ED 413 256

TITLEINSTITUTIONPUB DATENOTEAVAILABLE FROM

PUB TYPEEDRS PRICEDESCRIPTORS

IDENTIFIERS

ABSTRACT

DOCUMENT RESUME

SO 027 134

Panic of 1907.Federal Reserve Bank of Boston, MA.1990-00-0023p.; Photographs may not reproduce clearly.Publications, Federal Reserve Bank of Boston, P.O. Box 2076,Boston, MA 02106-2076; telephone: 617-973-3459.Reports - Descriptive (141)MF01/PC01 Plus Postage.*Banking; *Business Cycles; *Capitalism; *Economic Climate;Economic Development; Economics; High Schools; ModernHistory; Monetary Systems; Social Studies; *United StatesHistoryPanic of 1907

This pamphlet recaps the chain of events known as The BankPanic of 1907. Historians view this as a watershed event that had a lastingimpact on the financial system of the United States. The panic resulted fromthe collapse of the United Copper Company and was averted with theintervention of John D. Rockefeller and the J. P. Morgan Company. Thepamphlet is divided into three parts: (1) "In Which the Downfall of aProminent Speculator Rocks the Financial System, and a Prominent MillionaireSaves the Day"; (2) "Panic of 1907: Movers and Shakers"; and (3) "Parallel

History: Everyday People." (EH)

********************************************************************************Reproductions supplied by EDRS are the best that can be made

from the original document.********************************************************************************

U $ DEPARTMENT OF EDUCATIONOffice of Educational Research and Improvement

EDUCATIONAL RESOURCES INFORMATIONCENTER (ERIC)

)(his document has been reproduced aseceived from the person or organization

originating it.O Minor changes have been made to improve

reproduction Quality

Points ol view or opinions stated in thisdocu-ment do not necessarily represent officialOERI position or policy

BEST cm_ AV ILA LE

66

CrasX Crash Crash99

Asian .P081- 2crot er 18,.1907

lthough the headline referred to events in New

York,, Boston Post readers knew exactly, what' it

meant. Effects of the financial crisis were certain to

reach beyond Wall Street. ¶ Financial panics and bank

runs were all too common during the 19th and early 20th

centuries. Some were more severe than others, but most followed

the same general pattern. The misfortunes of a prominent

speculator would undermine public confidence in the finanCial

system. Panic-stricken investors would then scramble to cut their

losses. And because it wasn't uncommon for speculators to double

as bank officials, worried depositors would rush to withdraw their

money from any bank associated with a troubled speculator. If a

beleaguered bank couldn't meet its depositors' demands for cash,

panic would quickly spread to other banks. (Remember! There

was no federal deposit insurance until 1933. If a bank failed,

depositors had little hope of ever seeing their money again.),

¶ With far less government regulation of the financial system than

there is today and with no government welfare "safety net," many

Americans suffered sudden and dramatic reversals of fortune

when a panic struck. Even ira relatively mild panic, fortunes

evaporated and lives ended in .ruin. ¶ The following pamphlet

recaps the chain of events that came to be known as The Bank

Panic of 1907. By most measures, it was not the worst panic in

U.S. history. But in retrospect, it was a watershed event that had

a lasting impact on the financial system.

o n e

. , , ... 4 .' *

\ :f.:14 111:

4

O

,'.

t )

- 1 t

1 11.010,3;!.10

, Pllar

1.,( ') -04" ...";,,,,...-- -;f--...il g '''\ A i'r9r- ..%

. ,

I'11 F 't c

'F.

1

1,1411 ; i;

/.. j:..1 i :'.-, f:tk,,,--..i

S

.t,,,.,,,,.,:, i 4,

'' ...., ,S

S P

/, ."4 e-Y456T44

..

. i ;1.. rd , I., if At),:,..a,3117.!

4""i: I ft-

-.,.

-1;4

,.'" t tf:. 4.,- .*1- --0-

.1.

,,

anic m 1907

PART I.

jn (N7cA de Awn/all ofa

igrominen/ peculaior. [Rods

de inancial CfrIem, ant a girominenf

awes de Zay

COPPER BREAKS HEINZEWATERLOO COMES TO YOUNG NAPOLEON AND BANKS TOTTER

Headline, Boston Post October 17, 1907

October 14, 1907, the stock of United Copper Companysoared past $62 a share. Two days later it closed at $15, and one

F. Augustus Heinze was well on his way to financial ruin.

The rise and fall of F.A. Heinze had been nothing less than spectacular.Only 18 months earlier, the onetime owner ofa Montana copper mine hadridden into New York with $25 million in cash and stocks garnered in anout-of-court legal settlement. with a rival mining company, He soonattracted notice by aggressively purchasing interests in several New Yorkbanks and engaging in speculative activities.

