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Nothing New Under the Sun: The Bankers Manifesto of 1892 and the Business Depressions of 1893 - 1911


In 1892, American bankers were preparing for war.  Sides were very clearly drawn.  The bankers (the rich of the society) were against everyone else.  And the rich had a plan to retain power (and to enslave 'the lower order of people' -- you and I) as the next Great American Depression began, in 1893.

How were the rich going to win the war that began in the Night-Cycle of 1893?  Through 'combination and legislation' -- that is, through conspiracy and through their ownership of the government.  "The courts must be called to our aid, debts MUST BE collected, bonds and mmortgages foreclosed as rapidly as possible.'

The Banker's Manifestor states: "When, throught he process of the law, people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the bontrol of the leading financiers.  People without homes will not quarrel with their leaders.'

If there is any doubt who the enemy is, this manifesto puts that cout to rest.  We should not forget that the Federal Reserve is a private bank owned by private individuals, Americans and foreigners, who have no legislated loyalty to the American government, the American citizen, or the American economy.  Loyalty of the Federal Reserve is to bankers, to themselves.  When Greenspan and Bernanke assure us that their policies are to preserve the American economic system, rest assured that their true meaning is that they are determined to preserve the place of banks on top of the pyramid of American economic and political and social life.

There is no doubt where Hank Paulson's loyalty was.  His loyalty was to his friends in the banking system, to banks in America and overseas.  He had no loyalty to American workers, to American taxpayers or to American political institutions.  His first and only loyalty was to his friends and colleagues in the banking system.

Here is the full text of the Bankers' Manifesto of 1892.

"The Bankers Manifesto of 1892"

"We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance. The Farmers Alliance and Knights of Labor organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.


At the coming Omaha Convention to be held July 4th (1892), our men must attend and direct its movement, or else there will be set on foot such antagonism to our designs as may require force to overcome. This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination and legislation.


The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible.


When through the process of the law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of the government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders.


History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism.


The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party.


By thus dividing voters, we can get them to expand their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete action, we can secure all that has been so generously planned and successfully accomplished."

I found this manifesto at the following website:

Those of you familiar with my writing will recognize my thesis that history moves in regular (18 year) Day-Cycles of warmth, economic expansion, economic bubble inflation and accumulation of wealth, civilization, technological growth, ambitions to empire, followed by Night-Cycles of cold, economic contraction, economic bubble deflation and disintegration, loss of wealth, a return to nature, a rebirth in religious sentiment, a breaking apart of the empire...

Inflation, in this definition, is the expansion of the bubble economy with its requisite inflation of prices of all asset classes.  The image of inflation is a bubble rising high above the earth.  Inflation, as a monetary policy, is effected by the lowering of interest rates and the keeping of interest rates at a low level.

Deflation, in this definition, is the contraction of the bubble economy with its requisite deflation of prices of all asset classes.  The image of deflation is the remnants of a collapsed bubble crashing back to earth like the Hindenburg Dirigible.  Deflation is effected even when interest rates remain low.

Note above that the bankers of the 1982 understood that they were entering another depression and that they had goals set for their own survival during the populist sentiment that rises during each depression -- just as the bankers realized they were entering a depression in 2001, and responded with a planned strategy to saddle the world with more debt, and enrich the bankers with more burst of profit before the contraction set in.  "
History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism. "

Those who believe that America has had only one depression, beginning in 1929, and that this depression was actually a recession that became a depression because of Washington mismanagement (too much public spending and too much regulation) need to re-think this assumption.  America has a form of depression (a Night Cycle) every 36 years.  Bankers understand this.  That is why bankers created the housing bubble as a conscious strategy to suck in as much public and private wealth as they could before deflation set in.  They also know that public hostility to banking is ALWAYS a part of Night-Cycle sequences.  To combat this, they have essentially taken over the American government through bribes, lucrative jobs after government service, and bloated campaign contributions to both parties.  Bankers don't really care which party is in power, as long as they control both parties through lavish generosity and purchased loyalty in Washington.

Night Cycles of American Economic and Social Disintegration. 
1785 - 1803
1821 - 1839
1857 - 1875
1893 - 1911
1929 - 1947
1965 - 1983
2001 - 2019

Was there a Great Depression in 1893?  There was.  In fact, there were a series of depressions and panics from 1893 - 1911. 

