Monday, June 18, 2012

Otto Heinze

May 22, 1908, New York Times, Gross and Kleeberg Resume,

It was learned yesterday that it was this transaction in United Copper stock which started the collapse of the Heinze corner. Heinze & Co. had been carrying an account with the McIntyre firm, and without warning demanded the delivery of a block of United Copper shares which had been deposited as collateral. T. A. McIntyre, it was said by one of his associates yesterday, went out on the Curb himself and engineered the transaction which broke the shares from 58 to 19 in less than an hour.

Timeline of panic
in New York City[16]
Monday, October 14
Otto Heinze begins purchasing to corner the stock of United Copper.
Wednesday, October 16
Heinze's corner fails spectacularly. Heinze's brokerage house, Gross & Kleeberg is forced to close. This is the date traditionally cited as when the corner failed.
Thursday, October 17
The Exchange suspends Otto Heinze and Company. The State Savings Bank of Butte, Montana, owned byAugustus Heinze announces it is insolvent. Augustus is forced to resign from Mercantile National Bank. Runs begin at Augustus' and his associate Charles W. Morse's banks.
Sunday, October 20
The New York Clearing House forces Augustus and Morse to resign from all their banking interests.
Monday, October 21
Charles T. Barney is forced to resign from the Knickerbocker Trust Company because of his ties to Morse and Heinze. The National Bank of Commerce says it will no longer serve as clearing house.
Tuesday, October 22
bank run forces the Knickerbocker to suspend operations.
Wednesday, October 23
J.P. Morgan persuades other trust company presidents to provide liquidity to the Trust Company of America, staving off its collapse.
Thursday, October 24
Treasury Secretary George Cortelyou agrees to deposit Federal money in New York banks. Morgan persuades bank presidents to provide $23 million to the New York Stock Exchange to prevent an early closure.
Friday October 25
Crisis is again narrowly averted at the Exchange.
Sunday, October 27
The City of New York tells Morgan associate George Perkins that if they cannot raise $20–30 million by November 1, the city will be insolvent.
Tuesday, October 29
Morgan purchased $30 million in city bonds, discreetly averting bankruptcy for the city.
Saturday, November 2
Moore & Schley, a major brokerage, nears collapse because its loans were backed by the Tennessee Coal, Iron & Railroad Company (TC&I), a stock whose value is uncertain. A proposal is made for U.S. Steel to purchase TC&I.
Sunday, November 3
A plan is finalized for U.S. Steel to take over TC&I.
Monday, November 4
President Theodore Roosevelt approves U.S. Steel's takeover of TC&I, despite anticompetitive concerns.
Tuesday, November 5
Markets are closed for Election Day.
Wednesday, November 6
U.S. Steel completes takeover of TC&I. Markets begin to recover. Destabilizing runs at the trust companies do not begin again.

May-June, 1914, The Federal Reporter:, Volume 212, Action by the Western Development Company against John W. McKinnon, as stockholders' agent, etc., of the Bank of North America. Judgment for plaintiff, and defendant brings error. Reversed, page 708,.

Underwood, Van Vorst & Hoyt, of New York City (John G. Milburn, J. Markham Marshall, and Alexander B. Siegel, all of New York City, of counsel), for plaintiff in error.

Ferdinand E. M. Bullowa, of New York City (Frank H. Piatt, of New York City, of counsel), for defendant in error.

Before LACOMBE, COXE, and WARD, Circuit Judges.

WARD, Circuit Judge. At a former trial of this case the court directed a verdict in favor of the plaintiff, assignee of Otto Heinze & Co., on the ground that the Bank of North America, for whose stockholders the defendant was agent, having agreed to loan that firm $126,000 against certain collateral, neither made the loan nor on demand returned the collateral. We reversed the judgment because the court had not permitted the defendant to show, if it could, that the bank did not agree to make the loan and had delivered the collateral to C. W. Morse, who did make it.

At the new trial it appeared that on October 14th, in the hard times of 1907, the firm of Otto Heinze & Co. were in urgent need of from $450,000 to $500,000 to take up outstanding loans and release valuable collaterals, among which was a loan from J. S. Bache & Co. for $126,000. Otto Heinzeapplied to his brother F. A. Heinze, who was president of the Mercantile National Bank, for the loan. F. A. Heinze said that the bank would not make it unless it was participated in by some other financial interest. The brothers then went to the Bank of North America to see C. W. Morse, who was chairman of the executive committee of the Mercantile National Bank and vice president of the Bank of North America. F. A. Heinze had a private interview with Morse, Otto Heinze remaining outside the room. At this interview Morse gave his check to the order of F. A. Heinze individually for $126,000, and then told Otto Heinze that his firm would get the loan at the Mercantile National Bank the next day, and that he should send the collateral for the Bache loan to the Bank of North America. October 15th Otto Heinze made a collateral note payable on demand to the Bank of North America and sent it with the collateral to the bank. When the package was handed to the president of the bank he said the bank had never agreed to make the loan, and never would make it, and he handed the package to F. A. Heinze, then present, who immediately took it into Morse's office and delivered it to him.

The testimony left it in' doubt whether Morse individually or the bank agreed to make the loan, but there is no doubt that Otto Heinze & Co.intended the collateral to secure the repayment of the loan, that Morse individually made it, and that Otto Heinze & Co. received it. Although Otto Heinze & Co. drew a check for $126,000 on the Bank of North America they never deposited it or presented it for payment. The Bank of North America did not indorse Otto Heinze & Co.'s collateral note, which went with the collateral into the hands of Morse.

The court charged the jury:

"What I can and must tell you Is this: What you should do according to the different possibilities of your findings. Let us suppose that In the first place, you believe that in the interview in which Otto and Augustus and Morse were there, after lunch, It was understood that Morse Individually should take the loan, and it should not be the Bank of North America. If that be so, then you will have to give a verdict for the defendant, because then the bank did not have anything to do with it Otto understood he was liable to Morse. Let us suppose as a second possibility that it was left vague at that time; the transaction was undetermined from whom Otto was going to get the money; then you might determine that when he went to Augustus and let Augustus go into the room with Morse, he meant to agree to the arrangement as Augustus should make it with Morse. That is to say, you may treat the transaction as substantially a consent by Otto to let Augustus make the deal for him. In that case, if you believe the deal went through as Augustus said it went through, and It was to be personal, then Otto would be bound, and you must render a verdict for the defendant.

"There is a third possibility to the case. You may conclude that it is quite clear from the fact that Morse afterwards kept the note, when It came on the 15th, and from the other testimony, that the original agreement contemplated a loan by the bank, as far as Otto knew, and that Otto never gave any authority to Augustus to deal for him, but that the interview was a matter between Augustus and Morse individually. And yet you may conclude that Augustus is telling the truth, when he said that he and Morse arranged that Morse should take it over, and that when Morse paid him money in the form of the check, In performance of the loan, he meant it as a payment to the Mercantile Bank, and that the agreement was that the money should be paid to the Mercantile Bank.

"Now, If you should determine that, what would be the rights of the parties? Well, this is an assignable contract. If Otto made a contract for a loan from the bank—and, as I told you, It seems to me he did—and the bank the next day, before the loan had been made, or the same day, at once before any advance had been made, had assigned it to Morse In a formal way, Otto could not have objected to It And If he had meant that the only person to whom he would intrust his security was the National Bank of North America, he was bound to Indicate that at the time he made the contract, because unless there was some such indication, the contract would be assignable.

"So, you see, It did not take Otto's co-operation In that case to effect the assignment of the contract. It would have been a valid assignment if he had not known anything about it.

"You may conclude that Morse Indicated his assent, in this conversation between himself and Augustus, that he should take it over personally, regardless of how the contract read, so far as Otto was concerned. And you may conclude that on the next morning the transactions between Curtis and Morse indicated that Curtis, the president of the bank, was quite willing that Morse should take It over; that, when he sent the securities In to Morse saying, "We won't have anything to do with it,' in view of the fact that Morse had already advanced the money they both agreed, both Curtis for the bank and Morse for himself, that he should take over the transaction. Now, if that was the understanding between Curtis and Morse, then the only question in the case is whether, when Morse gave the check to Augustus, he was paying the money as Otto intended the money should be paid. Because if the contract is as Otto says It was, that the money should be paid directly to him, not deposited in the Mercantile Bank, a delivery of a check by Morse to Augustus would not be good. It would not be the delivery that Otto had stipulated he should get But If In the agreement between Otto and the bank. Otto expected that the money should be deposited or delivered to the Mercantile Bank for him, then I charge you that any delivery by Morse to Augustus was a good performance under that contract, unless you suppose that when he delivered that he said something to Augustus, or it was understood between them, that that check was not for that purpose at all, as the plaintiff suggests you might believe.

"That question Is a very crucial fact In the case, and I am going to leave that to you. I am going to leave It to you and not express any opinion about that. The only testimony In the case is that that was the intention, and you have got to decide that.

"If you determine that that is what was done, then the plaintiff cannot recover. But, if you determine either that Otto expected to get the money some other way, or that Morse, when he gave him the money, had no intention to pay It to the bank or to Augustus as an officer of the bank, then, you will have to find a verdict for the plaintiff."

In accordance with the last paragraph of the foregoing, the jury found a verdict in favor of the plaintiff for the value of the collateral as of October 22, 1910, the date of demand and refusal, $160,903 with interest at 6 per cent, to the date of the verdict, November 21, 1912, $20,112.50, aggregating $181,012.50. But we discover no testimony whatever that Morse paid the $126,000 to F. A. Heinze for any other purpose than to enable Otto Heinzeto get accommodation for the amount at the Mercantile National Bank. Any conclusion to the contrary was founded on pure conjecture. The result is extraordinary, because it takes no account whatever of the loan received by the plaintiff from Morse October 14, 1907, of $126,000, with interest at 6 per cent, from date to November 21, 1912, which would aggregate the sum of $165,000.