As is so often the case when things are going-well, Heinze seemed incapableof making a bad business -deal. His downfall took everyone by surprise.

The financial empire of F. Augustus Heinze began to unravel in October1.907 when he overreached himself in an effort to corner the stock of.United Copper Company. (An investor who tries to "corner the market"on a commodity or a stock is attempting to gain control in order to fix theprice.) In less than 24 hours, he dropped 850 million; and the financial:markets went haywire. According to an article in the October 18, 1907edition of the Boston Post:

Sensations followed each other in rapid succession in the financialdistrict today as the result of the collapse of the projected corner inUnited Copper and the suspension of a prominent brokerage firm

yesterday. As a result of these sensations the stock market washalting and irregular, but there was an apparent feeling that thebreak if the attempted corner in United Copper had cleared theatmosphere somewhat, and the market rallied before the close.

BEST COPY AVAILABLE dree5

The "prominent brokerage firm"mentioned in the article was OttoHeinze & Co.,; which was .run bythe brother of F. Augustus Heinzeand was heavily involved in thedisastrous attempt to corner UnitedCopper. In addition ,'F.A. Heinze'sButte (Montana) Savings Bank failedon October 17, 1907.)

Predictions that the atmosphere hadcleared proved far too optimistic.The Worst was yet to come;

Had F. AuguStus Heinze been. amere copper speculator, the finan-cial markets might-have been .ableto shake off the news of his collapse.Unfortunately, he was also deeplyinvolved in banking, and his financialreversal had a farreaching effect.

Shortly after midnight on October.17 Heinze announced his . inten-tion to resign as president ofMercantile National Bank. He wasnot a banker by training nor' bytemperament, -a- fact noted- in afront-page 'story in the New YorkTimes (OCtobet. 17, 1907):

Friends. of Mr. Heinze havesaid regarding his 'assumptionof the Presidency of the Mercantile .

that he did not pretend to knowl-

edge-of the.banking business and

that hf meant rather to learn the

.business as President of -the Mer-

cantile than personally to direct

its operations.

In his effort to "learn. the-business.Heinze had formed relationshipswith bankers at a number of institu-

I COPY AVAILABLE

tions. Their "association - with himproved to be their undoing.

The first high-profile New Yorkbanker to experience difficultybecause of his association withHeinze was C.W. Morse of Mer-cantile NationaLCBank. Morse's-involvement in the United Copperdebacle had undermined confidence

-in Mercantile National, so onOctober 19, . he resigned his scaton the bank's board of directors andsevered all official tics with morethan half a dozen other banks andtrust companies.

Most of the pressure for Morse toleave banking' had come from theNew York Clearing House Com-mittee. In generiC terms, a clear-inghouse is az.isociation in whichmember banks agree to exchange-and process checics for one another.But the New York Clearing HouseCommittee, which counted some

'_of the 'city's most respected andinfluential' bankers among its mem-bers, also assumed many of theresponsibilities now .performed 'bygovernment regulators.

WSei-i the presence Of Heinze andMorse :threatened to erode Confi-

,

deuce in :New' York's banks, theCktanng House Committee pressuredtherii to leave banking., It thenasSigned a task force to determinewhether or -not Mercantile Na-tional and other troubled 'bankswere solvent and worthy ofClearing House support.

Ultimately, theCotrimitteepledged to standbehind Mercan-tile National andextend whateveraid was necessaryto meet the de-manids. of thebank's depositors.In other words,banks that weremembers of the Clearingwould contribute funds to helpcover the withdrawals by Mercan-tile National's depositors.

House

The front page of the New YorkTimes (October 21) prominentlyfeatured statements by leadingbankers lauding the Clearing HouseCornmittee's decisive action.. arnesSpeyer, head of Speyer 8t.Co., wasofthe opinion that, "Everyone willbe impressed by the.prompt actionand by this new proof that the thenat the head of the important banksstand together solidly, thereby.accomplishing 'necessary reformsand preventing injury to depositorsand' shareholders." He also calledfor "every -one to keep cool andshow common sense."