Those who think that the 2001 depression (the Dot com Bubble burst) and the Depression of 2007 are not connected, and who think that signs of economic growth today are meaningful should recall that we had a depression in 1929-1933, we had a depression in 1936-37, we had a deflation crisis in 1937-1940, a world war from 1941-45, and another devastating depression from 1946-47, all Night Cycle of deflation incidents connected by an 'underground' structure.

The same type of connected depressions, deflations and panics also occurred through the entire Night Cycle of 1893-1911.

2019 - 2037 will be the next cohesive, coherent economic expansion in America.  All the talk of economic growth today, of housing bottoms, of 'light at the end of the tunnel', is mere cheer-leading and economic/political gamesmanship and 'positive thinking'.  Deflation is the Night and the Night will not be bargained away with promises of better behavior next time, of more attention to (better) regulation, of limits on bankers' bonuses.  Nothing is going to keep us from entering the global Dragon's Mouth, the collapse of our global economic structure.

As I write in my book 'Turn Out The Lights":

We have discovered that economic deflation and the Noon-Hour in our conceptual structure have been companions through much of the 1800’s in America.  This was clearly the case from 1857 through the Civil War until about 1875.  What about the next Night Cycle, 1893 – 1911?


Noon 1857 – Business Expansion ends: Chaos begins.

Dusk 1866 – Business Contraction: Chaos accelerates.

Midnight 1875 – Business Expansion begins.  Chaos begins to end.

Dawn 1884 – Business Expansion accelerates.

Noon 1893 - Business Expansion ends: Chaos begins.

Dusk 1902 – Business Contraction: Chaos accelerates.

Midnight 1911 – Business Expansion begins.  Chaos begins to end.


Right on time, 1893 marks the beginning of a period of world recessions.  Not only was the depression on time, but social chaos also replaced the relatively prosperous period of the preceding Day-Cycle, 1875 – 1893.  David O. Whitten writes in his article ‘The Depression of 1893’ about both the depression and the impressive growth of the preceding Day-Cycle (1875 – 1893):


The Depression of 1893 was one of the worst in American history with the unemployment rate exceeding ten percent for half a decade. This article describes economic developments in the decades leading up to the depression; the performance of the economy during the 1890s; domestic and international causes of the depression; and political and social responses to the depression.

The Depression of 1893 can be seen as a watershed event in American history. It was accompanied by violent strikes, the climax of the Populist and free silver political crusades, the creation of a new political balance, the continuing transformation of the country's economy, major changes in national policy, and far-reaching social and intellectual developments. Business contraction shaped the decade that ushered out the nineteenth century.


Unemployment Estimates

One way to measure the severity of the depression is to examine the unemployment rate. Table 1 provides estimates of unemployment, which are derived from data on output -- annual unemployment was not directly measured until 1929, so there is no consensus on the precise magnitude of the unemployment rate of the 1890s. Despite the differences in the two series, however, it is obvious that the Depression of 1893 was an important event. The unemployment rate exceeded ten percent for five or six consecutive years. The only other time this occurred in the history of the US economy was during the Great Depression of the 1930s.


Timing and Depth of the Depression

The National Bureau of Economic Research estimates that the economic contraction began in January 1893 and continued until June 1894. The economy then grew until December 1895, but it was then hit by a second recession that lasted until June 1897. Estimates of annual real gross national product (which adjust for this period's deflation) are fairly crude, but they generally suggest that real GNP fell about 4% from 1892 to 1893 and another 6% from 1893 to 1894. By 1895 the economy had grown past its earlier peak, but GDP fell about 2.5% from 1895 to 1896. During this period population grew at about 2% per year, so real GNP per person didn't surpass its 1892 level until 1899. Immigration, which had averaged over 500,000 people per year in the 1880s and which would surpass one million people per year in the first decade of the 1900s, averaged only 270,000 from 1894 to 1898.


.  Estimates of Unemployment during the 1890s

Lebergott          Romer

1890             4.0%               4.0%

1891             5.4                   4.8

1892             3.0                   3.7

1893            11.7                  8.1

1894            18.4                12.3

1895            13.7                11.1

1896            14.5                12.0

1897            14.5                12.4

1898            12.4                11.6

1899              6.5                  8.7

1900             5.0                  5.0

Source: Romer, 1984

The depression struck an economy that was more like the economy of 1993 than that of 1793. By 1890, the US economy generated one of the highest levels of output per person in the world -- below that in Britain, but higher than the rest of Europe. Agriculture no longer dominated the economy, producing only about 19 percent of GNP, well below the 30 percent produced in manufacturing and mining. Agriculture's share of the labor force, which had been about 74% in 1800, and 60% in 1860, had fallen to roughly 40% in 1890. As Table 2 shows, only the South remained a predominantly agricultural region. Throughout the country few families were self-sufficient, most relied on selling their output or labor in the market -- unlike those living in the country one hundred years earlier.


