The Panic of 1907, also known as the 1907 Bankers' Panic, was a financial crisis in the United States. The stock market fell nearly 50% from its peak in 1906, the economy was in recession, and there were numerous runs on banks and trust companies. Its primary cause was a retraction of loans by some banks that began in New York and soon spread across the nation, leading to the closings of banks and businesses. The severity of the downturn was such that it eventually pressured the United States Congress to accept the proposal by a group of bankers to pass the Glass-Owen Bill, essentially a blueprint of the Nelson W. Aldrich plan that had been defeated in congress earlier. This bill allowed a group of bankers to create, buy the shares, and own the Federal Reserve System in 1913. The 1907 panic was the fourth panic in 34 years. A financial crisis is a situation when money demand quickly rises relative to money supply. ... A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... 1906 (MCMVI) was a common year starting on Monday (see link for calendar). ... This article does not cite any references or sources. ... Theatrical promotional poster depicting a bank run A bank run is a type of financial crisis. ... “NY” redirects here. ... Type Bicameral Houses Senate House of Representatives President of the Senate President pro tempore Dick Cheney, (R) since January 20, 2001 Robert C. Byrd, (D) since January 4, 2007 Speaker of the House Nancy Pelosi, (D) since January 4, 2007 Members 535 plus 4 Delegates and 1 Resident Commissioner Political... The Federal Reserve Act of 1913, also called the Glass-Owen Bill, established the Federal Reserve System in the United States. ... Nelson Wilmarth Aldrich (November 6, 1841 - April 16, 1915) was an American politician. ... The Fed redirects here. ... Year 1913 (MCMXIII) was a common year starting on Wednesday (link will display the full calendar) of the Gregorian calendar (or a common year starting on Tuesday of the 13-day-slower Julian calendar). ...

One of the contributing factors of the Panic involved F. Augustus Heinze and his bank, Knickerbocker Trust Company. Heinze copied the speculation tactics of Charles W. Morse, who had obtained control of the Bank of North America and other banks to float consolidations and other schemes. In 1906, Heinze sold his shares in Montana copper mines for $12 million. He then moved to New York, bought Knickerbocker Trust and became a director in a national financial chain. Banking industry leaders, threatened by the developing trusts, staged a financial attack on Heinze's Knickerbocker Trust. Their motive was to sway public and congressional opinion against trusts. F. Augustus Heinze was one of the three Copper Kings. His company was called the Boston and Montana Company. ... The Knickerbocker Trust was at one time, one of the largest banks in the United States. ... The Bank of North America was chartered in 1781 by the Continental Congress and opened on January 7, 1782, at the prodding of Finance Minister Robert Morris, and was rechartered in 1784. ... 1906 (MCMVI) was a common year starting on Monday (see link for calendar). ...

In March 1907, over-expansion and poor speculation led to a stock market crash. Money became extremely tight. A second crash occurred in October 1907. This time, the crash was directly precipitated by Heinze's brothers, who had used money borrowed from Knickerbocker Trust in a failed attempt to corner United Copper. In the wake of the crash, Heinze was forced to resign as bank president. On October 21, the National Bank of Commerce ceased to honor checks of Knickerbocker Trust, causing a run on the Knickerbocker Trust. By the end of October 22, the National Bank of North America had failed and runs were sparked on nearly every trust in New York. is the 294th day of the year (295th in leap years) in the Gregorian calendar. ... The National Bank of Commerce was first chartered as the Kansas City Savings Bank in 1865. ... is the 295th day of the year (296th in leap years) in the Gregorian calendar. ...

To bring relief to the situation, United States Secretary of the Treasury George B. Cortelyou earmarked $35 million of Federal money to quell the storm. Complete ruin of the national economy was averted when J.P. Morgan stepped in to meet the crisis. Morgan organized a team of bank and trust executives. The team redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. Within a few weeks the panic passed, with only minimal effects on the country. The United States Secretary of the Treasury is the head of the United States Department of the Treasury, concerned with finance and monetary matters, and, until 2003, some issues of national security and defense. ... G.B. Cortelyou Brian William Cortelyou (July 26, 1862–October 23, 1940) was an American Presidential Cabinet secretary of the early 20th century. ... John Pierpont Morgan (April 17, 1837 – March 31, 1913), American financier and banker, was born in Hartford, Connecticut, a son of Junius Spencer Morgan (1813–1890), who was a partner of George Peabody and the founder of the house of J. S. Morgan & Co. ...

By February 1908, confidence in the economy was restored. 1908 (MCMVIII) was a leap year starting on Wednesday (link will display the full calendar). ...

In May, Congress passed the Aldrich-Vreeland Act which established the National Monetary Commission to investigate the panic and to propose legislation to regulate banking. In 1913, the commission recommended the adoption of the Federal Reserve Act, which mandated the creation of a central banking system to dampen the effects of future panics. It was enacted the day before Christmas Eve the same year. The Aldrich-Vreeland Act of 1908 established a National Monetary Commission which recommended the Federal Reserve Act of 1913. ... National Monetary Commission was a study group created by the Aldrich Vreeland Act of 1908. ... The Federal Reserve Act, also known as the Act of December 23, 1913, ch. ... Look up Act on Wiktionary, the free dictionary Act may refer to: in law, a written document that attests the legality of the transaction. ... The Christmas Eve (1904-05), watercolor painting by the Swedish painter Carl Larsson (1853-1919) Christmas Eve, the evening of December 24th, the preceding day or vigil before Christmas Day, is treated to a greater or a lesser extent in most Christian societies as part of the Christmas season. ...

Some historical accounts have stated that J.P. Morgan himself caused the panic. Some say he spread rumors about other banks going bankrupt which were not true. This created a downward spiral of people running and closing their accounts forcing his rivals to close their doors for good. The motivation for this was to pass the Federal Reserve act which he himself actually wrote, which was passed in 1913 by President W. Wilson.

See also

• Great Depression

For other uses, see The Great Depression (disambiguation). ...

References

• Moen, Jon and Ellis Tallman. "Lessons from the Panic of 1907." Federal Reserve Bank of Atlanta Economic Review 75 (May/June 1990): pp. 2-13.
• Carosso, Vincent P. The Morgans: Private International Bankers, 1854-1913. Harvard University Press, 1987.
• Friedman, Milton, and Anna 1. Schwartz. A Monetary History of the United States: 1867-1960 Princeton University Press, 1963.
• Moen, Jon, and Ellis W. Tallman. "The Bank Panic of 1907: The Role of the Trust Companies." Journal of Economic History 52 (September 1992): pp. 611-630.
• Moen, Jon. "Panic of 1907". EH.Net Encyclopedia, edited by Robert Whaples. August 15, 2001. Online Version
• Sprague, Oliver M. W. "The American Crisis of 1907." The Economic Journal 18 (September 1908): pp. 353-72.

External links

• Panic of 1907 at National Public Radio
• F. Augustus Heinze and the Panic of 1907
• Account of the Panic by "The Daily Reckoning"