AUGUST 21, 1(11
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The Commoner.
How Wall Street Made the 1907 Panic
Back in the early months of 1907, when pros
perity wag universal in this country, John D.
Rockefeller gave to the American press a state
ment predicting that financial disaster would
goon overtake the country's industry and com
merce. From time to time, following his
startling announcement, other Wall street
financiers voiced the samo view.
So great was the prosperity of the country
that even this sinister warning did not immedi
ately slacken the activities of honest business.
Stranger still, it soon came to ho regarded hy
men who usually possessed acute business judg
ment as meaningless, save perhaps as a threat
against the Roosevelt administration. With
basic conditions sound, bumper crops and every
forge and mill and factory so busy that unem
ployment was practically nonexistent, the pessi
mistic prophecy seemed Incredible.
Our readers will recall how often then we
assorted our belief that, owing to tho vicious
national currency system, Wall street had the
power to turn off the credit essential to legiti
mate business to such an extent that a panic
could be artifically produced.
Wo reasoned also that Wall street, controlled
by the Standard Oil and Morgan groups of banks
and truBt companies, could make great profits
out of a money panic. The history of specula
tive banking gives overwhelming proof that
banks with vast sums of money at command
make their biggest profits when legitimate busi
ness is being threatened or wrecked, for lack of
usual accommodations.
We pointed out then that prosperity had be
come so widely diffused throughout every sec
tion of the country that large profits were going
into too many hands outside of the charmed
Wall street circle to please the men who con
trolled tho credit.
If a money panic could bo precipitated, in
evitably would the checking of legitimate busi
ness in various' communities cause the accumu
lations of the many to come back into the hands
of the few. It seemed to us that, viewed from
tho standpoint of Standard Oil and Wall street
. generally, a money panic was by far the most
profitable line of freebooting which could be
Indulged in at that particular time.
Wo recorded the movements of the artificially
made panic as tho plot unfolded day by day.
Despite all warnings, tho insiders continued to
unload stocks upon the public at only gradually
lessening prices, thus continuing to add to their
war fund, after the death sentence of prosperity
had been read to all the world.
Soon after the Rockefeller prophecy of evil
it became known to the New York Inside busi
ness world that war had been declared against
F. Augustus Heinze and Charles W. Morse.
Heinze was an ancient, picturesque and ex
pensive enemy of Standard Oil's Almalgamated
Copper company. He never had been punctilious
in his financial methods or morals otherwise
7 - never would'-have seen New York. In Mon
tana he fought the devil with fire and won. The
winning was his offense. Standard Oil was
forced t6 a compromise that left Heinze with a
dozen millions. Thereupon Standard Oil marked
Heinze for destruction and bided its time. The
time came in 1907.
Charles Morse had made the mistake of fail
ing to content himself with mastery of the Ice
market. He had become a possible impediment
to J. P. Morgan. He had made a merger of
'Atlantic coastwise steamer lines. Morgan was
just about ready to perfect the railroad-trolley-water
monopoly of New England transportation.
Morse's boats provided undesirable competition
Morse became a marked man.
And both Heinze and Morse had come to New
York and were dabbling in finance.
The public was misled as to the real situa
tion by skillful press agents keeping alive the
fiction that the old business enmity between the
Rockefeller-Harrlman group and the Morgan in
terests still existed.
Persistent, secret, united work led only to the
finding that the intruders from Montana and
New England were better fortified than tho
masters of Wall street had supposed. After
withstanding months of warfare they still had
at their back financial institutions which were
able to givo them protection,
Just when, how or by whom the decision was
reached to wreck the Heinze and Morse banks
we do not know. But it now is history that
those banks were wrecked, the first victim being
tho Knickerbocker Trust company, subsequently
proved thoroughly solvent.
Of course, it must bo borno in mind that
Hoinzo and Morso had been conducting their
fight on illegitimate banking lines, although it is
believed they differed little from the genoral
methods of other Wall street proraotor-bankers.
It was not until It was found necessary to
wreck banks, by withholding from them clearing-house
sanction, that tho scheme of tho steel
trust to pillage the Tennessee Coal and Iron
company became known.
Tennessee Coal and Iron long had boon tho
Naboth's vineyard coveted by tho steel trust.
Its property, developed and undeveloped, was
well nigh equal in value to that of tho stool
corporation itself. It was better equipped than
its more powerful rival with tho modern opon
hearth process. It owned a wealth of hlgh
grado ore, almost at tho doors of its furnaces,
needing no such long shipments as from the
northern lakes to Pittsburg or Gary. Right at
hand was abundance of coking coal. Labor was
plentiful and conditions of living in the mild
climate cheap. And there was competition in
transportation. It was a potentially formidable
competitor of Morgan's pet "billion-dollar
trust."
Therefore in tho most fevered period of tho
1907 panic it happened that tho powerful Now
York banks refused suddenly and utterly to
continue loans unless United States Steel bonds
were substituted for Tennessee Coal and Iron
securities as collateral.
It was believed that the trust company of
America was a heavy holder of tho stock as
collaterial, and was really tho strong financial
powor which had enabled a Tennessee Coal and
Iron syndicate to withstand so long the subtle
attacks made upon it.
Not until the trust company was forced to ask
for mercy, after a wrecking run which tho presi
dent now testifies was staTted by a statement of
George W. Perkins, then a partner of Morgan,
and after it had disclosed its assets, which in
cluded less than $500,000 worth of Tennessee
coal and Iron stock, behind loans otherwise
amply protected, did other banks dare to como
to its assistance.
But tho panic was forced harder and harder
until the really vulnerable spot was reached.
And what followed Is told by John W.
