Today, the cavalry arrived (sort of).
Knickerbocker Trust was a wildly successful financial institution in late 1800’s America. Its president, Charles T. Barney, was wired into many of the banks, railroads, and real estate firms that were funding and profiting from building the Gilded Age. In 1907, Barney concocted a scheme to buy up all the available shares in copper mines and thereby drive up the prices, and funded it with borrowed funds from wealthy investors and other banks (by “cornering the market” he could buy shares low, and then sell them for a profit once said shares were scarce). Then, one of the copper companies itself the victim of a takeover attempt, flooded the market with its shares. The value of Barney’s borrowed holdings promptly crashed. When news of his over-leverage went public, banks announced they’d no longer accept checks written for Knickerbocker. On this day, the run on the bank ensued, and it was forced to close its doors before noon.
The crowds on Wall Street moved to other banks, demanding their savings or trying to cash out their stock certificates. The stock market lost half its value. Within days, nine of the nation’s top banks had failed, though financier J. P. Morgan was already at work behind the scenes. Morgan, one of the nation’s richest men, guaranteed the deposits of the Trust Company of America, and convened a group of his fellow plutocrats to encourage them to do the same for other banks (John D. Rockefeller put $10 million into National City Bank, and told a news reporter that he’d pledge half his wealth to maintain America’s credit). Of course, these weren’t acts of charity. After the drama of the Panic of 1907 was history, Morgan would end up with half his enormous net worth tied to bank shares that grew in value after the crisis. While the government put in place rules to stop future panics (and created the Federal Reserve), more speculation would follow (as recently as the Hunt Brothers’ attempt to corner the silver market in the 1980s). Knickerbocker’s Barney was never prosecuted; he killed himself a month after his bank failed.
Which proves that it’s far more profitable to own the game than it is to try and play it.