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6 People Who Single Handedly Screwed Entire Economies

#3. William Paterson Ruins Scotland

Glasgow University Library

The man: A guy who wanted to seize one of the most valuable pieces of land on earth.

The Impact: Blew a fifth of all the money in Scotland, forced it to merge with England to form Great Britain.


Anyone with that large a wig is up to no good.

The tiny little strip of land that connects North and South America -- where the Panama Canal is today -- is one of the most strategically important bits of land in the world. That was true even before there was a canal -- just look at a map and you'll see that the two halves of the globe need to cross that little strip of land if they want to trade (and not sail all the freaking way around South America).


It's a bit of a time-saver, is what we're saying.

If you control that shit, you have the world by the balls. So a guy in Scotland named William Paterson said, hey, let's start a colony there and we'll rule this shit. That seemed like a great idea to Scotland, which was in the middle of an economic disaster and in general depressed because it had been 400 years since Braveheart happened.

Money poured in from investors from all levels of Scottish society, 400,000 pounds sterling total. If that doesn't sound like a lot, let's put it this way: it was a fifth of all the money in circulation in Scotland at the time. In terms of impact on the economy, it'd be like if an American investor rounded up $400 billion in one risky scheme, or the equivalent of 20 Bernie Madoffs.


"Surely this will prove a safe basket for all our eggs."

In July of 1698, the first expedition to the Isthmus of Panama, carrying Paterson, his wife and his child, set sail. Colonists arrived and promptly erected 50 cannons and a fort. Boom! We control world trade, baby! That was easy!

Then people started dying. A combination of the hot season and tropical disease devastated the colony, and shipwrecks and delays prevented backup supplies from showing up. The colonists finally bailed out -- Paterson himself was nearly dead from fever and had to be carried onto one of the fleeing ships.

Glasgow University Library
All of his finest wigs perished in the voyage.

Scotland, not knowing that everything had gone to shit, sent another expedition of 1,200 people and four ships. Upon arrival, they found much to their surprise that a) the previous colony had gotten the fuck out of there and b) Spain had found out about their little scheme and sent a bunch of warships to put a stop to it.

And with that, Scotland realized that Paterson's plan had flushed a fifth of their wealth down the toilet. A few years later, Scotland would wind up signing the Acts of Union with England, based partly on England's promise to give them money to make up for what they lost on Paterson's scheme. The two united to form Great Britain and somewhere, William Wallace was spinning in his grave.


"All of that money would have been better invested in killing more British people."

#2. A Single Snitch Kills the Flow of LSD

Getty

The Man: A chemist who was making virtually all of the world's LSD. In a nuclear missile silo. Until he got caught.

The Impact: About 90 percent of the world's acid supply vanished overnight.

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The impact on Phish ticket sales was disastrous.

Methamphetamine is so easy to make, rednecks in trailers are able to produce thousands of pounds per year with only a few dozen deadly explosions. The production of LSD is much more involved. It requires expensive lab equipment, a deep understanding of chemistry and precursor chemicals you can't find in your garage. At any given time, only a couple of people in the entire world are capable of actually producing acid.

From 1991 to 2000, almost all of the world's LSD was made by a respected chemist named William Pickard. He was the former deputy director of the L.A. Drug Policy Research Program and a former research director at UC Berkeley. Pickard viewed acid as a religious sacrament, and offered prayers before cooking up every batch. Since that cooking process often involved inadvertently dosing himself with hundreds of hits of high-test LSD, Pickard had a definite interest in ensuring its quality.


You try doing highly advanced chemistry under the influence of five hundred hits of shitty acid.

Pickard then partnered up with a wealthy pot dealer named Gordon Skinner. Skinner used his money to purchase an old Atlas-E nuclear missile silo. He turned it into the perfect post-apocalyptic luxury pad, complete with an $80,000 sound system and marble hot tub.

His goal was to establish a sort of hippy utopia, dedicated to manufacturing mass quantities of LSD and being a sweet ass place to crash after Burning Man. Pickard was drawn by the opportunity for a secure cooking spot and Skinner's promise to donate several hundred thousand dollars toward clinical research on psychedelics at Harvard.


Finding college age volunteers for an acid study would take about four minutes of standing on the quad with a clipboard.

But, before production could start, Skinner ran out of money. He was arrested in a casino, after he attempted to pass himself off as an Interpol agent. It's worth noting that Skinner was on a winning streak at the time. He basically committed a two-count felony for the sheer sake of being balls out crazy.

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"Put it all on 'impersonating a federal officer.'"

Pickard realized Skinner was crazy and made the decision to move his operation out of the silo. But Skinner had sold out pretty much as soon as he was cuffed, and the Man was hot on Pickard's trail. As he drove away with all his lab equipment and enough ergotamine tartrate to make 15 million hits of acid, William Pickard was pulled over by the highway patrol and arrested for holding an entire Summer of Love worth of hallucinogens. He got a life sentence, and the government estimates that taking him off the street slashed the worldwide supply of LSD by 90 percent.

As for Gordon Skinner, the man who ruined a million parties? He got off scot-free. Although he had to sell the silo.


Damn the man.

#1. Augustus Heinze Crashes the American Economy

Getty

The Man: Just a guy who owned some copper mines in Montana, who had a get rich quick scheme.

The Impact: The stock market plummeted 50 percent and nearly collapsed the U.S. economy.


Above: Not the ketchup guy.

Every so often, a person comes along who is so talented at what he does that anything else he tries seems like a miserable failure. That's true for Michael Jordan's baseball career, and it was true for Augustus Heinze's career as a banker. He'd made his fortune as a copper baron in Butte, Montana, but, in 1906, Heinze decided to try his hand at making some real money. New York money.

For a while, Augustus did well. He served on bank boards all across the country and quickly ingratiated himself with the financial "scene" of the day. But then he and his brother Otto came up with a plan. A stupid, stupid plan.

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New York is a city built on stupid plans.

Remember what we said about short selling in the earlier entry? Well, people were shorting stock in this guy's copper company, and Augustus and Otto figured, well shit, there's an easy way to fix that. We'll just buy up all the shares ourselves. Remember that short selling involves a promise to buy later, so the brothers figured, if we hold all the stock, they'll be forced to buy it from us. We can gouge the shit out of them and we'll be rich! Hell, why didn't anybody else think of this?

It worked. For a day. Shares of United Copper started at $39, and by the next day had shot way up to $60.

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It was a good time to be copper.

But they had miscounted now many shares were out there, somehow, and the short sellers had no problem buying elsewhere. Everyone figured out what the Heinzes were doing and started dumping the stock. The price collapsed 85 percent, down to $10 a share. Heinze's brokerage house immediately went bankrupt, and that wound up being to the collapse of 1907 what Lehman Brothers was to the collapse of 2008.

The resulting chain reaction of disaster would be called the Panic of 1907, and the New York Stock Exchange plummeted to 50 percent of what it had been the previous year (basically, imagine if today the stock market fell by 6,000 points). Banks and businesses across the country started going belly-up by the dozen.


And that was the last time one man's greed ever crashed the economy.

Thanks in part to Augustus, the government saw fit to create the Federal Reserve in an effort to keep this sort of thing from happening in the future. Which, depending on how much Ayn Rand you've read, is either the savior of our economy or Satan himself.

For more ways we keep boning everything up for ourselves, check out 6 Natural Disasters That Were Caused by Human Stupidity and 6 Man-Made Natural Disasters Just Waiting to Happen.

And stop by LinkSTORM to discover which one of you screwed the Internet up for all of us.

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