Panic!

Sean D. Carr

Ed. Note: In the last issue of Scripophily we saw how F Augustus ‘Fritz’ Heinze had hustled his way in Butte, Montana, to millions in tribute from the Amalgamated Copper Co and the Standard Oil interests. We also learned that he had touched off the Panic of 1907. This is the rest of that story.

History may not repeat itself, but it rhymes.(saying popularly attributed to Mark Twain)

By 1907 a confluence of weak and decentralized banking regulations, deepening liquidity constraints, rampant speculation, and pyramid-like interdependence among lending institutions had created weaknesses in the nation’s financial system. A Brooklyn-born copper mining magnate, who had had the audacity to challenge the most powerful interests in the world, provided the spark for an economic conflagration of historic proportions – the Panic of 1907.

During the early years of the twentieth century, Fritz Augustus Heinze had made his fortune in copper mining along the wild, untamed slopes of western Montana. Adventurous, sociable and extremely ambitious, Heinze moved to New York in early 1906 with an eye toward establishing himself as a banker and financier. With his brothers, Otto and Arthur, he organized the stock brokerage Otto C. Heinze & Co and used his assets to purchase personal interests in various banks, trust companies and insurance firms.

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