If the bank were to pay the judgment and Morse collected his loan out of the collateral in his hands, the plaintiff would receive the full value of its collateral from the bank and a loan of $126,000, fully paid out of its collateral in Morse's hands, with a possible claim against him for a surplus. On the other hand, if Morse were to sue on the collateral note, the plaintiff would, on payment of it, get back the original collateral and at the same time have its full value from the bank.

Assuming that the bank did agree to make the loan against the collateral as the plaintiff contends, it had the right as pledgee to turn over Otto Heinze & Co.'s note with the collateral to Morse, who did make the loan personally. The bank would not be responsible for any conversion by him of the collateral. Goss v. Emerson, 23 N. H. 38; Bank v. Davis, 113 Ga. 341, 38 S. E. 836, 84 Am. St. Rep. 248. The fact that it did not indorse the note makes no difference in this case. Morse had the equitable title to it and the absence of indorsement only left him subject to any equities which the plaintiff might have had against the Bank of North America, and none are suggested. Freund v. Bank, 76 N. Y. 352. The court erred in not directing a verdict in favor of the defendant.

Judgment reversed. 212 F.—45

Oct. 22, 1907, New York Times, Heinze Gives Up Mercantile Stock; Copper Man Relinquishes Control to Gould and Cromwell and Enters Plea in Court. MAY TURN ON OLD PARTNERS Deserted, When in Tight Place, It Is Said He May Tell Secrets -- Bank Indictment Plea Not Guilty.


The title of F.A. Heinze to something like 8,000 shares of Mercantile Bank stock, which put him into the presidency of the bank just a year ago, reverted to Edwin Gould and William Nelson Cromwell yesterday, when the copper man failed to take up the stock, which he had pledged as collateral for a balance of approximately $2,000,000 due on the puchase price.

HEINZE GIVES UP MERCANTILE STOCK; Copper Man Relinquishes Control to Gould and Cromwell and Enters Plea in Court. MAY TURN ON OLD PARTNERS Deserted, When in Tight Place, It Is Said He May Tell Secrets -- Bank Indictment Plea Not Guilty.

The title of F.A. Heinze to something like 8,000 shares of Mercantile Bank stock, which put him into the presidency of the bank just a year ago, reverted to Edwin Gould and William Nelson Cromwell yesterday, when the copper man failed to take up the stock, which he had pledged as collateral for a balance of approximately $2,000,000 due on the puchase price.

January 9, 1907, Auburn [NY] Democrat Argus, Heinze Gave Bail, Entered a Plea of Not Guilty to Indictment,


Charges Over-certification of 15 Checks Representing in Aggregate Over $400,000.

New York, Jan. 8.—indicted by the Federal grand jury for the over-certification of 15 checks, representing in the aggregate over 1,400,000 and drawn by the firm of Otto Heinze &. Co., on the Mercantile National Bank, F. Augustus Heinze, the copper magnate and former president of the Mercantile National Bank, surrendered himself to United States Commissioner Shields yesterday and later was released on $50,000 bail. Heinze will be formally arraigned to plead to the indictment before Judge Chatfield in the United States court today.

Edward Lauterbach, counsel for Heinze, stated last night that his client did not willfully over-certify, the checks, as he had drawn check to the credit of Otto Heinze & Co. to the amount of $500,000 which the bookkeeper of the bank possibly failed to enter on the books until the day after the certification of the checks in question. '

Aftermath of Copper Collapse.

The indictment of Heinze by the Federal grand jury, which has been investigating the Mercantile and other banks identified with the Heinze and Charles W. Morse interests. In the aftermath of the collapse of the Heinze pool in United Copper and which brought about the suspension of Gross & Kleeberg, stock brokers, and subsequently resulted in the resignation of F. Augustus Heinze from the presidency and the retirement of the director's of the Mercantile National Bank after an examination of the institution had been made by the Clearing House Committee. Heinze declared at the time that he had been betrayed by his friends in the United Copper pool.

Heinze had been informed quietly that indictments charging him with over-certification of 15 checks alii
drawn on October 14 just before the smash in United Copper, had been found by the Federal grand jury on
December 2 and that his appearance would be required yesterday.

Pleads Not Guilty.

Without awaiting the service of a bench warrant, Heinze, in company with his counsel, appeared before
Commissioner Shields yesterday afternoon. The proceedings were short. Heinze pleaded not guilty and bail
was furnished immediately by a surety company. When these proceedings were concluded Heinze told
the newspaper men that he did not care to make any statement and hurried away with his counsel.

After an examination of the indictment, which contains 30 counts, Counsel Edward Lauterbach last
night made the following statement:

"The indictment is based upon certification of 15 cheeks amounting to something over $400,000, drawn by
Otto Heinze & Co. on the 14th day of October last.. Before the certification was made F. Augustus Heinze,

obtained the discount of a note for $500,000, secured by abundant stock exchange collateral worth at the market rates of that day more than $300,000, and drew his check for $300,000, and drew his check for $500,000 to the credit of Otto Heinze & Co., the amount of which should have passed to their credit, as I think it was.

Wilful Intent Denied.

"There certainly was no wilful Intent within the statute to overcertify any check, not even to the
 extent that overcertiflcation is practiced every day in Wall street by all the banks as a matter of 
business necessity.

On the contrary, as I have stated, there was far more than the amount of the checks standing to the credit of the account of the drawers of the checks when they were certified.

I believe that if the grand jury could have understood the situation correctly no indictment 
would have been found.

The indictment specifically charges that Heinze while president of Mercantile National Bank overcertifled
15 checks. That is, he guaranteed by the bank signature that the sums indicated in the checks were
held by the institution to the credit of the drawer. To overcertify bank paper is under the Federal statute
an offense punishable bv imprisonment of not less than five years and not more than 10 years.

Alleges Intent to Defraud.

One count is devoted to each of the checks involved. It is alleged that Heinze knew that Otto Heinze & Co. did not have to its credit the  sums named in the various checks. The 16th count in the indictment  charges that Heinze intentionally appiled the funds of the bank, and  without the knowledge of the directorate, to the payments of the 15 checks drawn by Otto Heinze & Co., and knowing that the company did not have on deposit with the bank a sum equal to the amount named on the certified checks. For such an offense the Federal statues provide a penalty of not less than five years' imprisonment or a fine of  not more than $5,000, or both. The checks certified to by Heinze according to the indictment, were as follows: Gross & Kleeberg, $62,761; H. T. Cary & Co., $21,469; Cuyler, Morgan & Co. $13,185; C. H. Smith & Co. $11,006; J.S. Bache & Co. $124,680; Waaserman Bros., $42,88; Marshall. Spader a Co., $49,674; Morse, Moore & Moore. 424,625; J. B. Colgate * Co., $13,384; Sinn a Co., $15,000; Sternberger,Sinn & Co.. $4,603; Hayden, Stone & Co., $12,000; W. R. Rosenbaum, $6,000 Gross & Kleeberg, $30,000, and E. F. Hutton a Co., $25,767

Beginning of His Troubles.

The troubles of F. Augustus Heinze begun with the bull campaign started by Otto Heinze a Co., and associates in the stock of the United Copper Company, which Mr. Heinze had organized and developed after his long fight with the Amalgamated interests in Montana. The stock was selling at 60 cents when a mysterious selling was detected. Believing it to be an effort to raid the stock by short selling, Otto Heinze a Co. gave unlimited buying orders to various brokers, believing, that when the time came the bear operators'
would be unable to cover their contracts except at such prices as the Heinzes directed. Heavy selling of United States Copper continued, and, to purchase the stock offered Otto Heinze & Co. were forced to draw checks for large amounts to various brokers.

Claim They Were Betrayed.

When the source of the selling was ascertained the Heinzes declared that they had been betrayed by friends who sold their holdings of United Copper on the high market.

The United Copper stock slumped and Gross & Kleeberg, stock brokers, suspended, claiming that Otto
Heinze & Co. failed to take up the stock of the United Copper which had been bought for them. A crisis was provoked in the affairs of the Mercantile National bank and the Clearing House Committee made an examination, following which Heinze withdrew from the institution, but with his friends still maintained a stock control, which he had purchased several months before from Edwinn Gould. There have been reports recently in the financial district that the Gould interests would again assume control of the Mercantile.

Amassed Fortune in the West.

F. Augustus Heinze was born in Brooklyn about 40 years ago and graduated  with honors from the Columbia School of Mines. He went west, where he made a success of working out abandoned mines. He also went into British Columbia. where he obtained land and timber rights from the Canadian government. Later he returned to Montana and developed the famous Minnie Healy mine after Marcus Daly had. abandoned it as worthless. Healy engaged with the Amalgamated Copper Company in long litigation over
claims which were finally settled. The firm Otto Heinze & Co. is made up of Otto Heinze and Arthur P. Heinze--two brothers of F. Augustus Heinze and one or two other members.

May 6, 1908, New York Times, T.A. McIntyre Found,  In Miss Alston's Sanitarium--To Be Questioned There To-Day.

T.A. McIntyre, head of the failed Stock Exchange house of T. A. McIntyre & Co., whose whereabouts in this city had been kept a secret by his attorneys, is staying, it was learned last night, at Miss Alston's sanitarium for private patients at 26 West Sixty-first Street.  It was admitted last night that Mr. McIntyre was there, but he could not be reached for any statement regarding his affairs.

