The Panic of 1901 began after a struggle for control of the Northern Pacific Railway.
In May 1901, rival groups associated with financier E. H. Harriman and the investment banking firm J. P. Morgan sought control of Northern Pacific. Heavy buying drove the railway’s share price sharply higher. When speculators who had sold the stock short tried to cover their positions, trading became disorderly and prices surged further.
The corner was followed by a rapid reversal that caused losses among brokers and investors. The panic was concentrated in the stock market and did not become as broad a banking collapse as the Panic of 1907, though it exposed the dangers of concentrated railway speculation and market manipulation.
Northern Pacific was ultimately combined with other rail interests in the Northern Securities Company. The episode helped focus public attention on the power of large financial combinations. It is sometimes overlooked because the later Panic of 1907 had more extensive economic consequences.