A writer by any other name . . .

While not a direct parallel, the comparison one could draw between the panic of October 1907 (101 years ago) and the current economic crises are too good to pass up. The most obvious comparison,is that greed was the root cause both then and now. Some things never change.

Consider the following:

The Panic of 1907 was a financial crisis that occurred in the United States when its stock market fell close to 50 percent from its peak the previous year. Primary causes of the run included a retraction of market liquidity by a number of New York City banks, a loss of confidence among depositors, and the absence of a statutory lender of last resort. The crisis occurred after the failure of an attempt in October 1907 to corner the market on stock of the United Copper Company. When this bid failed, banks that had lent money to the cornering scheme suffered runs which later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company—New York City’s third-largest trust. The collapse of the Knickerbocker spread fear throughout the city’s trusts as regional banks withdrew reserves from New York City banks. The panic would have deepened if not for the intervention of financier J.P. Morgan, who pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system. By November the contagion had largely ended. The following year, Senator Nelson W. Aldrich established and chaired a commission to investigate the crisis and propose future solutions, leading to the creation of the Federal Reserve System.

That is just a short summary. Given the present financial crises, I suggest that all of you not already familiar with the panic of 1907 to go to the Wikipedia article and engage in a short history lesson. We are currently witnessing history in the making, and at such times it is always good to have a sense of history.

I will leave you with a last bit. After the crises of 1907 was over, congress held investigations into the matter. At that time:

Although suffering ill health, J.P. Morgan testified before the Pujo Committee and faced several days of questioning from Samuel Untermyer. Untermyer and Morgan’s famous exchange on the fundamentally psychological nature of banking—that it is an industry built on trust—is often quoted in business articles:

Untermyer: Is not commercial credit based primarily upon money or property?
Morgan: No, sir. The first thing is character.
Untermyer: Before money or property?
Morgan: Before money or anything else. Money cannot buy it … a man I do not trust could not get money from me on all the bonds in Christendom

And what do we see today? History repeating itself.

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