WHEN the Stock Exchange closed for four days after the terrorist attacks in lower Manhattan on Sept. 11, 2001, no one doubted that the venerable institution would eventually reopen.
That wasn’t the case during the stock market panic of 1907, when lack of capital had the Exchange on the brink of collapse.
One man singlehandedly came to the rescue, and rode into the history books.That man was John Pierpont Morgan. At 70, he was already a well-known name on Wall Street, having founded a bank, which still survives today – in a much changed form – as J.P. Morgan Chase & Co.
But Morgan demonstrated his lasting influence on Wall Street during that panicky week in October, 1907. All that year, speculation in stocks was running rampant and many investors were maxing out on margin buying. But then the market started to slide, and in one day fell 8.2 percent – the most it ever had at that time.
Some spooked investors committed suicide, literally jumping from the windows of the taller buildings on Wall Street. The president of the Knickerbocker Trust Company of New York shot himself.
The New York Stock Exchange, weighed down by all the margin debt that was unlikely to be repaid, begged Morgan to lend it $25 million to keep it afloat. (That $25 million would be worth $462 million in today’s inflation-adjusted dollars.) Morgan immediately pledged the money.
“When the support package was announced, pandemonium broke out on the exchange,” wrote market historian John Steele Gordon in “The Great Game: The Emergence of Wall Street as a World Power.”
“Morgan heard a thunder of noise at his office across the street,” Gordon wrote. “It was the members of the NYSE giving him an ovation.”
But that wasn’t all the saving that Morgan would do that year. The City of New York, in an economic depression because of the slide on Wall Street, was also experiencing financial troubles.
Morgan himself agreed to underwrite a $30 million bond issue, which was enthusiastically bought up by investors, reassured by Morgan’s involvement.
“People began to trust him once they saw that he was not in any way doing this only for his own private gain, but that he was essentially building … an American future,” said Jean Strouse, author of “Morgan: American Financier.”
Since Morgan didn’t focus on building his personal net worth, he died with a mere $80 million to his name, at a time when men like John D. Rockefeller and Andrew Carnegie were already billionaires.
* Beth Piskora is The Post’sSunday business editor.