By agreement between the receivers of T. A. McIntyre & Co., and T.S. Ormiston, attorney for Thomas
A. McIntyre,, head of the firm, United States Commissioner Alexander Gilchrist, Jr., will examine Mr. McIntyre at the sanitarium to-day regarding the affaits of the firm.

It is hoped that his testimony will give the creditors a clearer insight into its affairs. The other partners have testified that the conduct of the firm's business was almost entireely in the hands of T. A. McIntyre, and that even on occasions when they sought information on certain transactions they did not receive much satisfaction

October 17, 1907, New York Times, Crash in Coppers; Heinze Quits Bank

CRASH IN COPPERS; HEINZE QUITS BANK; Lets Go Mercantile National Presidency at Conference Lasting After Midnight. DENIAL FROM W.B. RIDGELY Controller Says He Won't Take It -- Gross & Kleeberg, Heinze Brokers, Go Down with United Copper. CRASH IN COPPERS; HEINZE QUITS BANK'

At a meeting of the controlling interests of the Mercantile National Bank, lasting until after midnight, F. Augustus Heinze announced early this morning his intention of resigning at once his Presidency of the bank. That intention is to be formally carried into effect at a meeting of the bank's Directors to be held at 11 o'clock this morning.

October 18, 1907, The New York Times, Otto Heinze & Co. Fail. Suspended by Stock Exchange -- A.P. Heinze Out of the Firm. Refer to "Unjust Demands." Manner of Failure a Surprise. Gross & Kleeberg's Explanation. F.A. Heinze's Plans.

WASHINGTON, Oct. 17. -- William B. Ridgely, Controller of the Currency, is expected to accept the offer of the Presidency of the Mercantile National Bank of New York, though he said to-night he had not reached a decision.

DIRECTORS MUST PAY MONEY DRESSER LOST; Officers of Trust Company of the Republic Liable for Shipbuilding Loans. HELD FOR NEGLECT OF DUTY Directors Responsible Personally, Court Rules, When They Intrust Their Functions to Others

The banking panic of 1907

Cornering stocks are rare nowadays as government regulations limit their existence. However it was a common scene in the early years of the 20th century. The plot is to make gains in a particular stock by squeezing the short sellers, thereby increasing the price further when the short sellers are forced to cover. It is only possible if an individual holds a majority of the stock, and decides to call out all of his holdings from stock brokers. Brokers normally lend out stock shares to short sellers, and this can be exploited by a firm or an individual who, in part, think that they own a vast majority of the lent out shares. By calling out the stock physically, brokers would be forced to recall the shares held by short sellers to comply with the real owner’s request to actually hold all physical shares that he owns. The engineer of this stock corner would profit from inflated prices of his shares, caused by short sellers trying to buy at any price just to cover or return the shares they borrowed. This idea was attempted by Otto Heinze, the brother of the short lived United Copper Company founder Fritz Augustus Heinze in 1907. This corner attempt contributed greatly to the great banking crisis of 1907.

It started with Otto Heinze on the 9th of October 1907. He purchased a $96,000 seat on the New York Stock exchange to start the Otto C. Heinze and Company brokerage house. Thinking that they own a majority of United Copper Company stocks, he engineered a stock corner that would eventually bring down most banks and trust funds at that time. Otto Heinze noticed that stocks of United Copper co. was trading well over 25,000 more shares than the total outstanding shares accounted. He came into a conclusion that, this was mainly due to the other brokerage houses lending out shares to short sellers. For the months to follow, Otto Heinze would try to exploit this heavy short selling activity with United Copper company shares. It required about $2,000,000 to purchase what he thinks would be sufficient to acquire a controlling interest of United Copper shares. However, the president of the Knickerbocker Trust company Charles W. Morse estimated that, it would probably take over $3,000,000 to successfully execute the corner when the Heinze brothers consulted him. Otto Heinze’s plan was well rejected by his brothers and Morse. This was mainly due to the fact that United Copper Co. has been buying its own shares on margin to support its declining stock price. But this share buy back activity was not put into consideration on their verdict that, it was merely due to the short sellers causing the price of United Copper Co. shares to drop in value. The Heinzes were already indebted to their brokers for their margin purchases. Ignoring all of these red flags, Otto Heinze still executed his plan to corner shares of United Copper Co.

It was Monday, Stocks of United Copper Co. quietly increased in value from $39 to as high as $60. Otto Heinze’ order instructions were to purchase 100 shares in increments until it reaches $49, and then lots of 1,000 shares thereafter. The stock has risen over $23 with over 4,000 shares traded by the end of the trading day. The next day, aside from that huge surge of buy orders, stocks of United Copper Co. still continued to decline as if there was an invisible force springing it back down to the ground. By the end of the day it settled back down to 52.

On the other hand, the stock certificates arrived at the offices of Otto Heinze and Co., Otto Heinze has until 14:00 that day to pay the obligation. The Heinzes took out a loan to cover the remaining checks written against their brokerage. With all the short sellers looking at all places to cover their shorts, Otto Heinze has set the stage for the final step on his plan. He called all the shares they own the next day, hoping that the price would shoot skywards as brokerages look for their short clients to finally cover the stock they borrowed. Instead, a different scene unfolded. To his surprise, all 20 brokers produced the stock that had been called. Nobody defaulted, and it exposed that shares of United Copper co. were abundant in the market. Heinze was eventually forced to refuse payment for the declining stock. The brokerages meanwhile were forced to dump the undeliverable flood of stock certificates into the market, offering them at any price to cover. The attempt to corner the stock of United Copper failed. Prices continued to slide from $50 a share to 40 and finally, the common stock of United Copper settled at $10. There were no bids.

There were many casualties caused by this corner attempt. Brokerage such as Gross and Kleeberg, who spent around $300,000 to purchase the stocks ordered by Heinze, were forced to sell it at a price as low as $10 to cover their losses. Eventually, the exchange suspended Otto Heinze & Company. Heinze offered to pay Gross & Kleeberg a third of its total indebtedness, but the offer came too late. Banks holding United Copper Company stocks as collateral to loans soon failed like falling dominoes. The bank failure triggered major runs to other banks that were remotely affected by this ordeal. Depositors rushed as they try to withdraw their deposits on fears that their bank may soon follow the series of failure. This failed corner attempt prompted the major banking panic in 1907. This collective lesson later set the stage for the establishment of a central bank, as well as the separation of investment houses such as Trust funds from consumer banks.

October 19, 1907, The Economist, UnitedCopperpage 612,

UnitedCopper.—A number of stirring events of considerable financial consequence have occurred this week in connection with the securities of this company, of which Augustus F. Heinze is president. Otto Heinze & Co. and an associated firm, Gross & Kleeberg, undertook to corner the stock on this company last Monday, as there was believed to be a large short interest. The plan was to bid up the price of the stock and then call up on those firms who were short to deliver the stock. Stock was bid up on Monday as high as 60, the bid price on last Saturday for the common being 37. The preferred was quoted in the ask column last Saturday at 76. On Tuesday the brokers were notified that the stock must be delivered to Otto Heinze & Co. It was expected that the brokers would not be able to deliver and would be compelled to settle with the Heinze firm for the difference betwen the borrowing price and the market price. But the brokers handed over the certificates liberally and the Heinze firm and Gross & Kleeberg, who were buying for Heinze, were not able to pay for them. The brokers had been able to pick up scattered shares; without being forced to settle with Heimw^'aiitf <tne pool had failed in its purpose. As -a result of the failure Gross & Kleeberg were forced to the wall on Wednesday afternoon and their suspension from the New York stock exchange was followed on Thursday by the suspension of Otto Heinze & Co. The latter firm had refused to accept a large block of stock, claiming that the transfer office had refused to transfer the stock purchased. The refusal of the Heinze firm to acceptthe stock caused the failure of Gross & Kleeberg. The failure of the pool was followed by a slump in the United Copper stock, the closing bid on Wednesday being 15 for the common stock. Although it is claimed that F. A. Heinze was not connected with the transactions of his brother's firm, the collapse was followed on Thursday by the failure of the State Savings Bank of Butte, Mont., in which F. A. Heinze was a director and a large depositor. The opinion prevails in La Salle street that F. A. Heinze is insolvent. He has resigned the presidency of the Mercantile National Bank and Controller Ridgely has been elected to succeed him.

United States Express. — Several months ago a committee of the stockholders sought to have the dividends increased from 4 per cent annually to 7 per cent. During the past week the stocks were placed on a 6 per cent basis by the declaration of a 3 per cent semiannual dividend. In a circular issued by President Piatt some months ago it was stated that the income from investment for 1907 would be about $350,000, and that income from operation would probably increase this to 7 per cent on the $10,900,000 of capital stock.

1908The Financial Review, Annual-Feb., Note On Reduction in Gold Supplies, by William B. Dana Company,

A note to a small chart on page 15 of The Financial Review's year-end retrospective for 1907, mentions that a revised estimate for the stock of gold coin and currency in the U.S. had been "adopted" on August 1, 1907, less than three months before the Wall Street panic began that October. We are told this downward revisionism in the available bullion supply represents 135, 000,000 ounces, although it isn't clear what relevancy this has to the supply as marked on the static date of December 31, which is indicated on the chart.

Such an unplanned reduction in the available money supply surely made the job of mastering the crisis after it had arose  that much harder---whether for public officials, or private bankers for that matter. 

