More notes at http://tanguay.info/learntracker
C O U R S E 
A History of the World since 1300
Jeremy Adelman, Princeton University
C O U R S E   L E C T U R E 
The Panic of 1907
Notes taken on September 3, 2017 by Edward Tanguay
the late 19th century saw increasing troubles in the core European nations, and in the United States
the economy of the Victorian boom began to falter
1873-1896 global and near-global recessions
had the capacity to skip from society to society
the weaknesses of the model of interdependence began to show
interdependence affected the ability of governments to stop the problems from spreading
this was not new but became more rapid at the end of the 19th century
John Maynard Keynes (1883-1946)
British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments
August 1914, wrote essay in Economic Journal
worried about the world's ability to survive a major crisis, a prescient article
the world economy faced two kinds of problems:
1. the gold standard that had served as a ballast for the system, restricted the ability of governments to deal with currency pressures, was very rigid
2. private banks were so large in proportion to the amount of money in circulation, that a run on any bank could cascade into a full-blown financial crisis
if one bank failed, it could bring down the entire system
The Panic of 1907
a United States financial crisis that took place over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% from its peak the previous year
panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies
began with a few bond failures
collapse in commodity prices
started with the price of copper that was being traded internationally
the United Copper Company tried to corner the copper market
the loans that the banks issued to the company failed
then the banks became unstable
led to a run on stocks
pressure on the American dollar
led to the failure of the Knickerbocker Trust Company—New York City's third-largest trust
there was no central authority to intervene to put an end to the panic
it fell to the magnates of Wall Street to solve it
J. P. Morgan (1837–1913)
the panic might have deepened if he hadn't intervened
pledged large sums of his own money, and convinced other New York bankers to do the same, to shore up the banking system
put together a major infusion of liquidity, became a "lender of last resort"
pumped in 23 million dollars in the New York stock exchange
bought up New York City bonds
led to a series of discussions on ways to prevent these kinds of financial panic situations in the future
1913 the approval of the Federal Reserve Act
considered if free markets needed support to prevent them from ruining their own fortunes