Notefinancierjacob H. Schiff toldthe Times that, "The Clearing HouseCommittee is so.able and so conser-vative that they deserve the full

. .

confidence of the community," and.added that. "So faras my own knowl-edge of the situation goes, I believeit to be entirely sound.-

Unfortunately,these statementsproved to be littlemore than "whis-tling past thegraveyard."Things had yet to.hit bottOm.

Back on October18, depositors ot''New York's

Knickerbocker .Trust Company, started a run, after they learnedthat Knickerbocker's president,Charles T. Barney, was a businessassociate of F.A. Heinze and C.W.Morse. Later that day, the situation,worsened when the NationalBank of Commerce announcedit would: no longer act asKnickerbocker's. Clearing House

.agent. (As a trust company,Knickerbocker was not eligiblefor membership in the ClearingHouse' and, therefore, needed anagent to proCess its checks. In theevent that Knickerbocker failed,National Bank of Commerce didn'twant to be 'stuck with a lot ofKnickeibocker checks that wouldn'tbe honored)

BEST COPY AVAILABLE

fve

On October 21, with the situationcontinuing to deteriorate, CharlesBarney stepped down as,Knickerbocker's president.By October '22, Knickerbocker'sdepositors were so desperate towithdraw their money that itstellers paid out more than $8 mil-lion during a three-hour run, and

the beleaguered trust company closedits doors shortly after noon.

PANIC WAS SPREADING.ENTER J.P. MORGAN.

J. Pierporit Morgan had an almost-legendary capacity to control theoutcome of a situation throughsheer force of will. Even at age 70,he was still the dominant figure inAmerican finance.

When the financial situation inNew York continued to deterio-rate, Morgan decided to takecharge. He was neither elected norappointed to the task. He simplydecided that the time had come forhim to take action.

He-.started by designating a com-mittee of bankers to audit thebooks of Charles Barney's troubled.Knickerbocker Trust. (One of thebanker's, Benjamin Strong, wouldone day head the Federal ReserveBank of New York.) Morgan'scommittee began- its work onOctober 22, 'as Knickerbocker'sfrenzied' depositors were liningup to withdraw $8 million inlittle more than three hours.

The New :York Times headline onOctober 22 had declared that,`.!Knickerbocker Will Be AidedJ.P. Morgan& Co. Help." ,But noaid was forthcoming. On the basisof his committee's report, Morgan.'had decided not to bail outKnickerbocker Trust.

BEST COPY AVAILABLE

"Knickerbocker Will Not OpenConference of Bankers Deems ItUnwise to Aid the Trust CompanyFurther To-day," read the Timesheadline on October 23. Instead,Morgan had decided to aid anotherinstitution, the Trust Company ofAmerica, which was considered tobe in much better condition thanKnickerbocker.

According to the Times, "The rea-son the Knickerbocker Trust wasnot aided by the Clearing HouseAssociation and Mr. Morgan andhis associates was that the company'scapital and surplus were impaired,and that Mr. Morgan did not careto assume the responsibilities of pre-vious poor management."

Trust Company of America wasanother case altogether. It was abasically sound institution hurt bywidespread reports suggesting thatit had lencheavily to C.W. Morseand Charles T... Barney. Thereports ultimately proved to be

. exaggerated, but the damage had'been done. The. Times' front pagearticle ,on October 23, stating thatMorgan had pledged to help TrustCOMpany of America, probablyadded -to the anxiety -of the trustcompany's depositors.

Morgan's decision to aid TrustCompany of America was an-nounced after a meeting with U.S.Treasury Secretary GeorgeCortelyou, who had traveled toNew York to. help manage thecrisis. (Note how things have

.81X

changed since1907. The Trea-sury. Secretarytraveled to NewYork. Morgan didnot travel to Wash-

,ington.)

Shortly after l a.m:on' October 24,SecretaryCortelyou emerged from a meet-ing with Morgan to announce that$25 million in U.S. governmentfunds.would be deposited in NewYork City's banks to meet anyfurther emergencies that mightarise.. "If the presS of this city willcontinue its cooperation, and if thepublic, on its part, will reflect uponthe.-real- strength of our bankinginititutions," read Cortelyou'sofficial .staternent, "there will be aproMPt return of the -confidenceWhiCli'-'their condition -.warrants.As .evidence of the Treasury's dis-posifion; I have directed depositsin thii 'city to the extent of $25million." (Twenty-five milliondoll:a's -may not sound like muchto present-day Americans, but in1907,the..govemrnent's action andthe sum =of money involved werenothing short of extraordinary.)