The year 1907 began in prosperity and ended in depression. In this it confirmed the expectations—we might almost say the predictions—of close observers, expressed during the course of the year or before its beginning. It has been said of the panics of the past that generally they came unawares. Such a statement certainly cannot be made concerning the tremendous financial upheaval which occurred in 1907, and which will always distinguish that year as one of the most disastrous of its kind in the country's history.

Whatever may be said of the contributory influences, no competent student of affairs can deny that the controlling element in the financial revulsion which came in October and November was the tremendous shrinkage in security values which had been steadily going on for a period of nearly two years, and the complete loss of confidence in the financial world resulting from that circumstance and from the legislative and governmental assaults upon the railroads, upon corporate activity generally and upon capital and accumulated wealth. It was recognized when the year opened by those whose business it is to watch the course of the markets that the situation was gradually becoming acute. The railroads, the country's industrial force, were in need of new supplies of capital for their extension and development, but could not borrow except on onerous terms; and some of them, with credit never of the very best, could not borrow at all. The reason was that various new enactments, Federal and State— more particularly the Hepburn Rate Law of 1907 and the New York insurance legislation of the same year— had greatly changed the old state of things, while repeated increases in wages and enhanced prices for everything needed in the operation of a railroad came in still further to complicate affairs. In brief, the future of railroad properties was in doubt, the long antecedent decline had made investors timid, and, as there was no abatement of the spirit of hostility which had already done so much damage, investors began to lose faith altogether.

In their dire extremity the railroads began to have recourse to the issue of short-term obligations; and no feature of the financial history of 1907 is so conspicuous as the extent to which this expedient was employed. Even the strongest and best-managed roads, those of highest credit, were forced to employ this means to relieve their financial necessities. We may refer, for illustration, to the $50,000,000 threeyear 5% notes issued in January on behalf of the New York Central and its subsidiary properties and to the $60,000,000 three-year 5% notes placed by the Pennsylvania Railroad in February. But this at best was only a palliative, not a remedy. As the year progressed it became more and more difficult to raise money, even on the basis of short-term obligations, one reason being that the continued shrinkage in security values was so greatly impairing the resources and the strength of financial institutions and capitalists and men of means, that it was not possible for these to extend assistance in the way so frequently done in the past, even if they had desired. Investors held aloof for the reasons already stated.

One would have supposed that such a situation would have made those high in authority cautious— would have induced them to pause and see whither the new policy was leading. On the contrary, they determined to go ahead regardless of consequences. In a word, the country, as far as these governmental agencies are concerned, proceeded headlong towards destruction—and with its eyes wide open. That this is not an exaggeration, bear in mind that, though the climax did not come until October in a financial catastrophe which shook the whole world, as early as the previous March the man for whose rescue work at the critical moment the country is so much indebted paid a visit to President Roosevelt at Washington and tried to acquaint him with the dangers of the situation. Mr. Morgan on that occasion, it may be remembered, sought, entirely unsolicited, to get the President to call in consultation the heads of the leading railroad systems of the country. The conference he tried to arrange between these railroad presidents and the ¡ President never took place, apparently because Mr. Roosevelt was determined not to modify his policy and the railroad presidents did not want to appear as suppliants before him. Only a few days after this there came that tremendous collapse in prices on the Stock Exchange which alone would have made 1907 memorable, even if it had not been followed by more serious events later in the year.

Let anyone read the narrative of the events of the year as given at such great length in our monthly summaries on succeeding pages and he will see how, step by step, month after month, as if with malice prepense, we proceeded towards the inevitable goal—disaster. Never before have cause and effect been so closely related. Never before has the connection been so direct and palpable. Mr. Roosevelt's own efforts were reinforced by those of his Cabinet Ministers and the work of the Federal Government was supplemented by that of the several State governments and legislatures. In January and February the Inter-State Commerce Commission was stirring up things in connection with its investigations of the so-called Harriman roads, and several of the States began that movement toward the enactment of 2-cent-a-mile passenger rate laws which later assumed such tremendous dimensions. In March Gov. Hughes's Public Utilities Bill began to play a prominent part in affairs, and after Mr. Morgan's fruitless efforts and the occurrence of a semipanic on the Stock Exchange, the President was beseeched by financial men to make some kind of an assuring statement with reference to his policy that would tend to relieve apprehension. On April 1 Mr. Roosevelt finally authorized a public declaration which was to the effect that he had nothing new of moment to say concerning railroad affairs, and that he would not in the future deviate one hair's breadth from the course he had pursued in the past. The disposition of all the executive officials at Washington was to treat the disturbance in the stock market as having been engineered by Wall Street.

In May the financial public again looked forward to something encouraging from the President—hung on his prospective utterances—but the Decoration Day speech proved as disappointing as previous remarks. In June Mr. Roosevelt delivered two addresses at the Jamestown Exposition at Norfolk in which he took occasion mainly to declare renewed adherence to radical notions, advocating an income tax, progressive inheritance tax, the employers' liability for damages to employees, &c. At the same time the legal department of the Government began suit against the anthracite coal roads. In July Attorney-General Bonaparte announced his new policy with reference to actions against so-called trusts, saying he would hereafter ask for the appointment of receivers who would then proceed to bring about a dismemberment of such combinations. In the same month there came the conflict of authority between the State and Federal courts in several of the Southern States in the effort to compel the railroads to put into effect new rate laws imposing non-compensatory rates upon the carriers. The actions on the part of State officials, not only in the South but in many other portions of the country, were an exceedingly disturbing feature nearly all through the year, and perhaps the most remarkable fact was the number of States that sought to deny access to the Federal courts to railroads and other corporations, on penalty of exclusion from the State if suits were taken into the United States courts. The revoking of the license of the Southern Railway by the State authorities in Alabama on Aug. 2 was based on an enactment of that kind.

At this juncture, things were rapidly approaching a crisis; and of all the months of the year, aside from October, August was perhaps the most noteworthy. The series of adverse developments in that month was simply overwhelming. Another break in the stock market occurred, hardly less serious than that of March, and carrying prices even lower than on that occasion. Besides the troubles of the railroads with the authorities in the various Southern and Western States, the celebrated $29,000,000 fine against the Standard Oil was announced. Arrangements were also under way for calling a convention of the Attorneys-General of the different States with a view to determining upon a concerted plan of action in trust prosecutions. Attorney-General Bonaparte, on his part, spoke to newspaper men of there being "a big covey of game," and saying he proposed to land a bird or two. Aug. 19 came the speech of Secretary of War Taft and Aug. 20 the very notable address of President Roosevelt at Provincetown, in which he attributed the financial disturbances in Wall Street to "certain malefactors of great wealth," who, he charged, were engaged in attempts to discredit his Administration.

In the foregoing we have alluded mainly to the more conspicuous of the disturbing events and influences of the year, in order that the reader might see how we were paving the way for the inevitable disaster which came with such overwhelming force in October and November. It should be distinctly remembered that there was no crop failure (though the crops were not of the extraordinary magnitude of those of 1906) or other calamity of nature. It was the acts of man that were working destruction, which was now proceeding at an accelerating pace. It only needed some such overt happening like the disclosure with regard to the internal affairs of the Mercantile National Bank of this city to show how utter was the loss of confidence and how widespread the fear that no man could feel sure of the safety of his possessions and accumulations except by getting physical possession of the same. Runs upon all classes of financial institutions—commercial banks, savings banks, trust companies—immediately began; and, in complete falsification of the claim that the loss of confidence was confined to Wall Street, these runs extended to all parts of the country. It deserves to be recalled that when the pani« was at ite heighth, and at the very moment when the Seeretary of the Treasury, Mr. Cortelyou, was employing all the vast resources of the Government in the effort to avert general disaster, Mr. Roosevelt felt called upon to make declaration once more that he would persist in his policy and course.

The disaster when it came was naturally proportioned to the disturbing nature of the influences and conditions that brought it about. Whether it will take its place as the worst financial crisis ever experienced in the country's history is not for those contemporary with it to say. Some idea of its depth and magnitude, and of the profound nature of the loss of confidence which preceded and attended it, is gained from the fact that never before at a time of a calamity of this kind has the premium on currency been maintained for so long a period. In its earlier stages cash money commanded a premium of 4@5%. The premium gradually diminished, but even up to the last week of December as much as 1@1K% was paJd for cash in any form. It was not until the very close of the year that the premium reached the vanishing point.

The extent of the relief which had to be provided is also an evidence of the profound nature of the disturbance. On Nov. 2 the Clearing House banks in their weekly statement showed a deficiency below the required reserve of $38,838,825. By Nov. 23 this had increased to $54,103,600. Saturday, Oct. 26, the N.Y. Clearing House began to issue Clearing-House certificates, and the aggregate taken out was $88,420,000, though the maximum amount used at any one time was only $74,000,000. Loan certificates, of course, were also issued by most of the other clearing houses throughout the country, and, indeed, at some very small places where such associations were not previously in existence they were expressly organized so that the combined resources of all the banks might be availed of in support of any one of them. After the panic was finally upon us the Government did everything to prevent its spread. Secretary Cortelyou, apparently with the full approval of the President, poured out Treasury resources in a most lavish way. Between Oct. 1 and Dec. 31 deposits in the national banks were increased from $170,512,212 to $256,920,155. The Government also stimulated national bank circulation in every possible way, one of the means to that end finally adopted being the issue of Panama Canal bonds and one-year Treasury notes. The aggregate of national bank notes secured by bonds increased from $556,101,329 Sept. 30 to $643,459,899 Dec. 31. At the same time there were tremendous imports of gold, the United States having drawn from the other side over $100,000,000.

