The Revenge Of The Trust

Finally, in 1906, Heinze agreed to drop his lawsuits, and the Amalgamated paid him $10.5 million. He had beaten the big boys.

“No, you are mistaken, John,” responded Clancy. “I had scrambled eggs for breakfast yesterday morning.”

Clancy did what Heinze had had him elected to do. One Amalgamated lawyer could recall only two occasions when Clancy ruled in his company’s favor. The judge regularly allowed Heinze and his employees to inspect the Amalgamated mines to see if they were encroaching on his rights but denied the Amalgamated the same privilege in Heinze’s mines.

Heinze had noted a small triangle of land on Butte Hill, only seventy-five feet long and ten feet wide at the base, that remained unclaimed, probably because of early surveying errors. Heinze bought it, using a company he impudently called the Copper Trust, and promptly claimed that it contained the apexes of the great veins of ore in the adjoining Anaconda, St. Lawrence, and Neversweat mines, belonging to the Amalgamated. Judge Clancy agreed.

Soon a blizzard of lawsuits, injunctions, appeals, and reappeals enveloped Heinze and the Amalgamated, which set up a special set of books just to keep track of it all while Heinze had thirty-seven lawyers on his staff. Intimately familiar with the maze of tunnels, Heinze could often ignore whatever injunctions were in force and reach a disputed vein by cutting in from another mine. The Amalgamated, no more scrupulous than Heinze, did the same, and underground warfare roared beneath Butte Hill. Shafts were suddenly closed by dynamite. Miners would break into a disputed tunnel only to be met with steam hoses and lime poured down the hoses that supplied the tunnels with fresh air.

When Judge Clancy ruled in Heinze’s favor in one dispute, the Amalgamated, anticipating the outcome, had prepared well ahead of time. No sooner did the judgment come down than the Amalgamated blew the mine up. If they couldn’t have the ore, at least neither could Heinze.

The battles above and below the ground went on and on until the trust, at last, decided to get tough. Very tough. It closed down all its properties in the state of Montana, and twenty thousand men, perhaps four-fifths of all the wage earners in the state, were thrown out of work.

The Amalgamated, fed up with being denied justice time and again in Judge Clancy’s court, wanted a fair-trial law, allowing a party to demand a change of venue if it suspected prejudice on the part of the judge. Heinze, in a brilliant speech from the Butte courthouse steps, convinced an initially hostile crowd of ten thousand miners that it was all the trust’s fault, not his, but the governor, faced with the very real threat of statewide starvation, called a special session and the legislature passed the law. The Amalgamated properties reopened for business.

With his loss of Judge Clancy’s services and with the Amalgamated now determined both to get rid of Heinze and to use unashamedly its immense power, Heinze could see that the party was over. The Amalgamated had dismissed Heinze’s real assets as nothing more than “a number of lawsuits and some district judges,” but some of those lawsuits were turning out in Heinze’s favor even in courtrooms less openly partisan than Clancy’s.

Finally, in 1906, Heinze and the Amalgamated made a deal. The Amalgamated paid Heinze $10.5 million for his mining properties in Butte, and Heinze dropped fully one hundred lawsuits against the Amalgamated. Heinze had beaten the big boys. Dazzled by his own success, he took his money and set off to conquer Wall Street. In Butte Heinze’s talents had allowed him to battle the Amalgamated and Standard Oil as an equal; but he was no match for them on Wall Street, and they had neither forgotten nor forgiven.

In the rapidly darkening financial climate of 1907, Heinze speculated dangerously in the stock of his own United Copper Company, unaware that the Amalgamated and Standard Oil were manipulating both it and the Wall Street rumor mills. Suddenly the banks he had borrowed from called their loans, and he had to bail out of his speculations. Because United Copper had few real assets after Heinze’s deal with the Amalgamated, the price dropped from sixty to ten almost at once. This caused worry about other Heinze interests, and a run on a bank he owned began and quickly spread to other banks. Wall Street was in turmoil. Heinze’s bank failed and his brokerage firm collapsed.

One year after he had taken the most powerful financial interests in the world for $10.5 million, the Amalgamated and Standard Oil had ruined F. Augustus Heinze and started the great Panic of 1907 in the process.