6. The New York Stock Exchange had its first collapse during the Panic of 1901
It was a battle between money barons and investors over control of the Northern Pacific Railway which led the nation into a financial downturn in 1901. As small investors found their stock holdings lose most of their value as a result of the machinations of the few, the battling barons worked out a compromise through which the majority of them walked away happy, as well as significantly wealthier. Among the stock manipulators who created the crisis are some of America’s more famous names, at least where it comes to conspicuous wealth, including Morgan, Rockefeller (both John D. – through Standard Oil – and his son William, though his First National City Bank) and E. H. Harriman, chairman of the Union Pacific Railroad. Harriman sought a monopoly of the Chicago railroad market.
To help accomplish that goal he purchased large amounts of Northern Pacific stock in an attempt to seize control of the railroad, opposed by Morgan and others, who likewise bought shares to stymie their rival. As prices for Northern Railway stock began to slide, it dragged down other railroad stocks with it, including those of the Burlington, the St. Paul, the Missouri Pacific, the Union Pacific, and several others. Shares of companies partially owned by the railroads declined as well. As the national economy slid into a recession as a result of the stock market crash – the NYSE’s first ever crash – the manipulators reached a compromise through which all of them realized profitable arrangements. Many thousands of smaller investors, including banks, were not so fortunate, and the economic downturn lasted for many months.