Gates, who, like Thomas Lawson, has done a
public service, just onco in his life by turning
state's evidence against one-timo accomplices
who plucked him. Gates testifies that the result
waB "a forced sale, in which the purchasers got
all the best of tho bargain."
Not a dollar changed hands in the transac
tion, the absorbed company being paid for by
securities issued by the Bteel trust, and not a
dollar was added to the funds of the New York
banks to check the progress of tho panic. It
was all but so much manipulation for the direct
profit of the financial combination headed by J.
Pierpont Morgan, and the losses were all borne
by the general public, including the legitimate
business men of America, who are still paying
the price.
Meanwhile, in the most acute days of the
panic, Theodore Roosevelt had been deluded into
making the worst mistake of his career, with
the best possible intentions. He trusted Mor
gan's subservient tool, George B. Cortelyou. And
through that stenographic taker of Wall street
dictation he was persuaded to listen to the tales
of woe of Frlck and Gary, of tho steel trust,
and sanction that iniquitous merger, to prevent
a predicted crash of credit and values that he
was warned would wreck or cripple every legiti
mate enterprise in the land.
Once Tennessee Coal and Iron had fallen Into
the grasp of the panic-makers, following tho
crushing of Heinze and Morse, It was to their
interest to stop the panic. By that time all tho
money In Wall street had been absorbed by Mor
gan and Standard Oil. Morgan sent for his
handy man, George B. Cortelyou, unhappily for
the country, secretary of tho treasury, and Cor
telyou promptly dumped into wall street $25,
000,000 of the government's money.
Morgan appeared in Wall street with his and
the treasury's millions, stopped tho panic and
was acclaimed hysterically by tories and fools
as a savior and a benefactor.
All these truths tho North American told from
each dark day to day during all the deviltry of
that needless distress to every honest American
business man. Earnest as was our support of
Roosevelt's policies and patriotic achievements,
our readers must recall that our criticism of
him at that timo was unspnrlng in our declara
tions that with tho purout purposes ho was being
"gold-bricked" and doluded to his own and tho
country's hurt by unscrupulous conspirators.
Wo beliovo that tho North Amorican was vir
tually alono in showing with dally persistence
that it was an artificial panic and that national
prosperity was being wrecked In cold blood for
the exclusive gain of two Wall streot groupH.
We retell history today simply to cite tho
latest proofs of a crimo that resulted in disaster
to life, churactor and honest property proof
provided In tho sworn testimony of John W.
Gates, of tho Tennessee Coal and Iron company;
Oakleigh Thorno, president of tho Trust com
pany of America, and Justice Gerard, of tho su
premo court of New York, formor director of
tho Knlckorbockor trust. Philadelphia North
Amorican (rep.)
JUDGE WALTER CLARK OF NORTH
CAROLINA
William LlndBoy, Los Angeles California:
In your editorial, "Avallablo Candidates for
Democratic Nomination in 1912," a remarkablo
knowledge and insight of tho "top cream" of tho
party is shown. What an array of splendid
men, men of raro ability and integrity; men who
stand for the peoplo, as did Abraham Lincoln.
Why is it that somo such man can not bo elected
to tho presidency?
In the light of past events, the merging of
tho last administration into tho present, tho
political intrigue, insincerity and total disregard
for tho interests of tho masses of our popula
tion; surely he can be. Tho sweat and blood
of humanity will cry out from tho ground for
a roal man a truo man. Tho peoplo wero
fooled by tho voice of a Roosovolt, outwardly
clothed with the policies of a Bryan, delivering
tho same into the hands of a Taft, for non-oxe-cutlon.
A wlso and safe delivery. The peoplo
now see It. Tho graduating of a' twonty years'
schooling. Tho culmination is at hand.
Tho man who wins in 1912, regardless of
party, vmust not only bo an advocate of tho
Bryan, policlos, to which the people have been
educated, (though a part of tho peoplo call said
policies by another name), but ho must bo
an embodiment of tho samo. A recommended
candidate will not do next time.) No doubt
many, If not all of The Commoner's list of
"avallables," will meet this requirement, one
of tho number wo happen to know, most as
suredly does, viz., Judge Waltor Clark of North
Carolina.
What a memorable fight for tho cause of tho
peoplo, whon ho wan a candidate for supremo
court judge in his state. Arrayed against him
was tho Simmons Southern Railway element,
at that time, in the democratic party, tho
American Tobacco company element In the re
publican party, but tho peoplo of all parties
wero for him, and a sweeping victory was
achieved. He has made a great judge. Ho
would make a groat president. All classes look
alike to him, but tho trust barons and protected
corporations know this too well, and when he,
or any other truo representative of the peoplo
is nominated, a life and death struggle by such
"special interests," will bo on, as in tho memor
able Bryan campaigns.
AS THE STANDPATTERS SEE IT
The Washington Post regards tho election of
Mr. Vardaman to tho United States senate from
Mississippi as a sure indication that the re
public is tottering to its fall under the baneful
influence of the primary election law.
"Does not the defeat of Senator Percy indi
cate," domands the Post, "that not even John
Sharp Williams could have turned the tide
against Vardaman?"
And does not tho overwhelming victory for
Vardaman indicate that the people of Mississippi
wanted Vardaman to represent them in the
senate? A condition which the esteemed Post
and the rest of the standpatters would remedy
by refusing to allow the people to choose their
own representatives.
The way to preserve the sacred Institution of
representative government for the peoplo is to
keep the people from naming their representa
tives. That ought to be as plain as the noBe on
your face. Kansas City Star.
"THE PEOPLE ARE BRYANIZING"
To the Editor of The World: Yes, indeed,
Woodrow Wilson is Bryanizing. But the people
will forgive him, for they too are Bryanizing.
S. W. ROGERS.
Washington, Aug. 8.
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