The 1901 U.S. stock-market crash caused partly by a struggle for control of Northern Pacific Railway was the Panic of 1901.
The contest involved major financiers, including E. H. Harriman and James J. Hill on one side and interests associated with J. P. Morgan on the other. Investors bought Northern Pacific shares aggressively as they expected a railroad consolidation battle to determine control of important western routes.
On May 9, 1901, Northern Pacific shares rose dramatically and then collapsed when traders who had sold shares short faced a severe shortage of stock. The resulting squeeze and reversal caused a sharp break in the market and spread losses to other securities.
The Panic of 1901 was brief compared with the prolonged depressions associated with the Panics of 1893 and 1907. Its significance lies in showing how concentrated railroad ownership, speculation, and short selling could destabilize the New York market.