Augustus Heinze dominated the copper fields of Montana, but his family’s scheming on Wall Street set off the Panic of 1907
Frederick Augustus Heinze was young, brash, charismatic and rich. He’d made millions off the copper mines of Butte, Montana, by the time he was 30, beating back every attempt by competitors to run him out of business. After turning down Standard Oil’s $15 million offer for his copper holdings, Heinze arrived in New York in 1907 with $25 million in cash, determined to join the likes of J. P. Morgan and John D. Rockefeller as a major player in the world of finance. By the end of the year, however, the Copper King would be ruined, and his scheme to corner the stock of the United Copper Co. would lead to one of the worst financial crises in American history—the Panic of 1907.
He was born in Brooklyn, New York, in 1869. His father, Otto Heinze, was a wealthy German immigrant, and young Augustus was educated in Germany before he returned to the United States to study at Columbia University’s School of Mines. An engineer by training, Heinze arrived in Montana after his father died, and with a $50,000 inheritance he developed a smelting process that enabled him to produce copper from very low-grade ore in native rock more than 1,500 feet below ground. He leased mines and worked for other mining companies until he was able, in 1895, to purchase the Rarus Mine in Butte, which proved to be one of Montana’s richest copper properties.
In a rapid ascent, Heinze established the Montana Ore Purchasing Co. and became one of the three “Copper Kings” of Butte, along with Gilded Age icons William Andrews Clark and Marcus Daly. Whip smart and devious, Heinze took advantage of the so-called apex law, a provision that allowed owners of a surface outcrop to mine it wherever it led, even if it went beneath land owned by someone else. He hired dozens of lawyers to tie up his opponents—including William Rockefeller, Standard Oil and Daly’s Anaconda Copper Mining Co.—in court, charging them with conspiracy. “Heinze Wins Again” was the headline in the New York Tribune in May of 1900, and his string of victories against the most powerful companies in America made him feel invincible.
“He has youth and magnetism upon his side,” one Montana mining engineer said at the time, “and is quite the hero of the state today. He has had laws passed that benefit every smelter and independent mine owner.… The more he is threatened, the more he laughs, and the brighter his songs and his raillery, as he entertains at the club the lawyers or the experts upon either side equally well.”
The miners in Montana adored him because he cut their working day from 10 hours to 8, and he navigated the political world with the same ease that he pulled copper from the earth. In 1902, with authorized capital of $80 million, he incorporated the United Copper Co. and continued to chip away at the position of Anaconda’s corporate successor, the Amalgamated Copper Mining Co., atop the copper market. Stock in his company was literally traded outside the New York Stock Exchange in “on the curb” trading that would later become the American Stock Exchange.
Heinze was a hard-drinking ladies man who liked to gamble, and he spent lavishly in Butte’s saloons. He was friendly with legislators and judges. (A “pretty girl” alleged to have connections to the Copper King once offered a judge a bribe of $100,000. Heinze was implicated in the attempt but never charged.) Heinze bought a suite in the Waldorf-Astoria Hotel in New York City and paid for an entourage of friends to travel with him on yearly trips. “Broadway howls when the copper crowd whirl down in their automobiles,” one newspaper reported in 1906. “Everyone in the party enjoys himself carte blanche at Mr. Heinze’s expense on these tours, and the commotion the Western visitors created last May during the annual Heinze tour furnished the newspaper with columns of good stories.”
Yet despite his charm and gentlemanly demeanor, Heinze carried a reputation as a man not to be trifled with. When some thugs from Utah arrived in Butte and tried to assault Heinze and a friend on their way home from a club, the Copper King and his friend fought their attackers off, “pounding their heads in the gutter, and a few minutes later the thugs were handed over to the police,” one miner told the Boston Globe.
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