Panic of 1907

Abstract

The Bank Panic of 1907 was the final banking crisis of the National Banking Era (1863–1913); it was significant in that it led to the Federal Reserve Act. The panic began when the spectacular attempt by F. Augustus Heinze to corner the stock of United Copper Company collapsed on 16 October 1907. The collapse revealed the extensive links of Heinze to another notorious financier in the New York City banking community, Charles F. Morse, a man O. M. W. Sprague (1910, p. 248) describes as having ‘an extreme character, even by American speculative standards’. Solvency concerns led to a series of bank runs at several national banks controlled by the two men. Yet the turmoil surrounding the Heinze collapse did not produce a systemic panic in New York, because the New York Clearinghouse took prompt corrective actions on the member institutions.