AlsO pitching in to do his part wasJohn D.'Rockefeller; who pledgedto deposit $10 million, of his ownmoney in New York's financialinstitutions. "The existing alarm

. among investors is not warranted,"declared the oil tycoon in a state-thent to the Associated Press,

BEST COPY AVAILR.

"and I hope the goodcommon sense ofour Americanpeople will controlthe situation. ... Ev-eryone having thegood of his countryat heart should byword and deed lenda hand now to re-establish confidence;

and I hope to do my part to the fullextent of my resources."

Nevertheless, depositors continuedto line up outside banks in hope ofwithdrawing their cash. Not thatthey were less patriotic than JohnD. They simply preferred not -torisk losing money that may havetaken them a lifetime to save.

And as always, certain peoplemanaged to find opportunity -inadversity. Some earned as much as$10 a day by holding places in linefor weary depositors.

Others seized the moment in dif-ferent- ways. 'Mitchell the Tailorplaced an ad in the 36st9, Post to

-, announce "Panin'rices." Accord-ing to the ad, "One of Boston'sprominent merchants finding him-self hopelessly involved in the stockmarket crash' this week closed out tome at private sale for cash.".

One person who didn't seekadvantage in the crisis was WilliamJennings Bryan, the Democrats'perennial presidential candidate.In an impromptu speech to the

seven

,assembled crowd at theBinghamton., New York trainstation, he came to the defense ofPresident Theodore Roosevelt, aRepublican. "1 notice," said Bryan,"that one of the officers of the bankthat just closed its doors yesterdayattributed it to President Roosevelt.That is not the reason. Don't blamethe Sheriff, but the horse thiefDon't blame the -officials whomake and enforce the laws, butblame the criminals who -makenecessary such laws. Blame theunscrupulous financiers who havepiled up predatory wealth and who-exploit a Whole nation as highfinance.

. -

The first tentative improvementin the crisis carne on October 24when the Trust Company of -America survived a run and thestock' market narrowly averteddisaster. The headline of a frontpage article in the New York Times(October 25) announced that,"Trust Company ofAmerica Keepspen.Its.Dbors and Pays All Who .Come." The article's lead sentencereported' `that, "The power ofmillions poured into the banks bythe Government, -into .the TrustCompany of America by thesow-erful. group of bankers which isStanding by that : institution;. andinto the Stock 'Exchange by a$25,000,000 money pool con:-ducted by J.P. ,Morgan & Go.,brought the financial communitythrough another day of -stress,yesterday." (Such was Morgan'sinfluence that he required only

BEST COPY AVAILABLE

.minutes to pressure bankers intocoming up with $25 million.)

According to the Times, "TheStockExchange had a brief quarter of anhour when utter deinotalizationseemed,a question of each. passingsecond, but the throwing into-theExchange of the Morgan pool's$25,000,000 of call money changedall this." The influx- of funds madeit possible for brokers to borrowand remain solvent.

But the relief was only temporary.The next day,-October 25, brokersagain had difficulty borrowingmoney, even at usurious rates, andmany faced the prospect of failure.

Morgan again took -charge' ,bymarching down to the Nevi! YorkClearing House and-prevailing uponthebankers to issue Clearing HouSecertificates-(scrip) intended ticfunc-tion as a tempbiary 'substitute for

-

scarce cash. When they. processed .checks, Clearing House=bank used-the certificates in .place.--,cilf4sh-;to-settle -accounts-with onel'..another.They were thus better able to meet

. the demands of anxious depositors -who were demanding to withdrawtheir cash. The certificates also freed

-.up more cash for _loans to cash-strapped stockbrokers.

.

Later in the week; 'Morgan triedto bolster public COnfidence,.byemploying a less conventionalMeasure. He exhorted the city'sclergy to preach sermons urging"calm and forbearance. '-`FrO..

,

pulpits throughoutthe city," reportedthe Times (October28), "words of ad-vice were deliv-ered, and calmnessand confidence.urged upon all."

E-ven beforeMorgan's call toprayer, the crisisshowed .signs ofeasing. On October26 the Times headline read, "BankersCalm; Sky Clearing." The next day'sheadline was equally optimistic,"Banks Leaving Trouble Behind."

Btit the trouble wasn't over yet:Just as things seemed to be improv-

..

Mg for banks and the stock market,:New. York City's finances took

''trim for the Worse. Skittish'European investors.were reluctantto buy the city's bonds, so the mayorcalled upon Morgan :for help,:

he agreet1.8 provide after.,eXtracting a number of piotectivemeasures, including ,a barilsers'Committee' to oversee the city's

-

accounting. practices.

