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The Revenge Of The Trust

May 2024
6min read

Wherever opportunities for great wealth are concentrated there will also be a concentration of men who make up in ambition, genius, and reckless courage what they sometimes lack in scruples. This is as true of Wall Street and Hollywood as it was of the fallen empire of the Incas and the slave coast of Africa. It was true of Butte, Montana, at the turn of the century.

Montana has never been embarrassed about the source of its greatness. Its official nickname is the Treasure State, and its motto is the briskly straightforward Oro y Plata (“Gold and Silver”). But it was the copper in the “richest hill on earth” that really put the state on the map.

In their great days the copper mines of Butte had six hundred miles of tunnels, producing three hundred million pounds of copper a year. The soaring demand for electricity meant the demand for copper was soaring right along with it. It was a seller’s market, and men whose names are still household words in Montana, such as William A. Clark and Marcus Daly, battled the stubborn earth and each other as they moiled for the red metal.

But none of these copper kings, as they are remembered, could match a boy from Brooklyn named F. Augustus Heinze. Heinze combined the rare talents of a born prospector with a gift for politics and a degree of chutzpah rare even among native Brooklynites. He used these attributes to gain—and almost immediately to lose—one of the great American fortunes.

Heinze was born in 1869. His father was a prosperous German immigrant and his mother a Connecticut Yankee. An able student, Heinze graduated from the Columbia School of Mines when he was only twenty and decided to try his luck in Butte.

Heinze cut a fine figure; he was nearly six feet tall, with broad shoulders and brown hair and eyes. In addition, he possessed a powerful personality, a good speaking voice, and the endearing habit of giving his complete attention to whoever was talking. “When he entered a room,” his brother remembered, “you could very near feel it.” In Butte he immediately got a job as an engineer with the Boston and Montana Mining Company, one of the major mineowners, but soon he left the company and began to operate on his own. He leased the Estella Mine from James Murray, who was generally known as the shrewdest operator in Butte, but he wasn’t quite shrewd enough. Heinze had to pay a royalty only on ore that was above a certain grade, and he was careful to mix in enough poor-grade ore with the better to stay just below that level. Murray canceled the lease. Heinze “made both friends and money rapidly,” one early historian of Montana reported, “and spared neither in the promotion and accomplishment of his purposes.”

Heinze departed briefly for Canada, where he obtained a land grant from the Canadian government to build a railroad in British Columbia from Trail to Victoria. The Canadian Pacific, thoroughly alarmed at the prospect, bought him out for a reported $1.2 million.

Back in Butte once more, with major money in his pocket, Heinze built a smelter and soon bought the Minnie Healy, which had been unproductive until Heinze found the richest vein of copper in Butte a month after he bought it. By no means the least of the attractions of the Minnie Healy for Heinze was its proximity to the great mines owned by his former employer, Boston and Montana. Most of its stock was owned by the Amalgamated Copper Company, the so-called copper trust. The boards of these two companies were a who’s who of powerful Eastern financial interests, including J. P. Morgan, Henry H. Rogers, and William Rockefeller of mighty Standard Oil. Not the least intimidated by the copper trust’s size or connections, Heinze intended to use his great knowledge of the geology of Butte Hill, the proximity of his own mines, and a quirk in Montana’s mining law to take it on.

The apex law, one of the more misguided pieces of legislation in American history, had been passed with the best of intentions. The law said that the owner of the apex of a vein of ore, where it reached or came closest to the surface, could follow that vein downward even if it ran under someone else’s property. The purpose was to stimulate prospecting; the result was the “War of the Copper Kings.”

While the apex law was to be a great help to Heinze, he also needed the assistance of a few friendly judges to overcome the enormous economic power of the Amalgamated Copper Company. He set about electing some with the help of William A. Clark, another independent operator. Heinze bought newspapers to carry his party line. He maintained miners’ wages when the Amalgamated cut them. He gave his miners an eight-hour day. He hammered endlessly about the power of the trust and how he was on the side of the workingman.

Heinze’s tactics worked, and his political influence became very strong, especially in Silver Bow County, of which Butte was the county seat. He reportedly had 75 percent of the county vote in his pocket.

His most loyal member of the local judiciary was William F. Clancy, a very large man with a long white beard, bushy eyebrows, a “deep, crashing, bear-like voice,” according to one journalist, and slovenly habits. When a reporter noticed some debris in the judge’s beard, he said, “I see, Judge, that you had scrambled eggs for breakfast this morning.”

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.

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