Panic of 1907

Document Type

Syllabus

Publication Date

1-1-2023

Abstract

The 1907 U.S. Panic followed a period of high economic growth beginning in 1895 that ended the depression that followed the crash of 1893. The U.S. economy from this time to the end of 1906 grew 7.3 percent and doubled industrial production, while exports doubled between 1897 and 1907. Further, money in circulation increased by $1.2 billion from $1.5 billion to $2.7 billion. This rapid economic growth and capital investment led to speculation and debt expansion that only required an unforeseen event to trigger a panic and subsequent crash. The financial markets and economy were thus vulnerable when the Panic occurred due to the financial effects of the great 1906 San Francisco earthquake and the aggressive trust-busting initiatives of the Roosevelt Administration. Yet, its most significant impact on the U.S. economy and U.S. economic history is due to the formation of a Congressional Commission to study the origins and resolution of the crisis because the Commission’s report led to the 1913 legislation establishing the Federal Reserve System. The United States finally had a central bank that could act as a lender of last resort and could manage an expanding and increasingly complex financial system rather than relying on the offices of a single individual, J.P. Morgan, and a group of private banks.

Identifier

85192898304 (Scopus)

ISBN

[9781800377356, 9781800377363]

Publication Title

Elgar Encyclopedia of Financial Crises

External Full Text Location

https://doi.org/10.4337/9781800377363.ch63

First Page

260

Last Page

263

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