Table 2
.  Agriculture's Share of the Labor Force by Region, 1890


Northeast 15%

Middle Atlantic 17%

Midwest 43%

South Atlantic 63%

South Central 67%

West 29%


Economic Trends Preceding the 1890s

Between 1870 and 1890 the number of farms in the United States rose by nearly 80 percent, to 4.5 million, and increased by another 25 percent by the end of the century. Farm property value grew by 75 percent, to $16.5 billion, and by 1900 had increased by another 25 percent. The advancing checkerboard of tilled fields in the nation's heartland represented a vast indebtedness. Nationwide about 29% of farmers were encumbered by mortgages. One contemporary observer estimated 2.3 million farm mortgages nationwide in 1890 worth over $2.2 billion. But farmers in the plains were much more likely to be in debt. Kansas croplands were mortgaged to 45 percent of their true value, those in South Dakota to 46 percent, in Minnesota to 44, in Montana 41, and in Colorado 34 percent. Debt covered a comparable proportion of all farmlands in those states. Under favorable conditions the millions of dollars of annual charges on farm mortgages could be borne, but a declining economy brought foreclosures and tax sales.

Railroads opened new areas to agriculture, linking these to rapidly changing national and international markets. Mechanization, the development of improved crops, and the introduction of new techniques increased productivity and fueled a rapid expansion of farming operations. The output of staples skyrocketed. Yields of wheat, corn, and cotton doubled between 1870 and 1890 though the nation's population rose by only two-thirds. Grain and fiber flooded the domestic market. Moreover, competition in world markets was fierce: Egypt and India emerged as rival sources of cotton; other areas poured out a growing stream of cereals. Farmers in the United States read the disappointing results in falling prices. Over 1870-73, corn and wheat averaged $0.463 and $1.174 per bushel and cotton $0.152 per pound; twenty years later they brought but $0.412 and $0.707 a bushel and $0.078 a pound. In 1889 corn fell to ten cents in Kansas, about half the estimated cost of production. Some farmers in need of cash to meet debts tried to increase income by increasing output of crops whose overproduction had already demoralized prices and cut farm receipts.

Railroad construction was an important spur to economic growth. Expansion peaked between 1879 and 1883, when eight thousand miles a year, on average, were built including the Southern Pacific, Northern Pacific and Santa Fe. An even higher peak was reached in the late 1880s, and the roads provided important markets for lumber, coal, iron, steel, and rolling stock.

The post-Civil War generation saw an enormous growth of manufacturing. Industrial output rose by some 296 percent, reaching in 1890 a value of almost $9.4 billion. In that year the nation's 350,000 industrial firms employed nearly 4,750,000 workers. Iron and steel paced the progress of manufacturing. Farm and forest continued to provide raw materials for such established enterprises as cotton textiles, food, and lumber production. Heralding the machine age, however, was the growing importance of extractives -- raw materials for a lengthening list of consumer goods and for producing and fueling locomotives, railroad cars, industrial machinery and equipment, farm implements, and electrical equipment for commerce and industry. The swift expansion and diversification of manufacturing allowed a growing independence from European imports and was reflected in the prominence of new goods among US exports. Already the value of American manufactures was more than half the value of European manufactures and twice that of Britain.


Whitten claims there were two depressions, 1893-1894 and 1895-1897.  Of course, these two depressions were probably the same depression, with separate surface appearances, but with a common root system.