(As--.the crisis wound down, there .twere. a few issues- that needed. toVe,..'addieSsed. Trust companies;'including Trust' Company, ofAnierica, required fiirtherassistance, ...

Several brokerage houses 'stillfaced an uncertain future,' mostpcitablythe firm ofMoore & Schley,whiCh was $25 million in debt.Once again, Morgan devised

remedy,. w -hichcentered on effortsto form a $25 mil-lion pool of fundsto rescue the ailingtrusts. During an allnight bargainingsession at his library,

Morgan managedto browbeat theassembled collectionof bankers and trustcompany presidentsinto putting up

money to rescue the weaker trusts..(According to, sonic . accounts, heactually kept them locked in a roomuntil they saw things his way.)

As part of the trust company bail-- out, Morgan also won acceptance

of a plan to rescue Moore & Schley;'d plan that advanced his own inter-.ests as Well by enabling his barik toorchestrate-P.S.'Steel's acquiSitiOn-oilaCOmpetingcoMpariy. (U:S. Steelhad very close ties to Morgan's bank.)

Byjnid=November, 'the panic hadsubsided. But there was tb be 'one. _last casualty.. -On .the afternoon OfThursday, November 13, Charles.'

. T. Barney, former president Of thefailed Knickerbocker Trust Com-pany, died at his home on East 38thStreet from a self-inflicted gunshot.Reportedly, he was despondentover J.P. Morgan's refii§al to meetWith him.

ButMorgan and others were beingshowered-with accolades for theirhandling ofthe situation. The New.

BESToOPY-AVAILABLE,, -nine

1," Nk

wetg1TA "

e

;tre....rosw., -

, ,t5 Lt.li 1.* .z.r.*-544,6717:ZiseWr

- ,,Tml

4^^

York Clearing House passed aresolution thanking Morgan "forthe promptness with which he hadcome to the aid of the situation."President Theodore Rooseveltcommended Treasury SecretaryCortelyou "upon the admirable wayin which you have handled thepresent crisis." And although he didn'tmention Morgan by name, Rooseveltalso congratulated "those conserva-tive and substantial business men inthis crisis who have acted with suchwisdom and public spirit." LordRothschild, of the renowned Euro-pean banking family, praised Morganas "worthy ofhis reputation as a greatfinancier and a man of wonderfulresources. His latest action fills onewith admiration and respect for him."

A NeW Yorker by the name OfMcLandburgh Wilson went so far asto compose an ode to Morgan, whichthe Times ran in its Sunday editionon October 27:

A millionaire is wicked, quite;

His doom should quick be knelled;

He should not be allowed to grow,

If grown he should be felled,

But when a city's bonds fall flat,

, And no one cares Jo- r them,

.. Who is the man who saves the day?

It's J.P.M.

When banks and trusts go crashing down

From credit's sullied name,

While Speechifying Greatness adds

More_tnel co the flame,

When Titan Stiength is needed sore

Black ruin's tide to stein,

Who is the man who does the job?

It's J.P.M.

BEST COPY AVAILABLE

Yet even amidst the continuingpraise there were indications thatthe prominent bankers and greatfinanciers had reached the pinnacleof their power and influence. Thecalls for majonchanges in the finan-cial system were growing louderand stronger.

Senator Nelson Aldrich of RhodeIsland summed up the general feel-ing. "Something has got to bedone;". he declared, "We may notalways have Pierporkt Morgan withus to meet a banking crisis."

And eventually something wasdone. In 1910, Senator Aldrichintroduced legislation for a U.S.central bank. His bill failed to gainpassage, but several of its provisionswere ultimately incorporated inthe Federal Reserve Act (1913).Increased government oversight_of the financial system was in theoffing.

On December 23, 1913, just oversix years after the Panic of 1907,President Woodrow Wilson signedthe Federal Reserve Act. It providedfor "the establishment of federalreserve banks, to furnish an elasticcurrency, to afford means ofrediscounting commercial paper, toestablish a- more effective supervi7sion of banking in the United States,and for other purposes.."

J:P. Morgan; who during the Panicof 1907., had performed many of.the functions ofa central bank, diedin Rome on March 31,-1913.

Arorlokyy

PART II

9anie of 1907and AaAers

MONDAYOCTOBER 14:

The stock of United CopperCompany soars past $62 a share.

