A United States banking panic that began with a run on the Knickerbocker Trust Company in New York City the week of October 21, 1907, after speculators failed in an attempt to corner the market in United Copper stock. With no central bank to act as lender of last resort, financier J. P. Morgan personally organized a syndicate of bankers to supply emergency liquidity and contain the panic. The episode exposed the fragility of a banking system with no elastic currency or reserve backstop and directly motivated the National Monetary Commission, whose work led to the Federal Reserve Act of 1913.
Facts
LocationNew York City, United States 2 Chronology
End YearThe panic largely subsided by November 1907, while the wider recession measured by the NBER ran to June 1908. Connections
Associated With
The 1907 panic directly motivated the National Monetary Commission whose work produced the Federal Reserve Act of 1913.
Source The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed
Held Differently
Why this is disputed. Free-banking and Austrian-leaning historians (e.g. the private clearinghouse-association literature) argue New York clearinghouses were already resolving panics like 1907 without a central bank, making the case for the Federal Reserve weaker than the standard narrative holds.
Source The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed
In the Other Atlases
Located In
Also in Geography Atlas: where this subject is located.
Sources
1. Wikipedia: Panic of 1907
Panic of 1907, The panic
By November, the financial contagion had largely ended
In Group: Panics of the Nineteenth and Early Twentieth Century, Lead
The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that took place in the United States over a three-week period starting in mid-October, when the New York Stock Exchange suddenly fell almost 50% from its peak the previous year.
View the Source2. The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed
Federal Reserve Bank of New York (Liberty Street Economics), 2016final section, paragraph beginning 'The panic of 1907 had severe and far-reaching repercussions'
The panic of 1907 had severe and far-reaching repercussions. The recession that began in May of that year persisted until June 1908, with real GDP contracting more than 10 percent, about twice the decline experienced during the 2007-08 recession. The severity of the 1907 panic (and the many before it) convinced Congress that the country needed a long-term solution to modernize and stabilize the monetary system.
Liberty Street Economics, The Final Crisis Chronicle: The Panic of 1907 and the Birth of the Fed
The final shock came on October 16 after a failed attempt to corner the stock of the United Copper Company.
- Associated With: Founding of the Federal Reserve System
- Associated With School: Austrian School
View the Source 3. Wikipedia
Wikimedia FoundationPanic of 1907Quote, Panic of 1907
On October 22, the Knickerbocker faced a classic bank run
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