There was also a depression in 1901.  And there was also a bank panic caused recession/depression in 1907 – the so-called J.P. Morgan bank panic, caused by America’s leading banking family for the benefit of America’s leading banking family.  We are seeing, as we have seen in the other Night-Cycle periods, a sustained
de-construction of matter lasting for very close to 18 years.  There are bull rallies in the stock markets during periods of economic deflation.  There are companies that thrive.  There are attempts made by the masters of money to turn the tide of the economy in the direction of prosperity.  These rallies are bear traps.  The bears control the markets, with their negative energy: a combination of dread, sense of righteous self-martyrdom, appreciation of the tragic (the tragic view belongs to the Romantic) – and a real terror of sudden poverty which leads to tight-fisted saving as an ethic, which new Puritanism sinks the world further into inactivity, as the currency dries up in bank accounts, no longer circulating, which cripples the body politic.  Banks refuse to lend, since fewer and fewer people become credit worthy.  Fewer and fewer people want to borrow, as borrowing is viewed by the suddenly self-sufficient natures as foolish, at best,  or part of a criminal intrigue they wish to avoid.  Bankers are viewed as satanic accomplices.  The capitalist is equated with the slave-owner and the heartless landlord.

Depressions are a moral reaction in the heart of the culture to an aggregate business corruption, greed, and spiraling inflation that makes life become or seem dreadful.  In the same way that light is born as a seed at Midnight
(Winter), as represented by the Christ-child in the Christian system, so darkness is born as a seed at Noon (Summer)…and this Darkness came be represented simply by the word ‘No’ in terms of the question of ‘Is Life good?’.  The Sun-Hero, at birth, assents to this question: ‘Yes, life is good.’  But the light is different at Noon; and the world seems jaded, tired, corrupt, used up – entropy sets in.

The world 'fills up' during the Day-Cycles; and the world 'empties-out' during the Night-Cycles.


The 1901-1903 depression was brought on by more greed and corruption on Wall Street.  The smoking gun was the struggles between E.H. Harriman, Jacob Schiff and J.P. Morgan (allied with James J. Hill) in their bid for financial control of Northern Pacific Railroad.  The cornering of Northern Pacific stocks was organized by James Stillman and William Rockefeller’s First National City Bank – financed with Standard Oil money.  A compromise between these financial titans resulted in the formation of the Northern Securities Company – but the damage to Wall Street was already done.  On May 17, 1901, the New York Stock Exchange crashed with a terrible suddenness.  Harriman, president of Union Pacific Railroad Company, had been purchasing Northern Pacific shares in an attempt to monopolize the Chicago railroad market. 


Miriam Medina writes about the panic/depression of 1901-1903: 

The break started shortly before 1 o'clock, and when the market closed, some two hours later, quotations had slumped in the interval anywhere from 1 to 20 points. Many fortunes that had been made in the last six months by men who never before had a dollar, and who, encouraged by their great successes in the phenomenal market since Mr. McKinley's election had "pyramided" their accounts, were in some cases wholly wiped out as a result of the crash, and others so considerably reduced that little remains. Even some of the so-called "big" men have been badly hit, and there was talk also of serious trouble on the part of some brokerage houses.

So threatening, indeed, is the situation that conferences of important bankers and banking interests were held late last evening to discuss the matter and to consider ways and means to prevent a far-reaching financial catastrophe.

Hence is was that after the market's close last night there was gloom in many parts of the financial district, where for some months past only smiling faces have been seen. The youths and others, who, elated by their new-found fortunes, have been slapping one another on the back and half playfully, half in earnest, referred to themselves as "financiers," were chewing the "bitter cud" of despair and disaster, and wondering how it all happened. These are the men of whom before election Wall Street had never heard. Of many of them Wall Street will probably never again hear.


When the Break Came

The break itself came as out of a clear sky. All speculative eyes on the Street had in the early dealings been centered upon a further phenomenal rise in Northern Pacific common stock, which, the "corner" in it still operating, had jumped up by leaps and bounds to 180, as compared with Tuesday's close of 143 1/2- a gain of 70 full points in three days had then reacted to 145, only again to advance from that figure a dozen points or more, with $200 bid for it after the close of the market, and $70 a share paid for the use of it over night by the shorts. It was all so spectacular, all so interesting, all so phenomenal, that concerning the rest of the market the Street, generally, gave little serious heed and certainly saw little prospect or probability of the collapse that came so soon afterward.

Here and there some of the more conservative in the Street shook their heads ominously and declared that any such "corner" was always disastrous to the general market. But the rank and file paid no attention to these warnings and went blithely ahead buying stocks and sending them higher.