WEDNESDAYOCTOBER 16:

United Copper closes at $15 a shareafter bank owner/speculator F.A.Heinze fails in his attempt to cornerthe company's shares.

THURSDAYOCTOBER 17:

Shortly after midnight, Heinzeresigns as president of MercantileNational Bank. Later that morning,prompted by the fear that Heinze'sstock .market losses might affect thehank, Mercantile National's deposi-tors scramble to withdraw. theirmoney.

During the day, Heinze's Butte(Montana) Savings Bank fails asdoe's the brokerage firm of 'OttoHeinze 8t Co., which is owned bythe brother of F.A. Heinze.

That night, the New York Clear-ing House Committee declaresthat Mercantile National is "per-fectly solvent and able to meet allits indebtedness." The Committee's

BEST COPY AVAILABLE

acting chairman also announces thatthe Clearing House will stand by,the bank in the event of a run by.depositors.

FRIDAYOCTOBER 18:

Nine banks- form an emergencypool of funds to aid MercantileNational. But depositors atKnickerbocker Trust Companybegin to withdraw .their money.They are concerned becauseKnickerbocker's president, CharlesT. Barney, is an associate of F.A.Heinze.

SATURDAYOCTOBER 19:

Charles NV: Morse, a banker andspeculator who was involved withHeinze -in--the disastrous coppercorner, announces he will resign-official positions at nine banks and -trust companies.

MONDAYOCTOBER 21:

Charles T. Barney resigns aspresident of Knickerbocker TrustCompany. Depositors withdraw$8 million in less than four hoursbefore Knickerbocker suspendsoperations.

&eke1 4

TUESDAYOCTOBER 22:

J.P. Morgan refuses to a i d

Knickerbocker- Trust, which doesnot reopen for business.

A headline in the New York Timesannounces that .Morgan *illorganize support for Trust Com-pany of America, which isto be in much better condition thanKnickerbocker.

WEDNESDAYOCTOBER 23:

Treasury Secretary GeorgeCortelyou travels to New York tomeet with Morgan and other fin-anciers.-

THURSDAYOCTOBER 24:

At 1 aan.,- Cortelyou announces,thatthe U.S. Treasury will deposit$25 million in several New YorkCity banks.

Later in the day, oil tycoon John D:,kockefeller. commits $10 millionof his,own money to Stabilizingthe financial situation.

FRIDAYOCTOBER 25:

-Under heavy pressure from J.P.Morgan, New York bankers con -tribute $25 million rescue poolfor cash - strapped stockbrokers, whohave been unable to borrow andare facing ruin.

SATURDAYOCTOBER' 26:

BEST COPY AVAiLABLE

The crisis takes its toll on J.P. Mosr--gan. Under the headline "J.P:Mor-gan Has -a COld," the New YorkTimes reports, "J. Pierpont Morganhas a slight cold resulting from ex-posure to the night air. In the lastweek Mr. Morgan has attended*Many night conferences dealingwith the banking situation. In'doing soshe was obliged on severaloccasions to ride about in his cablate at night, and in some instancesin the early morning. The resultwas that he 'contracted a cold whichgave him some trouble yesterday.When he left his office late yestei-day afternoon he wore a handker-chief about his neck."

SUNDAYOCTOBER 27:

At the behest of J.P. Morgan,New York City's clergy preach ser-mons urging "calmness and confi-dence." .

WEDNESDAYOCTOBER 30:

In response to a plea from New-

York's MayOr, a Morgan-led syn-.-dicate bails' out the city by agreeingto-place $30 million worth of itsrevenue bonds-with investors.

The night before, Morgan hadpressured trust company presidentsinto putting 'up' funds to supportthe still ailing Trust Company ofAmerica and Lincoln Trust Corn-pany. Morgan and his associatesalso devise a-plan to save the bro-,-kerage firm of Moore & Schleyfrom failure:

iAirfeen15

._

gosioryPART III

everyday glyph

he Panic of1907 proved to be a defining moment in U.S. financialhistory; a major event that prompted widespread calls for reform.

It was also a front page story played out by larger-than-life characters.

But amidst the financial upheaval, newspapers continued to reporton the ebb and flow of daily life a daily life that greatly differed from ourown in certain respects yet was remarkably similar in others.

What follows is a "parallel history'.' that offers a glimpse into the everydaytriumphs, tragedies, IRllies, and frailties of ordinary people as reported bythe New. York Times and the Boston Post during the last two weeks ofOctober 1907.

