made to plead for emergency money through the telegraph dispatches of October 24 in every countinghouse, factory, and shop in America...
...It Worked Well For "High Finance" HOW beautifully it all worked out...
...On the street and in the brokers' offices the strain of apprehension was intense...
...United States Steel took over Tennessee Coal and Iron, thereby tightening its grip upon the most precious of all the national resources of the country...
...They went after the Knickerbocker Trust Company, Charles T. Barney, president, and close ally of Morse's...
...In this connection, the operations of Morgan and the Standard Oil furnish additional evidence of the character of this panic...
...It was charged in New York that the interests deliberately started a run on the Knickerbocker...
...Men looked into each other's ghastly faces...
...Thereupon they pooled an equal amount...
...They awaited its arrival and deposit...
...Some of the guns are loaded only with blank cartridges to alarm...
...Staging the Final Scene BUT the panic must be given a m ting finale, a dramatic finish...
...it passed from mouth to month...
...it was withheld...
...And so ended the panic...
...Did they give aid and support to the distressed merchant and manufacturer...
...How was it with Morgan and the Standard Oil banks...
...The Panic Serves Its Purpose THE PANIC was working well...
...After the company, relying upon that pledge, had paid out millions, it was forced to close its doors, and Barney went to a suicide's grave, Barney was likewise a director in the Trust Company of America, a comparatively new institution, with a few System directors, giving the great groups a semi-interest in the institution, though they have not yet taken it over...
...uncrowned Kingt...
...They knew when the next installment of aid would reach New York...
...Morgan and others had come out of the United States Steel bond-and-stock-conversion performance, and the insurance scandals, badly scarred...
...Standard Oil was getting under way...
...None but himself can be Ms parallel" "Even to the dullest person standing by, Who fastened still on him a wondering eye, He seemed the master spirit of the land...
...Morgan was appealed to for aid...
...Call loans for money were at last denied at any price...
...Westinghouse was in the way of Standard Oil's General Electric...
...How was it with Morgan and the Standard Oil hanks...
...They had made their representations at Washington...
Vol. 5 • March 1913 • No. 12