Of a sudden, Burlington stock, which had been more or less heavy all the morning, began to show unmistakable signs of weakness, while almost coincidently the Erie issues were depressed. The rank and file watched and wondered, and as they watched, the prices of the issues went lower still. Then in the general list, prices also began to fall. First it was St. Paul, then it was Missouri Pacific, and then it was Union Pacific. Finally the whole market was declining. Some holders of stocks not knowing the why and the wherefore of it and thinking it only one of the many ordinary reactions that have from time to time appeared in the market since election, "sat" on their stocks and looked for a recovery. Other holders, more timid if might be more conservative, of even less able to hold proceeded, however, to part with their holdings. Soon the contagion spread, the professional bears on the floor of the Exchange the while aiding in this by hammering the whole list.

Quotations thereupon began to break, not quarter or half points between sales, but one and two points. That settled it. The entire Street proceeded to sell. Where before the cry had been only. "Buy, buy, buy," it became, "Sell, sell, sell." Stocks were literally tumbled out sold without rhyme or without reason-anything "to get out."


The Affected Stocks

And so it was that every prominent stock on the list broke badly with the one conspicuous exception of Northern Pacific, which held its head so well above the storm that at the close of the day it showed a net advance of 16 1/2 points. In contrast, St. Paul sold down from the high figure 20 points, and closed with a net loss of 15 1/2. Union Pacific from its high figure, dropped 17 1/2 points and closed for a net loss of 9 3/4 points. Missouri Pacific broke 14 1/2 points, closing with a net decline of 8 1/2. Amalgamated Copper broke over 12 points; Sugar, 7; Atchison, 8; United States Steel, 7; and the preferred 12; Pullman Palace Car on one sale of 100 shares, 11 1/4, and many other conspicuous stocks from 3 to 5 points.

The break, indeed, was the biggest single-day general break the Street has seen since 1893-greater even, so far as the general list is concerned, than the decline following the death of Roswell P. Flower. When it was in progress the scene on the floor was one of the wildest excitement. The mad struggle to buy and to sell Northern Pacific stock at the opening had been startling enough; that in the late afternoon was unparalleled in recent years. Brokers acted as insane men. Men, rational and responsible, fairly fought with one another in the execution of their orders. Big men lightly threw little men aside, and the little men, fairly crying with indignation, jumped anew into the fray-using hands, arms, elbows, feet-anything to gain their point.

And, all the while, there was such yelling and shouting as had not been heard even on the recent "wildest" days in the street. Stocks were going down points at a time, and a second's delay might mean thousands of dollars.

To the spectators in the distant gallery of the Produce Exchange it was something incomprehensible, almost, demoniac- this struggle, this Babel of voices, these wild-eyed excited brokers, selling and buying, buying and selling. But to the brokers themselves it was serious business indeed. Fortunes were in their hands in trust for their customers who watched, eager-eyed, in the brokerage offices, the pulsating of the tickers as they told what was being done on the floor-as they ticked out how fortunes, easily made, being more easily lost.


Northern Pacific Corner.  

As for the market itself, the rise in Northern Pacific being the opening feature, comes logically first. And such a rise it was, proving beyond all question that the stock was actually cornered. On the day previous it had closed at 143 1/2, this marking a net gain in two days of no fewer than 33 1/2 points, the stock at the same time commanding a premium of 7 per cent over night. Yesterday it opened up at 155, on transactions involving 2,000 shares a gain of 12 1/2 points, and then fairly jumped up to 180. From there it declined to 145, only later to go to 167, and to close at 160, a net gain of 16 1/2 points on dealings in 50,000 shares.

Who these Northern Pacific losers are is only a matter of conjecture, but rumor is busy with many names. John W. Gates is credited with being short no less than 60,000 shares of the stock 50 points below the close of last night, while a number of Western " plungers" are also declared to be rather heavily involved. Mr. Gates smiles when asked about these stories, and declares that he is not short of the stock, and in fact, was never short a share of stock in his life, except some Sugar, which he was glad to cover without profit. In the meantime, however, he has postponed his European trip.

Isidor Wormser, also credited with being short of the stock, was seen by a New York Times reporter yesterday. "They say you are heavily short, Mr. Wormser," ventured the reporter. "Oh, do they? You don't mean to say so!" was the answer. And then, as he turned to go away, "I have nothing to say."

As for the stories of fortunes made, they are many. According to one report, ex-President Cleveland through a "tip" from Mr. Lamont, had rounded out a cool half million of dollars, while other of Mr. Lamont's friends had also done well. If this is so, it does not agree with the report that the Hill people had sold their stock, for Mr. Lamont is very close to Mr. Hill. However, all this is more or less gossip and cannot be verified. One certain gainer is known. He is John Manning, a well-known broker on the floor, who sold the 2,000 shares of stock yesterday at 180-sold it short, at that-and in less than a minute had bought it back at 160, a clear gain of $20,000.