THE POMPADOURVINDICATED

Women clerks in Pittsburgh de-.partrnent stores, who were warnedthat they would not be permittedto wear high pompadours while atwork, 'have Won their fight again'stthe managers of the .stores, and infuture they will wear their hair a lapompadour or any other old waythey see fit.

Front page storyNew York Tithes

Wednesday; October 16, 1907

CUBS WORLDCHAMPIONS

'Plunged. in. deepest glootn is De-troit tonight, and celebrations that-might have been tendered tojennine heroes have been strickenfriimthe schedule, for the world's

BEST COPY AVAILA LE

championship has pasied from theAmerican to the National league,and Chance's Cubs have come intotheir own. For the fourth succes-.sive time Chicago today showedthe, angiiish stricken -fans ofTigerville just-why Chicago made arunaWay, match of the Nationalleague *race, and three,fingeredMordecai' Brown proved thatAmerican league sluggers were nomore to be feared than the boastedbatsmen of a rival organization.

Front page storyBoston Post.

Sunday, October 13, 1907

BEER NEEDS NO FOAMON TOP

Judge Kimball in the Police Courttoday was called upon to decide

Oven' 17

whether a customer is entitled tobeer with much or little foam on it.He decided against the foam:

Boston Post:Monday, October 14, 1907

CASHIER FOUND GUILTYPaul R. Holland, formerly cashierof the First National Bank OfTurtle Creek, was found guilty incourt this afternoon on four countsof embezzlement, and four countsof misappropriating fUnds of thebank. His peculations amounted to$19,000.

Front. Page StoryNew York Times

Saturday: October 26, 1907

BURGLARS IN ,

WES-I-VHF STE R

Robberies along the HudsonRiver are become almost nightlyoceurrences in this vicinity. Theburglars leave no clue behind andthe police are baffled.

Front Page. Story:Boston Post

Sunday, October 27, 1907

CHILD STOLEN FROMCONVENT

From the midst of her playmatesin the yard of St. Joseph's Convent'at McSherrystown,.Penn., EvelynO'Drain, 8 year's old, of Philadel-phia, was carried off this afternoon

BEST COPY AVAILABLE

by two well-dressed women. ...The little girl was placed in theconvent a year ago when her fatherand mother separated. Her motheragreed to her being in the convent,but later wanted to take charge ofher and applied to the courts for thechild's custody. Judge Wiltbankdecided that the child was betteroff to stay in the convent. Themother was much disappointed,and her husband thinks she hastaken this means of getting the girl'in her possession.

Front Page StoryNew York Times

Tuesday, October 22, 1907

ARE NEW YORK'SPUBLIC MANNERS

REALLY GOING FROMBAD TO WORSE?

Observations in the 9pera, theTheatre, the Fashionable Restau-rants, and the Swell Cafes All Seemto Answer the Question in theAffirmative!

Headline of a Feature StoryNew York Times

Sunday, October 13, 1907

BEATEN CLOSE TOHIS HOME .

Four men left Frank Gill. of 441West Seventeenth Street uncon-scious on.the sidewalk last night atabout 8 o'clock after brutally beat-ing him because he refused to givethem a match when they accosted

.9&eezi18

1

him at the corner of SeventeenthStreet and Ninth Avenue. Theyalso robbed him of his gold watchand about $5 in cash.

New York TimesMonday, October 14, 1907

FINED FOR SON'S' DEATHEdwin M. Watson and wife, theMoodstown Christian Scientistsrecently convicted of manslaughterfor allowing their seven-year-old son,Granville, to die without medicalattendance, were sentenced hereto-day to pay a fine of $100 each.

Front Page StoryNew York Times

Thursday, October 24, 1.907

-PUT CHORUS GIRLIN JAIL

Miss Cecilia V. Clark of New York, ,a chorus girl, formerlywith RogersBrothers in Ireland, was held in$500 bond to-day on the charge ofvagrancy.... It is charged that shehas threatened. to kill two promi-nent menof Atlanta; and that last.'night she told a well-known youngman- that she intended to throwcarbolic acid. in his face: In thewoman's room were found a' 38-

. calibre hamMerless revolver. and a'. bottle of carbolic acid.

Front Pa.ge .StoryNew York Times

.Sunday, October 20, 1907

CRUELTY TO HORSES.During my travels in this countryfor the Past seven weeks I havespent a great deal of my time in theWestern states, and now on mydeparture to England I wish to saythat I have never seen such crueltyto horses as I have seen in NewYork "City 'during the past week.The manner of beating the poorbeaSts and the heavy loads whichthey are compelled to haul is some-thing disgraceful. I have been toldat my hotel that you have a humanesociety. If you have, I think it is adisgrace to civilization.