In Europe the financial situation was also more or less disturbed throughout the year, and this at times tended to accentuate our own troubles. There was considerable apprehension regarding the state of things in Germany as a result of the speculation which has been so actively carried on in that country for some years; and at the end of 1907 Germany apparently was suffering from business depression much the same as the United States, only in diminished degree. In the main, however, the financial unsettlement abroad—in London and on the Continent of Europe— had its origin in the state of things in the United States. In a word, Europe's financial turmoil was only a reflex of the dislocation here. The reasons lie on the surface. At nearly all the chief European financial centres larger or smaller amounts of American securities are held and the prodigious declines in these weakened the foreign position in precisely .the same way that it did the American position. Other classes of securities on the European markets naturally also declined—in part out of sympathy, in part because weakened holders had to throw them over in order to protect American properties. At such a time giltedged securities are naturally disposed of with the greatest freedom, since a market can be found for none others. This will explain the drop in English consols and funds of that description. It is to be added that the high yield which it was possible to obtain on first-class notes of American railroads furnished an additional inducement to foreign investors to dispose of home securities netting only a very small return. Lastly, in some of the European markets there is a considerable interest in foreign copper shares and these suffered from the complete collapse of the copper market no less than the American copper shares.

As illustrating the security situation abroad, it may be noted that in March English consols touched 84 5-16, the lowest point reached since 1848, and that repeatedly thereafter still lower figures were recorded, until in August the price dropped to 80 1-16. A recovery followed, but in November the price got down pretty close to the same figure again. It will be observed that these low records were coincident with the periods of intensest depression on our own Stock Exchange^—March, August and October-November having been the three occasions when the biggest collapses in the stock values here occurred. The Bank of England rate, which was 6% at the opening of the year, never got below 4%, and as early as August there was an advance to 4^%. At the time of our panic in Oct .-Nov., successive advances were made from 4J^ to bYi, to 6 and then to 7%. The Bank of Germany reduced from 7 to 6% in January and to 5% m April. In October there was an increase to 63^ and in November to 7J^%. The Bank of France, which very rarely changes its rate, in March, at the time of the financial disturbances, quite unexpectedly raised its rate from 3 to ZYt, and in November made another upward move to 4%.

With the exception of the copper trade and some slackening in the iron and steel trade, the country's industries remained in a state of great activity until the very time of the outbreak of the bank troubles in October. During all the many months when the market value of securities was so steadily shrinking and investors and capitalists were fearful and timid, business activity was maintained unimpaired. This may seem
rather anomalous, but is not so difficult of explanation after all. Mills, factories and furnaces were kept busy on past orders, which had been steadily accumulating, most concerns having been in arrears on their deliveries for years. Furthermore, as business prosperity had continued almost uninterruptedly for over a decade, very few persons could get themselves to believe that any change in that respect was possible. The collapse in the copper trade, however, which occurred in the second six months, showed clearly what was going on— what inroads were being made upon the country's prosperity. From an unparalleled demand for copper, the inquiry all of a sudden disappeared, and the price of the metal dropped from 26 cents a pound to only about 12 cents, and even then no considerable purchases were induced. There is no plausible explanation for the breakdown in the copper industry except that the inability to raise new capital made it impossible for trolley enterprises and other undertakings, in which extensive amounts of copper are used,to continue development work, thus cutting off the consumption of copper.

The collapse in the copper trade may also be said to have been the prime cause of the misfortunes of the Mercantile National Bank, out of which all the banking troubles arose. The loans of this institution may not have been safe-guarded as they should have been, but the underlying trouble was that the institution was a copper bank—that is, made a business of lending on copper secuiities. The sudden cutting in two of the price of copper destroyed the dividend-earning capacity of these properties and consequently took the value out of their shares.

For the railroads the year was one of great severity —not at all in the way of a falling off in business, for railroad traffic and tonnage continued to show growth (except in rare instances) up to the time of the financial revulsion—but in the difficulty in raising needed money and in the rise in operating expenses, due to increases in wages and continued high prices for materials and supplies. On this latter point, it is only necessary to say that for the 11 months sending Nov. 30 compilations prepared by us show that, while the gross earnings of 87 roads for this period gained $163,533,112 over the corresponding ten months of 1906, all but $4,754,679 was consumed by increased operating expenses. The difficulty which the roads had in borrowing money, making a resort to short-time loans necessary, has already been set out. Further evidence is found in the closing up of bond syndicates formed in previous years with a large percentage of the bonds still on hand unsold—a conspicuous instance being the syndicate which in February 1906 had underwritten $35,000,000 Lake Shore 4% bonds.

The stock market, as already indicated, passed through an almost continuous series of convulsions, and there was hardly a sustained period of recovery throughout the whole year. Exceedingly critical and acute periods were met with in March, again in August and finally in October and November. But the breaks on those occasions were simply violent manifestations of a state of depression that was literally interminable. During the first three months there was practically no recovery except for a few days in the early part of February. After the great break in March there was a sharp upward reaction in April, but in May the stock market was again under great pressure, many new low records being made. In June somewhat of a recovery ensued, which improvement was carried into the early part of July, when for a little while there appeared to be a real manifestation of strength. But this proved delusive, just like previous upturns, and extreme weakness soon again developed. In August came that downward plunge which carried prices even lower than at the time of the tremendous break in March. September once more saw indications of an improving tendency, but the collapse of the copper trade was now becoming a prominent influence in affairs, and before the end of the month the course of values was again strongly downward. In October prices kept dropping lower and lower, even before the advent of the panic, and thereafter there seemed no limit to the downward movement. In November the extraordinary shrinkage continued, and gilt-edged stocks and bonds suffered scarcely less seriously than the speculative fancies. December, fortunately, saw some recovery, except in special stocks.


a Par value Is $50 per share and price Is dollars per share: not per cent.

b Voting trustee certificates stamped extended.

e Par value Is 823 per share and price Is dollars per •bare; not per cent.

The money market acted as it always acts during a period of prolonged shrinkage in values and of great distrust. It other words, it had a disturbed look even when rates were not ruling very high. Evidence of this'disturbance was seen in the reluctance of lenders to'make time loans—they preferring to put their funds out on demand, subject to call—and in the difficulty which mercantile borrowers had in making sales of commercial paper. Borrowing by corporations on short-term notes absorbed some of the money supplies ordinarily available for the purpose. This was noted as an influence as early as February. In March, when the great Stock Exchange break unsettled the money market, a premium over the legal rate had to be paid for time loans; moreover, it was even then noted that lenders generally seemed to prefer to place their funds on call rather than to make contracts for fixed periods. Easier conditions developed in April and May. Bur in June a hardening tendency again became apparent, under the large gold exports and Treasury withdrawals, and some tension existed the early part of July, though later in the month the callloan branch of the market relaxed. The distinct feature in August was the advance in time loans, the rate for 90 days to 4 months being 6J^% and for longer periods still higher. Yet all through that month call loans on the Stock Exchange did not get above 6%, even during the period of most serious break in the stock market. In September the highest rate on call was 6J^%, while loans for 4 months could not be obtained at less than 6%. In October, before the panic came, the situation did not improve, and 6% was the quoted rate for time loans for all periods, with little money obtainable and with commercial paper almost unsalable. During and subsequent to the panic the business of money lending was of course brought to an abrupt end. Time loans could not be obtained at all, and call loans at first were largely a matter of favor, with rates as high as 125%. Relief was afforded first through the money pools formed by J.P.Morgan (one for $25,000,000 and another for $10,000,000) in the week of the panic, then by enormous additions to Government deposits in the banks, and finally by importations of gold of extraordinary volume. Callloan rates were in this way brought back to reasonable figures, but it is noteworthy that, with currency ruling at a premium, time loans were not obtainable, except in rare instances, the rest of the year, with quotations 10@12% at the close for short periods. It deserves to be noted that the New York City Clearing House banks did not show any deficiency below the required reserves until the very week of the panic.

The foreign exchange market covered a wide extreme, as would be expected in such an eventful twelve-month period. Though showing irregularity at times, the market was weak the whole of the first quarter of the year, influenced by easier discounts in Europe and. the offering of bills against European purchases of American short-term corporation notes. In April, however, the course of exchange was completely reversed. At the beginning of that month rates were so low that a small amount of gold was engaged for import to the United States. Subsequently, however, rates advanced 2^@4 cents per pound sterling, chiefly because of the development of easier money here and the shifting of American loans from Europe to this side. In May the strength continued, starting exports of gold, and in June the gold outflow reached large proportions. In July the gold outflow diminished, but exchange on the whole remained stiff. In August the rise in money here occasioned a sharp fall in sterling, but the advance in the Bank of England discount rate caused a rise again to very near the gold-export point. In September the tendency was downward, suggesting the possibility of gold imports. In October, before the panic, the continued liquidation of American securities here by foreign holders caused such an advance in rates that very little would have been needed to start an export movement of gold to France and England. The occurrence of the panic, of course, changed all this. Owing to t he monet ary stringency thatdeveloped,money advanced to figures permitting large gold engagements. During November and December these gold engagements continued, and exchange rates really played a minor part in the movement, the controlling factor being the high premium which cash money commanded here. This left a profit on gold imports, even though exchange rates for a good part of the time were at figures where ordinarily a gold outflow must have ensued. As the currency premium diminished, the exchange market began to respond more readily to the ordinary influences governing exchange, but it was not until the very end of the year that there was a return to normal conditions.

Below we bring together some general statistics for 1907 and 1906, affording an interesting contrast between the two years.