The amount of money lost by the short side in the stock is variously estimated at from $40,000,000 to $75,000,000. As for actual figures, these will not be obtainable for some time, if ever. Mr. Keene is credited with having enriched himself to the extent of $3,000,000 by the corner. To what extent the syndicate have profited nobody ventures an opinion. Some idea of the added worth of the shares may be gained when it is pointed out that they have enhanced just $50 per share since last Saturday. At a conservative estimate 600,000 shares have been traded in the first three days of this week, so that with an increase of $50 per share the long side of the market finished business yesterday about $30,000,000 richer than on Saturday.


 Great Fight For Control

 As for the talk telling of a great fight for control of the stock between the Morgan-Hill interests on the one side and the Harriman-Kuhn-Loeb-Standard Oil people on the other, nothing definite can be learned. In some parts of the Street the talk of a fight and of a great clash between these powerful interests is credited. In other parts it is ridiculed. One story has it that over 100,000 shares more than the actual capital stock of the company have been bought by the opposing syndicates, and that it is as yet uncertain where control lies.

In this connection a Wall Street news bulletin yesterday published the following as "on authority." " The Northern Pacific situation is this: The Morgan Hill interest some time ago sold a considerable amount of stock. The Harriman syndicate gradually acquired a very large amount of stock, nearly, if not quite, control. Notice was given that this stock had been bought not for war, but to promote harmony. The Morgan-Hill interests did not accept the proposition, but immediately began to buy and have bought in the last few days a very large amount of stock.

"The two interests, Hill-Morgan on one side and Harriman syndicate on the other, have bought more than 100,000 shares more Northern Pacific than there is in existence. It is impossible to tell with certainty which interest has control until it is known which party gets most certificates, and which gets most of settlement of contracts. Obviously one has voting power and one has not.

"Pending developments, stock is being loaned to legitimate borrowers and assurances are given that the books will not be closed immediately, giving time for arbitrage dealers to adjust their balances. Large arbitrage settlements have been made in London, which will materially reduce the borrowing demand from that source."

This, however, is altogether in conflict with the statement of Robert Bacon, a partner of J. Pierpont Morgan, who to a reporter of The New York Times said yesterday: "The Hill-Morgan interests in Northern Pacific are intact." Mr. Hill himself, seen coming out of J. P. Morgan & Co's office at half past 1 o'clock yesterday, and asked about Northern Pacific, replied: " I have not bought a share of Northern Pacific in six months.

Asked as to the reported differences between the Harriman syndicate and the Morgan-Hill interests, he said: "That has been magnified a thousand times." On the same subject a partner in the firm of Kuhn, Loeb & Co. said: "It would not be wise to make any statement today because not tending to promote the securing of that harmony which we all desire." Asked whether this meant that there actually was a fight on the gentleman in question merely laughed. James R. Keene, who is credited with having engineered the "corner," is the Street declares, "sawing wood and saying nothing."


 Appeal To Mr. Morgan

 However, whatever the situation, several conferences were held yesterday and late last night, attended by Mr. Hill, Mr. Harriman, James Stillman, Vice President Lamont of Northern Pacific, and several other gentlemen. What transpired was not disclosed. It is said that Mr. Morgan, now abroad, has been appealed to settle all matters in dispute, and that a reply from him in answer to a cablegram sent last night is expected at any time.

As to what will happen to the stock today that is only a matter for conjecture. Brokers sum the situation up thus: "Either the shorts will fail on it, or they will be given the stock by those who have cornered it."

Coming now to the general market, which broke so badly in the face of this great rise in Northern Pacific, it may be said that in large measure this very "corner" was responsible for the break. It showed, first, that in some respects, at least, certain of the advances in prices had been brought about artificially and without regard to real values. But, above and beyond this, particularly when the stories of a conflict between leading financial interests became so persistent, it led to many reports that certain, far-reaching consolidation schemes planned and planning would never be carried through. Specifically it may be said that it was declared with some positiveness that the Burlington deal was among those that would never be completed, principally because of the Northern Pacific development.