An English TouristTo the Editor of the

New York TimesSunday, October 27, 1907

MAN MARRIES WOMAN'FOR THIRD TIME

Ashley Brigham, now in the 71styear of his life, has just married thesame woman for the third timethe sweetheart of a childhoodromance. ... "Yes we are marriedagain," she said.. "Why?" Therewas a silvery laugh. "Why, becauseI yearned for the old love. I wantedto spend my declining years withMy 'own,' and now we are going tobegin all over again jUst as we didthat beautiful June morning so manyyears ago."

Boston PostSunday, October 27, 1.907

BEST COPY AVAILABLEcevenieen / 9

WEDDED AFTER23 YEARS,

STATEN ISLANDCOUPLE POSTPONED-

MARRIAGE WHILEPARENTS NEEDED CARE

Miss Margaret Pfaff and JohnBeaver, both of Richmond, S.I.,were married at St. Patrick's Catho-lic Church there last evening after acourtship of twenty-three years.They were born in Richmond,went to school together, and be-came engaged when nearing theirmajority. Each had, a father whoneeded care and attention, and theydecided to postpone theirmarriageindefinitely.

Front Page StoryNew York Times

Monday, October 28, 1907. .

VILLANCATA WAS RUDEWITH YALE PLAYERS,.

WILL BE DROPPED FROMELI SCHEDULE

Villanova's football tactics were soaggressive against Yale yesterdaythat her eleven will not be chosento fill a date on the Yale schedulenext fall. In at least two instancesthe visitors used foul tactics andwere hissed by the crowd. Villanovawill be dropped, as Penn State wasasyear ago and as Columbia was two

, seasons ago.

Boston PostMonday, Octotier 28, 1907

BEST COPY AVAILABLE

, PRICK OF THEHAND FATAL

Dr. Charles Eugene Monks, 38years old, a dentist, died to-dayfrom blood poisoning contractedin relieving a patient's suffering.The man suffered from a badlydiseased tooth and before the den-tist could sterilize his instrumentshe plunged the point of one intothe palm of his hand. Blood poi-soning immediately developeti anddeath followed after three days ofintense suffering. -

Front Page StoryNew York' Times

Tuesday, October 29, 1907

MISER DIES IN RAGSWilliam Henry Jay, known as theHermit Miser, died yesterday. Hewas apparently destitute, and wasclothed in rags, but it is reportedthat he was worth from $12,000 to$15,000. He lived in a little houseon the plains on the old CherryValley Road,.between Garden- Cityand Munson, and was rarely seenexcept when he went to a groceryfor provisions. He is said to havemade his living from a strawberrypatch which was patronized bywealthy residents of Garden City.

Front Page StoryNew York Tines

Wednesday, October 31, 1907

PHOTOS COURTESY OF THE BOSTONIAN SOCIETY. ANDBROWN BROTHERS

MOST OF THE FACTUAL INFORMATION IN THIS ARTICLEWAS DRAWN FROM THE FOLLOWING SOURCES:

"Lessons From the Panic of 1907," Ellis W. Tallman, Jon Moen, EconomicReview, Federal Reserve Bank of Atlanta, May 1990.

The House of Morgan, Ron Chernow, Atlantic Monthly Press,New York, 1990.

New York Times September, October, November 1907-.

Boston Post September, October, November 1907.

BEST COPY AVAILABLE..

nineleen 21

FOR ADDITIONAL COPIES CONTACT:

PUBLICATIONSFEDERAL RESERVE BANK OFP.O. BOX 2076 .

BOSTON MASSACHUSETTS.(617) 973-3459

BEST COPY AVAILABLE 22

BOSTON

0'2106-2076

FRBBoston

BEST COPY AVM LE

(9/92)

U.S. DEPARTMENT OF EDUCATIONOffice of Educational Research and Improvement (OERI)

Educational Resources Information Center (ERIC)

NOTICE

REPRODUCTION BASIS

ERIC

This document is covered by a signed "Reproduction Release(Blanket)" form (on file within the ERIC system), encompassing allor classes of documents from its source organization and, therefore,does not require a "Specific Document" Release form.

This document is Federally-funded, or carries its own permission toreproduce, or is otherwise in the public domain and, therefore, maybe reproduced by ERIC without a signed Reproduction Releaseform (either "Specific Document" or "Blanket").