CASE FILES

Sources of figures and data

The Panic of 1907

Panic of 1907 / October 1907 – January 1908 / United States of America (New York) / Credit, liquidity, financial crisis

Sources of figures and data

A list of where the figures in the diagrams and text come from in the source materials. Click the heading to open.

Read MoreNumerical Ledger (21 entries)

Approx. 5% (national banks 25%)%Cash reserve ratio of trust companies1907・Denominator: depositsFederal Reserve History 2015 Text

15% (of which 1/3 in cash)%Reserve requirement for trust companies under state lawFrom 1906・Denominator: depositsCarola Frydman, Eric Hilt, Lily Y. Zhou 2012 Note 11

62 milliondollarsKnickerbocker's depositsOct. 1907・NominalO. M. W. Sprague 1910 p. 251

8 million (in 3 hours)dollarsWithdrawals from Knickerbocker1907-10-22・Nominal. Fed History says "nearly $8 million"O. M. W. Sprague 1910 p. 251

Deposits 64 million・34 million in 2 weeksdollarsDeposits and withdrawals at Trust Company of AmericaFrom 1907-10-23・NominalO. M. W. Sprague 1910 p. 253

9.5% → 70% → 100%Annual rate %Call money rate1907-10-22 → 10-24. The high for the week of October 26 in Gorton–Tallman Table 5 was 125%.Federal Reserve History 2015 Text and Figure 1

36 million (of which 25 million on Oct. 24)dollarsTreasury deposits1907-10-19 → 10-31・NominalO. M. W. Sprague 1910 pp. 262–265 (Senate Doc. 208)

72 milliondollarsNet increase in government deposits1907-08-22 → 12-03・NominalA. Piatt Andrew 1908 p. 293

223,117,082.61 dollarsBalance of public money deposits in national banks1907-12-03・NominalOffice of the Comptroller of the Currency, U.S. Treasury Department 1908 p. 5

101.06 million issued・88.42 million max outstanding dollarsClearing House loan certificates (New York)1907-10-26 → 1908-03-28・NominalOffice of the Comptroller of the Currency, U.S. Treasury Department 1908 pp. 64–65

248,279,700 dollarsClearing House certificates (50 cities nationwide)1907-10 → 1908-01・NominalOffice of the Comptroller of the Currency, U.S. Treasury Department 1908 p. 64

334 million dollarsSubstitutes for cash (recorded)1907-10 → 1908-01・Nominal. Andrew estimates over 500 million including unreported amounts.A. Piatt Andrew 1908 p. 515

Up to 4%Premium on currency1907-10-31 → 12-31・Denominator: 1 dollar in currencyA. Piatt Andrew 1908 pp. 290–293

58 million in Nov・38 million in Dec dollarsGold imports1907-11 → 12・Nominal. Andrew reports over 63 million in November.O. M. W. Sprague 1910 p. 283

233 million dollarsCurrency that disappeared from banks1907-08 → 12・NominalA. Piatt Andrew 1908 p. 293

Over 36%Decrease in trust company deposits1907-08-22 → 12-19・Denominator: Deposits in New York City trust companies・NominalFederal Reserve History 2015 Note 12

Average 32.1% (11 affiliated companies 53.4%・27 unaffiliated companies 23.4%)%Decrease in trust company deposits (38 companies)1907-08-22 → 12-19・Denominator: deposits of each company・NominalCarola Frydman, Eric Hilt, Lily Y. Zhou 2012 Table 1

Industrial production −17%, real GNP −12%%Real economy1908・Denominator: Year-on-year・Real. Frydman et al.'s note 1 is −16%・−11%. The original source has not been referencedFederal Reserve History 2015 Note 16 (Tallman 2013)

2.4 milliondollarsKnickerbocker's capital increase1908-03・NominalFederal Reserve History 2015 Note 5

150 million (24.63 million + 15.44 million accepted)dollarsTreasury Department's bond offering1907-11-19・NominalO. M. W. Sprague 1910 p. 316

128.5 million (18.4% of the 700 million decrease in corporate investment)dollarsContribution to the decrease in investment1908・Denominator: decrease in investment by non-financial corporations・NominalCarola Frydman, Eric Hilt, Lily Y. Zhou 2012 Abstract・§5

