We'll be back with our favorite Fed paper on aught-seven, for now Crossing Wall Street:
Today marks the 107th anniversary of the start of the Panic of 1907. Gary Alexander of Navellier Marketmail describes the tumultuous week:
This Week in History: The Panic of 1907
Here’s a day-by-day rundown of the week that made Mark Twain’s “October” prediction come true:
On Monday, October 21, 1907, depositors staged a run on Knickerbocker
Trust Company, the third-largest mega-bank in New York City. John
Steele Gordon wrote (in “The Great Game: The Emergence of Wall Street”),
“Bedlam reigned as depositors fought to get to a teller and withdraw
their assets from the bank’s imposing new headquarters on Fifth Avenue.”
No luck. “The bank closed the next day after an auditor found that its
funds were depleted beyond hope. The bank’s president, Charles Barney,
shot himself several weeks later, prompting some of the bank’s
outstanding depositors to commit suicide.”
On Tuesday, October 22, the president of Knickerbocker Trust Company
bravely opened the doors of his troubled bank, but that was not a wise
move. Within hours, depositors had withdrawn $8 million. By afternoon,
Knickerbocker Trust Company announced its insolvency and closed its
doors for good.
On October 23, lower Manhattan streets were choked with anxious bank
depositors lined up in front of even the soundest of banks. On this
day, the Trust Company of America looked suspect. By 1:00 p.m., they
had only $1.2 million in cash on hand. By 1:20, it was down to
$800,000. By 1:45, they had $500,000 and at 2:15 they were down to
$180,000. About then, bank president Oakleigh Thorne (what a great
name!) rushed over to J.P. Morgan’s office for help. When Morgan was
convinced that the Trust Company was otherwise sound, he said, “Then
this is the place to stop the trouble,” and he transferred enough cash
to tide the bank over for the rest of the day. Morgan deposited roughly
$30 million in major New York banks and told those banks to lend the
money out to instill confidence among depositors....MORE