A revised estimate of stock of gold coin was adopted Aug. 1, 1907, a reduction of 3135.000.000 being made, 

a Estimated. 6 These are the statistics of the plpe-Unc companies handling the oils produced In the States of Pennsylvania, West Virginia, New York, Ohio, Indiana and Illinois. k This Is estimate of "Engineering and Mining Journal."

page 15

JANUARY.—Current Events.—Business continued ex tremely active everywhere. In Europe the monetary tension relaxed (the Bank of England on the 17th reducing its rate from6 to 5% and the Bank of Germany Jan. 22 from 7 to 6%), and in this country ease in money developed for the time being. Nevertheless, the feeling in financial circles and on the Stock Exchange became depressed and the stock market experienced a sharp decline. A recrudescence of the spirit of hostility against railroads and corporate interests was apparent. In the suit brought by Attorney-General Young in the Ramsey County District Court in Minnesota, Judge Oscar Hallam Jan. 23 made an order enjoining the Gt. Northern Ry. from issuing its proposed $60,000,000 additional stock. On Jan. to the Attorney-General brought still another suit in the Supreme Court at St. Paul, asking forfeiture of the charter of the St. Paul Minn. & Man. RR., a constituent property of the Gt. North Later in the month there were disturbing intimations from Washington that President Roosevelt was getting ready to adopt the ideas of Senator La Follette of Wisconsin and was giving much thought to devising some plan for the valuation of railroad property by which capitalization could be reduced. Attorney-General Hadley of Missouri Jan. 9 began an action in the Missouri Supreme Court to dissolve the alleged illegal merger of the Missouri Pacific, Iron Mtn.and Wabash RR., &c. Capital additions by the railroads were on an extensive scale. Following the announcement the previous month (Dec. 1906) of the offering of $60,000,000 newstock bv the Gt. North., of $93,000,000 by the Nor. Pac, and of, roughly, $100,000,000 by the Milwaukee & St. Paul (payment, however, for these different issues being in installments extending far into the immediate future),news came that the Penn. RR. would ask for authority at the annual meeting for considerable new securities—$100,000,000 In stock and $100,000,000 in bonds, so the accounts stated. Chic. & No. West, offered shareholders $21,403,000 newcom. at par, payment to be made on or before March 16. Most of the large borrowers, however, were obliged to issue short-time notes at stiff terms, it being impossible to sell long-term obligations at satisfactory figures. President Finlcy of the Southern Ry. issued an address to the public setting out the difficulties experienced in providing adequate service and this was followed by the sale of $15,000,000 3-yr. 5% gold debenture notes to J. P. Morgan & Co., the notes being subsequentlv re-sold to banking houses and offered at 97 and int. The N" Y. N. H. & H. RR. put out $26,000,000 of short-term notes of one kind or another. On Jan. 25 J. P. Morgan & Co purchased $50,000,000 3-yr. 5% notes of the N. Y Cent. linf# unsecured by collateral, $25,000,000 being issued by the Central itself, S15,000,000 by the L. S. & Mich. So. and $10,000,000 by the Mich. Cent. About $6,000,000, it is understood, was placed abroad. Early in the month the Amer. Tel. & Tel. Co. sold to a syndicate $25,000,000 of 3-yr. 5% notes and later the same syndicate offered at public subscription $40,000,000 of that company's convertible 4% gold bonds. A number of minor roads also issued larger or smaller amounts of short-time notes. Atch. Top. & Santa Fe shareholders authorized $98,000,000 of bonds convertible into common stock; of this amount $26,056,000 (10-yr. 5s) were offered to stockholders at par the following July, but only $9,943,000 subscribed—the rest sold. One of the incidents of the month was an investigation by the Inter-State Commerce Commission of the Union Pac. RR. and its relations to competing lines. At the hearing in this city it developed that since the close of the fiscal year on June 30 1906 there had been acquired by the Union Pac. $28,123,300 of 111. Cent, stock and by the Oregon Short Line RR. (controlled by the U. P. RR.) $14,285,700 of N. Y. Cent, stock, $10,000,000 of Atch. pref. stock, $3,690,000 of Mil. & St. Paul com., $3,215,000 of North. $32,334,200 of the com.and $7,206,400 of the pref. of the Bait. & Ohio. These disclosures were used to intensify the hostile sentiment against Mr. Edward H. Harriman. The Inter-State Commerce Commission made two reports on investigations undertaken by it under the joint resolution of Congress approved March 7 the previous year—one with regard to the Standard Oil Co. concerning the relations of common carriers by rail to the production and distribution of oil, and the other relating to discriminations with regard to the transportation of bituminous coal; neither report attracted much attention. That with regard to coal was reviewed in the "Chronicle" of Feb. 2 1907, page 244. The Secretary of the Treasury modified the requirement as to the re-payment of the $12,000,000 special deposits placed with the banks the previous month; instead of requiring that $6,000,000 be returned Jan. 21 and $6,000,000 Feb. 1, he advanced the dates respectively to Feb. 1 and Feb. 15. Some little uneasiness, however, was caused by rumors that re-payment would be required some time during February of the $30,000,000 deposits made with the banks the previous Sept., as it was thought to be the purpose of Mr. Shaw to get the money back into the Treasury by March 4, when he was to retire from office. Government deposits in the banks Feb. 1 were $160,654,952, against $158,753,158 Jan. 1. Treasury money holdings were $336,518,292, against $343,836,223. National bank circulation changed but slightly. Extensive further increases in wages of railway employees were announced—see V. 84. p. 222. An earthquake destroyed a considerable part of the city of Kingston, Jamaica. The United States offered relief and Rear Admiral Davis, with the consent and at the request of some of thelocal authorities, landed a small force of marines for the purpose of carrying on rescue work. An unpleasant incident grew out of this, Governor Swettenham of Jamaica asking Admiral Davis in a very offensive letter to re-embark the marines. The sentiments contained in this letter, however, were repudiated by the British public. The U. S. Govt, did not feel called upon to take any official notice of the event. It was announced that Theodore P. Shonts, the Chairman of the Isthmian Canal Commission, would resign his office in order to become President of the Interbor.-Met. Co. of this city. Two decisions adverse to the constitutionality of the employers' liability Act with regard to railroad employees passed by Congress the previous year were given in the Federal courts, one by Judge Evans at Louisville and one by Judge McCall at Memphis. The U.S. Supreme Court upheld the constitutionality of the stock transfer tax of this State under the law of 1905 imposing a tax of 2 cents on each $100 of face value or fraction thereof, but the Court of Appeals at Albany declared unconstitutional the amendment of 1906 making the tax applicable to each share of $100 of face value or fraction thereof. The N. Y. Court of Appeals also sustained the right of the Brooklyn Rapid Transit Co. to charge a double fare to Coney Island. At a general election of members to the German Reichstag a striking feature was a heavy reduction of the Socialist representatives. The weather here in the East was rather mild the first half of the month, but about normal the latter half. The trans-continental lines on the extreme north, however—the Gt. North., the Can. Pac, the "Soo" road, &c—reported the weather the worst ever experienced, with very heavy drifts of snow and abnormally low temperatures, running from 30 to 50 degrees below zero. Parts of some of these lines remained tied up for weeks. Middling upland cotton advanced from 10.65c. Dec. 31 1906 to lie. Jan. 31. There was much agitation against the grading of cotton on the New York Cotton Exchange, and the upshot was the striking off of certain grades from the list of grades tenderable on contracts, the changes to go into effect Jan. 1 1908. Print cloths at Fall River remained at 4 cents per yard. The demand for copper continued unabated, and Lake copper advanced to 25J^ cents per pound. The Chemical National Bank of this city increased its capital from $300,000 to $3,000,000 through the payment of a dividend of 900%. The Mercantile National Bank of this city passed to the control of F. Augustus Heinze and copper interests; this change was to play an important part in bringing about the panic the following October. Mr. Frederick B. Schenck, the President of the Mercantile, having thus been displaced, was made President of the Liberty National Bank. Another local event was the announcement that the Trust Co. of America had acquired

February, 1908, The Financial Review, by by William B. Dana Company, Annual--October, page 27

OCTOBER.—Current Events.—The dislocation and panic for which events had been paving the way for a very long antecedent period burst upon the country with great fury during this month, bringing with it the train of disasters that invariably accompanies such a catastrophe.

When the preceding month closed considerable anxiety was felt as to the tenor and effect of the speeches Pres. Roosevelt was to make on his trip down the Mississippi River after his unveiling of the McKinley monument on Sept. 30. It was feared that he would make some utterances tending further to disturb the situation, already so highly critical. The speeches, it was found, contained no announcement of new doctrines, but were a reiteration of the most obstructive of the old, with the usual rasping sentences in them, which in the prevailing disquietude proved doubly damaging. One expression which attracted wide attention was this: "If righteousness conflicts with the fancied needs of business, then the latter must go to the wall." He also declared that "the chief economic question of the day in this country is to provide a sovereign for the great corporations engaged in inter-State business," and made an urgent plea for "constructive jurisprudence" on the part of the courts, meaning that the courts should enter upon a policy of expanding the meaning of Constitutional provisions so as to give added powers to executive officials and legislative bodies.

The stock market apparently took little notice of this new manifestation of the President's old attitude, but in financial circles it was evident that distrust was being aggravated and intensified.

At this juncture other adverse developments kept piling up one after another. The copper trade caused great trouble. The price of the metal dropped still lower and got down to about 12 cts., against 26 cts. less than half a year previously. Even at 12 cts. there was no demand. The effect upon the market value of the shares of the copper companies was disastrous in the extreme. Enormous declines in such shares were recorded, succeeding the long series of previous declines. Evidences of reaction in the iron and steel trades and of recession in general business also increased.

