"Before reading The Panic of 1907, the year 1907 seemed like a long time ago and a different world. The authors, however, bring this story alive in a fast-moving book, and the reader sees how events of that time are very relevant for today's financial world. In spite of all of our advances, including a stronger monetary system and modern tools for managing risk, Bruner and Carr help us understand that we are not immune to a future crisis."
The ‘Panic of 1907’ caused nationwide bank failures, timber prices collapsed, mine operations ceased, railroads stopped running, a rash of bankruptcies occurred, and a dramatic loss of confidence and a nasty economic downturn sank in for the next year. Although not as severe as many in the past, the Panic made clear the need for national legislation to protect bank depositors.
The trigger of the Panic of 1907 was speculators attempting to corner the copper market. While buying up shares of companies with copper holdings in Montana, they discovered that the shares they purchased had been used as collateral for other purchases. The two leading speculators had used funds they borrowed from the Knickerbocker Trust Company to pay for their shares. When it became known that Knickerbocker had provided their funding, the bank run ensued.