Panic of 1907

Timeline of panic in New York City
Monday, October 14
Otto Heinze begins purchasing to corner the stock of United Copper.
Wednesday, October 16
Heinze's corner fails spectacularly. Heinze's brokerage house, Gross & Kleeberg is forced to close. This is the date traditionally cited as when the corner failed.
Thursday, October 17
The Exchange suspends Otto Heinze and Company. The State Savings Bank of Butte, Montana, owned by Augustus Heinze announces it is insolvent. Augustus is forced to resign from Mercantile National Bank. Runs begin at Augustus' and his associate Charles W. Morse's banks.
Sunday, October 20
The New York Clearing House forces Augustus and Morse to resign from all their banking interests.
Monday, October 21
Charles T. Barney is forced to resign from the Knickerbocker Trust Company because of his ties to Morse and Heinze. The National Bank of Commerce says it will no longer serve as clearing house.
Tuesday, October 22
A bank run forces the Knickerbocker to suspend operations.
Wednesday, October 23
J.P. Morgan persuades other trust company presidents to provide liquidity to the Trust Company of America, staving off its collapse.
Thursday, October 24
Treasury Secretary George Cortelyou agrees to deposit Federal money in New York banks. Morgan persuades bank presidents to provide $23 million to the to prevent an early closure.
Friday October 25
Crisis is again narrowly averted at the Exchange.
Sunday, October 27
The City of New York tells Morgan associate George Perkins that if they cannot raise $20–30 million by November 1, the city will be insolvent.
Tuesday, October 29
Morgan purchased $30 million in city bonds, discreetly averting bankruptcy for the city.
Saturday, November 2
Moore & Schley, a major brokerage, nears collapse because its loans were backed by the Tennessee Coal, Iron & Railroad Company (TC&I), a stock whose value is uncertain. A proposal is made for U.S. Steel to purchase TC&I.
Sunday, November 3
A plan is finalized for U.S. Steel to take over TC&I.
Monday, November 4
President Theodore Roosevelt approves U.S. Steel's takeover of TC&I, despite anticompetitive concerns.
Tuesday, November 5
Markets are closed for Election Day (no federal elections were actually held this year).
Wednesday, November 6
U.S. Steel completes takeover of TC&I. Markets begin to recover. Destabilizing runs at the trust companies do not begin again.

The Panic of 1907 – also known as the 1907 Bankers' Panic or Knickerbocker Crisis – was a United States financial crisis that took place over a three-week period starting in mid-October, when the fell almost 50% from its peak the previous year. Panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies. The 1907 panic eventually spread throughout the nation when many state and local banks and businesses entered bankruptcy. Primary causes of the run included a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets at . The panic was triggered by the failed attempt in October 1907 to corner the market on of the United Copper Company. When this bid failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company—New York City's third-largest trust. The collapse of the Knickerbocker spread fear throughout the city's trusts as regional banks withdrew reserves from New York City banks. Panic extended across the nation as vast numbers of people withdrew deposits from their regional banks.

The panic might have deepened if not for the intervention of financier J. P. Morgan, who pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system. At the time, the United States did not have a central bank to inject liquidity back into the market. By November, the financial contagion had largely ended, only to be replaced by a further crisis. This was due to the heavy borrowing of a large brokerage firm that used the stock of Tennessee Coal, Iron and Railroad Company (TC&I) as collateral. Collapse of TC&I's stock price was averted by an emergency takeover by Morgan's U.S. Steel Corporation—a move approved by anti-monopolist president Theodore Roosevelt. The following year, Senator Nelson W. Aldrich, father-in-law of John D. Rockefeller, Jr., established and chaired a commission to investigate the crisis and propose future solutions, leading to the creation of the Federal Reserve System.

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