Monday, Oct. 14, Marshall Field & Co of Chicago announced a reduction of from 9 to 15% in prices of prominent lines of bleached and other cotton fabrics.

It so happened, too, that the Agricultural Bureau report issued Oct. 10 showed that the 1907 grain yield, though on the whole good, would fall considerably below the extraordinary yield of 1906.

About the middle of the month, also, the passing of their dividends by two Western traction properties (the Detroit United Rwy. Co. and the Toi. Rwys. & Light Co.) caused a semi-panic on the Montreal Stock Exchange. The influence of this action was far reaching because of the reason given for the step. In both instances the statement was made that the companies found themselves unable to sell bonds at any reasonable figures, and, it being incumbent to make large expenditures for equipment, improvements and additions, the earnings which would have gone to pay dividends had to be used for this purpose.

Additionally disturbing was the fact that the long-continued decline in American securities had weakened holders of such securities abroad, and the collapse in copper shares contributed still further to weaken the foreign position. The result was a tremendous outpour of securities abroad with very extensive selling here for European account, this very naturally causing additional breaks in our markets. In this city the utter collapse of the copper market and the copper shares worked great havoc. Among the copper stocks which slumped badly were the shares of the United Copper Co., with which F. Augustus Heinze was so prominently identified. Mr. Heinze was also President of the Mercantile National Bank of this city, to which position he had been elected earlier in the year, when he acquired a large interest in the institution.

The Heinzes appear to have been interested in a market pool in United Copper shares, and thought they detected selling by some of the members of the pool. Thereupon Otto Heinze & Co. undertook to corner the stock and apparently gave extensive buying orders, and particularly to the Stock Exchange house of Gross & Kleeberg. They also undertook to stop the transfer of a certain block of the stock on the company's books. The attempted corner failed. United Copper com. was run up to 60 Oct. 14, but tumbled back the next day, and Oct. 16 broke to 10. Gross & Kleeberg were forced to the wall the same day, owing to the refusal, as alleged, of Otto Heinze & Co. to take up the stock bought for their account, and later Otto Heinze & Co. themselves suspended.

Attention was at once directed to the Mercantile National Bank, which had lost heavily in deposits since the Heinzes had become connected with it and which had loans out on copper stocks to the Heinzes and others. Oct. 17 Mr. Heinze resigned the presidency of the bank, and the same day an examination of the bank was made by the Clearing-House committee. The committee declared the bank solvent, and the next day the Clearing-House decided to stand by the institution and supply it with the cash needed to carry it through. Mr. Heinze had also been interested in the State Savings Bank of Butte, Mont. This closed on the 17th.

The seriousness of the copper situation was further emphasized by the action of the Amal. Copper Co. on that day in reducing its quarterly dividend from 2% to 1 %.

The failure on Oct. 17 of a private banking firm at Hamburg, Germany, for $7,500,000 did not tend to improve things, though it was not clear that this failure was directly due to the drop in copper.

The presidency of the Mercantile National was offered to Comptroller of the Currency Ridgely, and he took the offer under advisement, but declined it on Saturday, the 19th. Banking interests recognized that a highly critical state of things was developing. Mr. Charles W. Morse, the steamship man, had been associated with Mr. Heinze in the Mercantile National and was also interested in a chain of banks, prominent among which were the National Bank of North America of this city and the New Amsterdam National Bank. The Clearing House made an investigation of both banks, and finding them solvent determined to help them over. It was felt, however, that drastic action was necessary. Accordingly Mr. Morse was required to sever his connection with all the banking institutions in which he had an interest.

The same course was insisted on with reference to Edward R. Thomas and Orlando F. Thomas, who were also interested in various banking institutions and whose methods were not approved of in banking circles. It was now supposed that the crisis had been tided over, and with the publication in the newspapers Monday morning, Oct. 21, of the news of what had been done by the Clearing House the tone became distinctly better. The stock market reflected the fact in a rise of several points.

After the close of business that day, however, there came the announcement that the National Bank of Commerce of this city had given notice that after Tuesday, Oct. 22, it would refuse to clear any longer for the Knickerbocker Trust Co.— one of the largest of the trust companies with over $62,000,000 deposits and whose $100 shares had been quoted at $1,100@$1,200. Charles T. Barney at once resigned as President and director of the company. He had no loans with the Knickerbocker Trust but had been engaged in extensive real estate enterprises with Mr. Morse. Hurried conferences that night (Oct. 21) with J. P. Morgan and other financiers followed. Evidently, however, the company's condition was not found altogether satisfactory. For, notwithstanding very positive statements that the institution was strong in cash and that promises had been obtained of further cash, the company after paying out $8,000,000 to clamorous depositors, Tuesday morning, Oct. 22, was forced to close its doors. The stock market now became utterly demoralized In the afternoon (Oct. 22) the Stock Exchange firm of Mayer & Co., which had been extensively interested in Del. & Hud. stock, made an assignment. While the whole financial world was thus in turmoil, President Roosevelt made another speech, this time at Nashville, Tenn. He had two days before emerged from the canebrakes of Louisiana, whither he had gone for, a bear hunt after his trip down the Mississippi. In his Nashville speech, delivered the day of the suspension of the Knickerbocker Trust, he took occasion to say that he doubted that his policies had had "any material effect in bringing about the present troubles, but if they had it would not alter in the slightest degree my (his) determination that for the remaining sixteen months of my (his) term these policies shall be persevered in unswervingly."

The morning of the same day the daily papers had contained Washington dispatches saying that the Administration had decided to enforce a hitherto unused section of the Sherman Anti-Trust Law, which makes property owned by an unlawful combination subject to seizure and confiscation while in transit from one State to another or to a foreign country; and accordingly the Collector of Customs at NorfoIk, Va., had seized a large quantity of cigarettes in transit to New York and abroad. Intimations were given that the same plan might be pursued with reference to shipments for export by other alleged combinations—shipments of oil, for instance.

The next day (Wednesday, Oct. 23) the financial situation became still more acute. One of the morning papers had contained a very sensational account of a consultation the previous night concerning the affairs of the Trust Co. of America, which, like the Knickerbocker Trust, ranked among the city's largest trust companies—its deposits having aggregated $64,000,000 and its $100 shares having the previous week been quoted at $650. A run on that institution was precipitated which was not checked for two weeks following.

The same day, too, there came the embarrassment of the different Westinghouse interests at Pittsburgh and the appointment of receivers for the same (namely, the Westinghouse Elec. & Mfg. Co., which for many years had been paying 10% dividends; the Westinghouse Machine Co., the Nernst Lamp Co. and the Securities Investment Co.), with the closing of the Pittsburgh Stock Exchange and the suspension of a small trust company in Pittsburgh. Some of the uptown New York institutions also experienced a run that day, and the next day (Thursday, Oct. 24,) the Hamilton Bank (of which E. R. Thomas had been President) and the Twelfth Ward Bank were obliged to close their doors.

Unremitting endeavors were made Wednesday and Wednesday night to prevent the further spread of the panic; important conferences were held in which J. P. Morgan was a notable figure, and which were attended by Mr. Cortelyou, the Secretary of the Treasury, who agreed to add $25,000,000 to the Government deposits in the city banks. At one of these conferences at Mr. Morgan's office Wednesday a committee of five trust company presidents, consisting of representatives of the strongest and best companies, was appointed for dealing with the trust company situation. This, however, did not prevent a run Thursday (Oct. 24) on the Lincoln Trust Co., similar to that which the Trust Co. of America was experiencing. It was almost impossible to secure loans upon the Stock Exchange and money rates mounted to 125%. Accordingly a money pool for $25,000,000, headed by J. P. Morgan & Co., was formed. Report also had it that John D. Rockefeller had placed $10,000,000 at the disposal of the Union Trust Co., and was ready to contribute further relief. Friday (Oct. 25) several other suspensions were announced, mostly uptown in New York or in Brooklyn; the U. S. Exchange Bank, a Harlem institution , failed to open, and the International Trust Co., a small local concern, likewise decided to close, this applying also to its Brooklyn branch, formerly known as the Brooklyn Bank. Similar action was taken by the First National Bank of Brooklyn (this was a member of the N. Y. Clearing House), the Jenkins Trust Co. and the Williamsburgh Trust Co., in all of which there was more or less identity of interest. The Borough Bank of Brooklyn also suspended.

From out of town came the announcement that the Union Trust Co. of Providence, R. I., with $25,000,000 deposits, after an all-day run Thursday,had closed,and that clamorous depositors were besieging the other large trust companies in that city. The panic may be said to have reached its height on that day and got definitely under control. Another money pool (for $10,000,000) was formed in the afternoon at the office of J. P. Morgan.

At a meeting of savings bank officers that day (Oct. 25) it was decided that all the city's savings institutions should enforce the provision requiring 60 or 90 days' notice of intention to withdraw deposits—paying out, however, small amounts, according to judgment, to meet the needs of necessitous depositors. This action was quickly followed by the savings institutions in many other cities throughout the country and trust companies outside of New York holding savings deposits pretty generally took similar precautions.

On Saturday, Oct. 26, the N. Y. Clearing House Assn. decided to resort to the issue of Clearing House loan certificates and this action led to the very general issue of clearing house certificates by the clearing houses throughout the country.

The New York trust companies on Sunday, Oct. 27, in order to curtail the use of cash, decided as far as possible to pay depositors in certified checks on clearing house banks.

