The Panic of 1901 was triggered not by war or industrial failure but by a fight between a handful of Gilded Age titans. E.H. Harriman, who started on Wall Street as an errand boy at 14 and bought an exchange seat at 22, became chairman of Union Pacific’s executive committee in 1898 and rebuilt the bankrupt railroad. He wanted the Chicago, Burlington and Quincy Railroad, the key to the Chicago rail hub, but James J. Hill and J.P. Morgan placed it under the Northern Pacific Railway. With banker Jacob Schiff and Standard Oil money from James Stillman and William Rockefeller at First National City Bank, Harriman moved to take over Northern Pacific itself.

As both camps bought every available Northern Pacific share, the stock soared while short sellers faced margin calls and had to dump healthy holdings such as U.S. Steel, sugar and Amalgamated Copper. Around 1 p.m. on May 8, the CB&Q began sliding and the selling spread to St. Paul, Missouri Pacific and Union Pacific. Harriman and Hill ended the stalemate by forming the Northern Securities Company to hold the Northern Pacific, Great Northern and CB&Q. After President McKinley was assassinated in September 1901, Theodore Roosevelt’s Justice Department used the 1890 Sherman Antitrust Act against it, and the government won Northern Securities Co. v. United States.

• In the middle of the crash one stock on the exchange’s board was up 16 and a half points.
• Harriman personally rode the length of the Union Pacific line to inspect its track, bridges and locomotives.
• The episode describes the crash as a liquidity crisis: the titans’ buying drained cash from the rest of the market.
• A rumor spread that Arthur Housman, J.P. Morgan’s primary broker, had died, so he was brought onto the exchange floor to prove otherwise.
• Thousands of small investors were wiped out though they had no part in the railroad fight.