The Panic of 1907

1907 CE — North America, United States

Today: New York City

A failed attempt to corner the copper market brought down the bank that financed it, depositors ran on the trust companies of New York, and the stock exchange nearly closed for lack of cash. The United States had no central bank. What stopped it was J. P. Morgan, aged seventy, locking the city's bankers in his library overnight and refusing to let them out until they agreed to put up their own money. A private citizen personally halted a national bank run, which was precisely the argument for never being in that position again — the Federal Reserve was created six years later.

Worth knowing: Morgan reportedly locked the library doors and pocketed the key while the bankers argued. The lesson the country drew was not gratitude but alarm: no republic should depend on one elderly man's willingness to stay up all night.

Pattern: Mania & panic — A speculative belief detaches asset prices from fundamentals; the belief breaks and prices collapse.

Entry 203 of 240 in Precedent, a walk through the whole human story in order.