Outside of New York the practice was quite generally adopted of suspending temporarily the payment of money on checks except for small sums. At some cities shipments of money to interior correspondents were for a time completely suspended.
Another result of the panic was the declaration of holidays of longer or shorter duration in a number of Western States and on the Pacific Coast to protect banking institutions in their inability to meet drafts, &c.—this was true of Nevada, Oregon, Washington, California and Oklahoma.

Except in the continued run on the Trust Co. of America and the Lincoln Trust Co. of this city, the situation gradually improved towards the close of the month.

There were, however, numerous suspensions of minor financial institutions in different sections, and the California Safe Deposit & Trust Co. of San Francisco on Oct. 30 also suspended.

On this latter day there likewise occurred the suspension of the N. Y. Stock Exchange house of Kessler & Co., which had been heavily interested in Cripple Creek Central Ry. securities.

Enormous engagements of gold were made in Europe for import to the U. S. These engagements by the end of Oct. aggregated over $24,000,000,but none of the metal arrived until Nov., when further engagements of even larger magnitude were announced, as noted below.

The European banks interposed no extraneous hindrances to the gold withdrawals, but as a matter of protection the Bank of Germany raised its rate from 5J^ to 6J^%, and the Bank of England from 4 J^ to 5J^%, this being followed by still further advances the next month. A recovery in copper to 14@14J-£ cts. was a feature as the month closed.

In extending relief, Treasury money holdings during the month were reduced from $333,445,220 to $277,170,058. This reduction was effected mainly through increase of Government deposits in the banks from $170,512,212 to $220,270,625.

Great efforts were also made to stimulate a further increase in bank circulation, but the effects in this case did not appear to any great extent until the next month; during Oct. bank notes secured by bonds increased only from $556,101,329 to $562,727,614.

The panic created a frenzied desire on the part of timid depositors to get money in any form and led to extensive hoarding throughout the country; premiums of varying percentages were paid for cash. The effect of the situation on the prices of leading staples was very depressing. Middling upland cotton in N. Y. had got up to 12c. again by Oct. 14, but Oct. 28 was quoted at 10.80c, notwithstanding killing frosts in the interval, and the close Oct. 31 was 10.90c. Print cloths at Fall River, however, were kept unchanged at 5J^c. IQ grain very extensive liquidation was caused, and on the Duluth Board of Trade grain trading was suspended for a time. Early in the month there had been an active speculation at higher prices, and Dec. wheat in Chicago Oct. 14 sold at 107^;from this it got down to 94% Oct. 30. Dec. corn between the same dates dropped from 64% to 55 and Dec. oats from 56 to 44.

The drop, however, stimulated an active export demand for grain. Even silver suffered a sharp break, declining in London from 31 3-16d. Sept. 30 to 27 7-16d. Oct. 30, with the close Oct. 31 27 9-16d; contributory causes in this decline were the diminished demand from India, owing to prolonged drought and poor crops, and also the ravages of the plague. British consols declined from 83% Oct. 22 to 81 15-16 Oct. 29.

As a result of the panic, large numbers of industrial concerns curtailed operations greatly or suspended work altogether. In Minnesota Attorney-General Young placed himself in opposition to the Federal Courts in the railroad rate controversies pending in that State. The Southern Ry. reached an agreement with Gov. Comer of Ala. under which the litigation brought by the company and its allied lines in the Federal Courts attacking the 2J^c. passenger rate and other laws was dismissed. (See V. 85, p. 1083.)

An incident of the banking troubles in N. Y. was the resignation of the new State Superintendent of Banks, Luther W. Mott, whom Gov. Hughes had appointed only two weeks before. He was succeeded by Clark Williams, previously holding a prominent position with trust companies in this city.

Recrudescence 1. Revival of material or behavior that had previously quiesced.

Charles Wyman Morse (October 21, 1856 – January 12, 1933[1]) was a notorious businessman and speculator on Wall Street in the early 20th century [center]
Dictionary of American Biography, Vol. XIII, p. 239. New York: Charles Scribner's Sons, 1934.Druett, Joan (2000). She Captains: Heroines and Hellions of the Sea. [Simon and Schuster. pp. 304. ISBN 0-7432-1437-4, 9780743214377. Retrieved December 17, 2008.Robert F. Bruner and Sean D. Carr, The Panic of 1907. Lessons Learned From the Market's Perfect Storm, pp. 39-40. Hoboken, New Jersey: John Wiley & Sons, 2007. ISBN 978-0-470-15263-8
Dictionary of American Biography, Vol. XIII, pp. 239–240.
Dictionary of American Biography, Vol. XIII, p. 241.
Dictionary of American Biography Vol. XIII, p. 240.
Dictionary of American Biography, Vol. XIII, p. 240; Henry F. Pringle, The Life and Times of William Howard Taft, Chapter 33. New York: Farrar & Rinehart, Inc., 1939.
724 Fifth Avenue, on the West side of the avenue, between 56th and 57th Streets, had been built for R. Fulton Cutting in 1882; it was a brownstone rowhouse of four storeys and an attic with asymmetrical Romanesque Revival details; it was illustrated in Century Magazine, February 1886.
Staff. "CHARLES W. MORSE'S MARRIAGE ANNULLED; Divorce Mrs. Morse Secured from First Husband Pronounced Illegal.", The New York Times, January 8, 1904. Accessed February 10, 2011. ""They gave up that house a few months ago, and have been living at their home in Lakewood, N.J., and at their Summer cottage at Bath, Me."
"Charles W. Morse's Marriage Annulled. Divorce Mrs. Morse Secured From First Husband Pronounced Illegal", The New York Times, January 8, 1904.
George W. Hilton, The Night Boat, p. 97. Berkeley, California: Howell-North Books, 1968.
"Morse Buys Sound Lines From New Haven", The New York Times, February 7, 1907.
Walter Lord, The Good Years. From 1900 to the First World War, pp. 182–183. New York: Harper & Brothers, 1960.
"Ask Receivers For Morse Ship Lines. Bondholders Act in Maine, Boston, and This City to Protect Their Interests", The New York Times, January 31, 1908.
"Morse Heads New Company. Metropolitan Steamship Lines Will Be Incorporated in Maine To-day", The New York Times, October 11, 1909.
Dictionary of American Biography, Vol. XIII, pp. 240–241.
"C. W. Morse Contracts". Hearings before Select Committee on U. S. Shipping Board Operations. Washington DC: Government Printing Office. 1920. p. 1088. Retrieved on 18 January 2011
"C. W. Morse Contracts". Hearings before Select Committee on U. S. Shipping Board Operations. Washington DC: Government Printing Office. 1920. p. 1237. Retrieved on 18 January 2011.
Dictionary of American Biography, Vol. XIII, p. 241; Bruner and Carr, p. 183.
Time, July 26, 1926
 "Charles W. Morse Dead. Ex-New Yorker, Who Controlled 13 Banks, Is a Victim of Pneumonia", The New York Times, January 13, 1933.

June 17, 1909,  The New York Times, Heinze's Friend Indicted, Carlos Warfield and Clerk Geer Accused of Spiriting Copper Books Away, Page 16,

When the two latest Heinze indictments were handed up before Judge Ray in the United States Circuit Court yesterday it developed that not only F. A. Heinze, his brother, Arthur P. Heinze, and Sanford Robinson, his lawyer, had been indicted'by the Federal Grand Jury, but also Carlos Warfield and Calvin O. Geer. Mr. Warfield is an old-time friend of F. A. Heinze, who stood beside him in the long fight. in Butte against the
Amalgamated Copper Company, and recently came to New York to assist Heinze in his trouble. Geer is a clerk in the office of A. P. Heinze & Co. All of the defendants -were in court when the indictments were handed up. F. A. Heinze was represented by John C. Tomlinson, Jr., A. P. Heinze by ex-Assistant District Attorney  William Rand, Jr., and Warfield by John D. Stanchfield. District Attorney Wise announced that
he proposed to move these cases for trial next week. The attorneys for the defense, it is understood, will seek a postponement of the trial until next Fall.

The indictments both charge conspiracy to obstruct the administration of justice, and, as has already been made public, are based upon the spiriting away of a large number of the books of the United; Copper Company, the mutilation of three of those books, and the departure of Tracy Buckingham, formerly the transfer agent of the United Copper Company, to Canada when he was wanted as a witness before the federal Grand Jury.

The indictment against A. P. Heinze and Sanford Robinson cover the sending away of Buckingham and charge that! the two defendants, in conspiring to get Buckingham out of this jurisdiction, gave him $100 to defray his traveling .expenses. The other indictment, which is against; all five men named, relates in general to the Buckingham incident, and then specifically to the removal and mutilation of the 20 books of account, 100 letters. 10 letterpress copy books, 10 minute books, and ICO other documenfs in two trunks. Carlos Warfield is charged with the removal of ten books of account, fifty letters, five minute books, and fifty other documents in one trunk, and general accusations are made against A. P. Heinze in connection with both of these charges.

F. A. Heinze, A. P. Heinze. and Geer are charged with mutilation of books which the United States Attorney needed by having eighteen and one-half pages torn out of one ledger and forty-four pages out of three books known as Ledger " A," Journal "A," and Cash Book A."" All of the defendants were held in $2,500 bail, which was furnished.

The Federal Grand Jury for the June term of the Criminal Branch of the United States Circuit Court was sworn in yesterday by Judge Holt. This is the Grand Jury which will handle from now on the investigation of the Heinze case, both as to the charges of misapplication of funds of the Mercantile National Bank against P. A. Heinze personally, and the disappearance of the books of the United Copper Company, which has resulted in the Indictments of F. A., and A. P. Heinze, as well as Sanford Robinson, one of the Heinze attorneys, and several others.

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