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The United Copper Company was a short-lived United States
copper mining Copper extraction refers to the methods used to obtain copper from its ores. The conversion of copper consists of a series of physical and electrochemical processes. Methods have evolved and vary with country depending on the ore source, loca ...
business in the early 20th century that played a pivotal role in the
Panic of 1907 The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that took place in the United States over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% fro ...
. United Copper was incorporated in 1902 by
F. Augustus Heinze Frederick "Fritz" Augustus Heinze () (December 5, 1869 – November 4, 1914) was an American businessman, known as one of the three Copper Kings of Butte, Montana, along with William Andrews Clark and Marcus Daly. He was an intelligent, char ...
, a copper magnate who had tussled for years with
Amalgamated Copper The Anaconda Copper Mining Company, known as the Amalgamated Copper Company between 1899 to 1915, was an American mining company headquartered in Butte, Montana. It was one of the largest trusts of the early 20th century and one of the largest mi ...
for lucrative copper mines in
Butte, Montana Butte ( ) is a consolidated city-county and the county seat of Silver Bow County, Montana, United States. In 1977, the city and county governments consolidated to form the sole entity of Butte-Silver Bow. The city covers , and, according to t ...
. The firm was incorporated in
New Jersey New Jersey is a state in the Mid-Atlantic and Northeastern regions of the United States. It is bordered on the north and east by the state of New York; on the east, southeast, and south by the Atlantic Ocean; on the west by the Delawa ...
with an authorized capital of US$80,000,000. United Copper combined Heinze interests in The Montana Ore Purchasing Company, The Nipper Consolidated Copper Company, The Minnie Healy Mining Company, The Corra Rock-Island Mining Company, and The Belmont Mining Company. Retrieved on September 16, 2008. Upon consolidation, United Copper was capable of producing about 42 million pounds (19 thousand metric tons) of copper a year, as compared to 143 million pounds (65 thousand metric tons) per year for
Amalgamated Copper The Anaconda Copper Mining Company, known as the Amalgamated Copper Company between 1899 to 1915, was an American mining company headquartered in Butte, Montana. It was one of the largest trusts of the early 20th century and one of the largest mi ...
. United Copper was literally traded " on the curb" outside the
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City. It is by far the world's largest stock exchange by market capitalization of its liste ...
(NYSE). "On the curb" trading was later formalized as the
American Stock Exchange NYSE American, formerly known as the American Stock Exchange (AMEX), and more recently as NYSE MKT, is an American stock exchange situated in New York City. AMEX was previously a mutual organization, owned by its members. Until 1953, it was know ...
(AMEX). In 1907, after its legal battles with Amalgamated had finally been settled, United Copper again found itself the center of a scandal: in October, F. Augustus Heinze's brother, Otto Heinze, devised a scheme to
corner the market In finance, cornering the market consists of obtaining sufficient control of a particular stock, commodity, or other asset in an attempt to manipulate the market price. One definition of cornering a market is "having the greatest market share in a ...
in United Copper stock. The Heinzes owned a large share of the company and Otto believed that many of these shares had been loaned out to investors hoping to short sell the stock. Short sellers borrow, or make arrangements to borrow, the stock of a company, which they then sell at current prices. If prices later drop, they repurchase shares of the company, now at a cheaper price, to replace the borrowed stock. The difference is the
profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...
of the short seller. Heinze's plan was to move aggressively to purchase the stock of United Copper. The price would soar high. Then, with prices high, and Heinze controlling most of the stock, he would force the short-sellers to repay the borrowed stock, a move called a "short squeeze." The short-sellers would have no option but to settle with Heinze for high prices. But Otto Heinze overestimated how much of the company the family controlled (cf:
family business A family business is a commercial organization in which decision-making is influenced by multiple generations of a family, related by blood or marriage or adoption, who has both the ability to influence the vision of the business and the willingn ...
). When he forced the borrowers to buy back stock they were able to get it from other sources. When the market realized his corner had failed, the stock price of United Copper collapsed. So shocking was the collapse, that depositors rushed to pull the money out of the banks of F. Augustus Heinze. From there panic spread, as people pulled money out of banks associated with Heinze, and then from trust companies associated with those banks (''see''
Panic of 1907 The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that took place in the United States over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% fro ...
). In 1908, F. Augustus Heinze was indicted for his role in the corner. The share price of United Copper, meanwhile, never recovered. In 1913 the company was placed into
receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver—a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights"—especially in c ...
, so its assets could be unwound. Retrieved on September 16, 2008.


References

{{Reflist Non-renewable resource companies established in 1902 Financial crises Defunct companies based in New Jersey Non-renewable resource companies disestablished in 1913 1913 disestablishments in New Jersey 1902 establishments in New Jersey