From Burlington the story of "clashes" spread to other railways-to St. Paul, to Missouri Pacific and so on all through the list. Then, again, it was declared that some of the larger financiers were "selling out" on one another. And so the disturbing rumors went on, while the uneasiness was added to by a sharp rise in call money rates, at one time to 20 per cent. Where it closed, and by the announcement of an engagement of gold for export. London also was reported to have received the "cue" to sell, and this in a measure was borne out by the much lower prices sent over by London at the opening here, all the international stocks being down anywhere from one to ten points, the big drop being, strangely enough, in Northern Pacific.

But, as already pointed out, in the early trading Wall Street operators gave little heed to any of these disturbing reports or to the lower figures. Instead they went gaily in and bid the general market up from one to five points, Union Pacific leading always excepting Northern Pacific. Burlington, however, lagged, but not Erie, the latter being understood to be in the Burlington deal. Soon Burlington developed actual weakness: but still the market held. Then Erie began to fall off, and then the rout of the bulls began. They ran slowly at first, but as the decline grew greater they ran faster, and thus accelerated their own downfall. In the end they were in full flight and throwing over their stocks, though the nature of the purchases suggested that some of the stronger people were buying at the sacrifice figures.


 Fluctuations In Prices

Prices broke and rose frequently a point and two points at a time. An extreme case was where one sale of Brooklyn Rapid Transit was made at 73 and the next at 77-a clear gain of 4 full points. So great, indeed, was the rush to sell that in the last hour the total transactions for a single hour probably established a new record. It is a fact that the tape did not "tick off" the last transaction until 3:16 o'clock, being a full sixteen minutes behind. Not only that, but then came the Government bond sales, which usually are printed at 2:15 o'clock, but which yesterday were absolutely ignored until after the market's close. The last transaction in them was not recorded until 3:25 o'clock.


What Brokers Say

What some representative Stock Exchange brokers think of the market will appear from these expressions of opinion. S. V. White- What do I think? Why, what is there to think? The Northern Pacific "corner" has killed the market, has sickened it unto death.

Bayard Dominick of Dominick & Dominick-. This market was the result of over-speculation. Men, women, and children have had more on their hands than they could take care of, and the sequence was natural. It was not unexpected by brokers with any experience in Wall Street. The market has had a splendid decline, and the atmosphere has been greatly cleared. A revival will come after the belated liquidation is over.

H. H. Hollister of Hollister & Babcock- "The Street feels that there is a battle of giants for the Northern Pacific, and that if either side got it the Burlington deal would be jeopardized. That is the reason for the nervousness. At the same time today there was a kind of bargain counter here for people who had the money to avail themselves of a good opportunity. …


At that time all precedents of every kind in Stock Exchange history were broken. Where a few years before, transactions of 200,000 shares a day had been regarded as constituting a large market and half a million shares as a day of extreme activity, scarcely a day now elapsed in which the volume of business did not run from one to two million shares, culminating on April 30, 1901, in transactions of 3,200,000 shares. Prices in the meantime were advancing at a rate which brought the entire financial public into the field as a speculator. 

The real force underlying the movement was the purchase of stock companies by other companies which pledged their credit to raise the funds requisite to provide for the purchase. This movement culminated in the famous Northern Pacific corner of May 9, 1901, when the efforts of two rival groups of capitalists to get hold of that railroad property forced its shares to the price of $1000, the stock having never touched $100 until three weeks before. Apprehension that operators who were unable to deliver stock which they had pledged would be dealt with summarily, caused one of the most violent collapses of values in the Stock Exchange's History.

Recovery was prompt, and both 1901 and 1902 were characterized by numerous sensational movements for the advance, the second of those years scoring as a rule the higher values. In general, however, it was recognized that high-water mark in Stock Exchange activity had been reached. In the autumn of 1901 and in the fall of 1902 and the early part of 1903 severe reaction in values supervened.

The noteworthy characteristic of the period was the employment of enormously wealthy syndicates to sustain prices for the newly issued shares on the Stock Exchange until the public could be induced to buy. Such syndicates were remunerated at first by large allotments of stock and later by heavy cash payments, the syndicate formed in March, 1901, to "underwrite" the billion-dollar stock issued by the United States Steel Corporation to take up the shares of other steel and iron combinations, pledging itself, in case of necessity, to advance $200,000,000 capital for the purpose.