Read moreSources of the figures in the diagrams

Figure	What the figure represents	Value	Date/Period	Source and location
Figure 1	Diagram without numbers	—	—	—
Figure 2	Attempt to corner United Copper stock fails	—	1907-10-16	Federal Reserve History 2015
Figure 2	Clearing House announces the solvency of the involved member banks	—	1907-10-20	Federal Reserve History 2015
Figure 2	Knickerbocker's clearing agent stops its services; Clearing House and Morgan refuse support	—	1907-10-21	O. M. W. Sprague 1910
Figure 2	Knickerbocker pays out $8 million in 3 hours and suspends operations	—	1907-10-22	O. M. W. Sprague 1910
Figure 2	Run on the Trust Company of America	—	1907-10-23	O. M. W. Sprague 1910
Figure 2	$25 million fund from Morgan and $25 million deposit from the Treasury	—	1907-10-24	O. M. W. Sprague 1910
Figure 2	Clearing House issues loan certificates and restricts cash withdrawals	—	1907-10-26	Gary Gorton, Ellis W. Tallman 2016
Figure 3	Committee of five trust company presidents	—	1907-10-23	O. M. W. Sprague 1910
Figure 3	$25 million raised by Morgan from banks ($10 million on the 25th)	—	1907-10-24	O. M. W. Sprague 1910
Figure 3	Treasury deposit of $25 million ($36 million from Oct 19–31)	—	1907-10-24	O. M. W. Sprague 1910
Figure 3	Clearing House loan certificates (totaling $101.06 million)	—	1907-10-26	Gary Gorton, Ellis W. Tallman 2016
Figure 3	Treasury offers $50 million in Panama Canal bonds and $100 million in 3% certificates.	—	1907-11-19	O. M. W. Sprague 1910
Figure 3	Gold imports: $58 million in November, $38 million in December	—	November–December 1907	O. M. W. Sprague 1910 p. 283
Figure 4	Premium on Currency (Weekly High)	0.0%	1907-10-26	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	3.0%	1907-11-02	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	4.0%	1907-11-09	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	4.0%	1907-11-16	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	3.5%	1907-11-23	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	1.8%	1907-11-30	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	2.0%	1907-12-07	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	1.5%	1907-12-14	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	1.3%	1907-12-21	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	1.3%	1907-12-28	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	0.4%	1908-01-04	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 4	Premium on Currency (Weekly High)	0.0%	1908-01-11	Gary Gorton, Ellis W. Tallman 2016 Table 5
Figure 5	Most trust companies leave the clearing house settlement system. Cash reserves are around 5% of deposits	—	1903	—
Figure 5	Knickerbocker pays out $8 million in 3 hours and suspends operations	—	October 22, 1907	—
Figure 5	Federal Reserve Act. 6 years after the panic	—	December 23, 1913	—

Read MoreSources of Information

The historical sources are divided into four layers. First, the law. I read all 20 sections of the Aldrich–Vreeland Act of May 30, 1908 (35 Stat. 546), and the first page of the Federal Reserve Act of December 23, 1913 (38 Stat. 251), from copies on the Government Publishing Office's govinfo. Second, public documents. The 1907 and 1908 annual reports of the Comptroller of the Currency contain the history of loan certificates, issuance statistics for 1907, the balance of public deposits, and the Comptroller's own observations. Third, contemporary studies: the chapter on 1907 in Sprague's *History of Crises under the National Banking System* (1910), written for the National Monetary Commission, and two articles by Andrew published in the *Quarterly Journal of Economics* in 1908 (on hoarding and substitutes for cash). Fourth, modern studies: I read the commentary on Federal Reserve History (by Moen and Tallman), the study on trust companies by Frydman, Hilt, and Zhou (NBER working paper), and the study on clearing houses by Gorton and Tallman (NBER working paper).

These have biases and limitations. Sprague writes from a position of harsh criticism of the clearing house's delay and suspension of payments, and the clearing house chairman's defense is read through his quotations. Andrew's table is based on responses to inquiries to each city, and because many columns are "amount not available" and there are OCR errors, the figures in the text are limited to those confirmed by the text's descriptions and the total column. The primary sources for Treasury deposits (the Secretary of the Treasury's response to the Senate, Senate Doc. 208) and the text of the Secretary's annual report, the clearing house minutes, contemporary newspapers, Moen and Tallman's 1992 paper, and the peer-reviewed version of Frydman et al. are not included in the materials cited here. Odell and Weidenmier's 1906 earthquake theory and Bruner and Carr's general history have only been checked for their titles and publication details.

Researchers' views differ on three points. Regarding the cause of the bank run, Frydman et al. explain the decrease in deposits at 38 companies in terms of personal connections with Morse et al., showing a 53.4% decrease for the 11 connected companies and a 23.4% decrease for the 27 unconnected ones, indicating it was unrelated to corporate clients. Federal Reserve History, along with Fohlin et al., summarizes it as "mainly due to rumors," while Odell and Weidenmier seek a remote cause in the gold outflow after the 1906 San Francisco earthquake. Regarding the clearing house's 5-day delay, Sprague calls it the most serious error, the chairman defended it as an attempt to avoid a nationwide suspension of payments, and Gorton and Tallman write that the clearing house saw the crisis coming. Regarding the necessity of the suspension of payments, Sprague calculated that reserves were not depleted, while Frydman et al. suggest the suspension may have prevented 1930s-style chain failures. Views differ depending on the research, and it cannot be determined which is correct.

How we know — Type of source

Official Documents

Court Records

Institutional Accounts

Research

Was the cause of the run rumor or substance?

Frydman–Hilt–Zhou 2012/2015

Decrease in deposits is explainable by personal connections with Morse et al., and is unrelated to corporate clients (connected -53.4%, unconnected -23.4%).

Carola Frydman, Eric Hilt, Lily Y. Zhou 2012

Fohlin–Gehrig–Haas 2015 (original work not referenced)

Mainly due to rumors (summary from Fed History, note 8).

Federal Reserve History 2015

Odell–Weidenmier 2004 (original work not referenced)

Gold outflow after the 1906 San Francisco earthquake (Fed History, note 13).

Federal Reserve History 2015

Sprague 1910

The initial trigger was a copper speculation "of no public importance." The general economic condition was not unsound.

O. M. W. Sprague 1910