The stock issue worked out so successfully, however, that only a small fraction of the guarantee was called for, and two years later the original capital subscribed was returned to subscribers, with an additional cash allotment sufficient to raise profits to 200 per cent. A second syndicate, formed in 1902 to underwrite a $50,000,000 bond issue by the same corporation and the conversion of $200,000,000 of its stocks into bonds, fared less fortunately, being obliged to perform the whole of its guarantee at a time of falling prices. In the spring of 1903 it was generally recognized that the extensive employment of the syndicate underwriting plan had "tied up" immense amounts of capital which were usually available in the general market. The investing public having bought very sparingly and the syndicate banking interests being unable to support prices, a very severe and general decline on the Stock Exchange ensued.


This long, colorful description of the Crash of 1901 and the subsequent depression, serves to reiterate the lessons one must learn about the nature of popped economic bubbles.  In many cases, the destruction of the economy is triggered by a few men who have been best served by the lax economic regulations limiting their crimes, allowing them to line their own pockets at the public's expense.  But how much money is enough?  Is a billion enough?  Is ten billion enough? 

J.P.Morgan was one of the richest men in the world.  But he apparently wasn’t rich enough.  The mode of thinking/reacting of the type-A personalities which characterizes most successful entrepreneurs/businessmen and businesswomen is that the world is a jungle, that life is a war for survival, that the weak die and the strong survive – economic darwinism.  This is a form of schizophrenia, or course – because this type believes only in the half-truth they are perceiving – that the world has no heart and no soul and no decency, and that only the fool and loser believes it does.  This form of schizophrenia may make for explosive business successes; but it does not make for a sane society.  These schizophrenics are not good role models for our children – look at their own lives, which are often scarred with crimes, divorces, injured children, twisted values, loneliness, and self-destructive behavior.

Relatively, a very few VERY rich men pulled the Global Economy down to its knees in a matter of months in these years 1893-2011.  Why?  Because they could not control themselves.  The spirit of Greed and the quest for Power was such that they could not help themselves.  Like Ahab, they had to kill the White Whale, they had to chase the White Whale; life on land was not enough for them, they had to make that final deal, the one that turned billions into trillions.  And the average American citizen ends up paying for their failure, for their insanity, for at least a generation – until the Spirit of Greed takes over the world again and races toward thecliff, impelled forward by the monomanical belief that money is the only thing worth chasing in this world.

The same story happens over and over again.

If I have been able to discover 18-year half cycles (36 year cycles) that define the day-night cycles of the economy, does the reader think that professional, highly educated economists are not aware of this?  I find it almost unbelievable that Allen Greenspan and Ben Bernanke are not aware of these cycles.  My view is that Mister Greenspan probably did know that economic cycles in America did run in 36-year cycles, top to top, and that 2001 was the end of the American expansion, in terms of Nature’s (or God’s) plan – but that Mister Greenspan, like Ahab, believed he could cheat the devil, trick God, overpower Nature with his advanced intellect.  He would break the cycle.  He had been studying the problem his whole life; and he had a solution to this encroaching power of the negative.  He would flood the world with money.  He would make everything float if he flooded the world with cheap money.  If the Federal Reserve Board had just flooded the world with cheap money in 1929, darkness would have been banished from the world.  We now knew how to strip the world (and history) of all its negativity.  And he was just the man to do it.

Call it arrogance, hubris, pride, genuine faith, optimism, greed, criminality…if Mister Greenspan had been acting in accord with Nature, he would have seen the Dot Com bubble bursting in 2001 as the first step toward a necessary
deflationary season – and he would have begun to raise rates and protect the dollar.  In fact, he should have anticipated the approaching Night-Cycle and begun raising rates slowly in 1999.  Yes, this would have caused recession.  People would have lost jobs.  Companies would have failed. 

To have done this would have required an amazing political will – one that usually is missing from democratic systems, where ‘being liked’ means being elected, where being a kind of Santa Claus, spreading gifts and good news all around, is the road to political power.

Because Greenspan (and the Federal Reserve Board) fought Nature will all its might – and is still doing so, claiming that making it easy for people and companies to borrow will save the nation’s economy – still not understanding that we are heading over a cliff because we abandoned all borrowing discipline as a nation (high to low, wall street to main street) for the better part of two decades.  Borrowing is what created this mess.  Being a debtor nation, a debtor society, slaves of the banks, is what led to our demise.  Living on borrowed time.  Borrowing more – whether the U.S. government or the U.S. consumer – is the absolutely wrong
approach.  We need deflation; we need a painful readjustment; we need a new set of values that looks at 'easy money' with suspicion, that looks at corrupt business practices as immoral and self-destructive and dangerous to a democracy.