Hoarding in the Panic of 1907

Claims Supported by This Source

1. During the Panic of 1907, a currency premium existed in New York for two months, reaching a high of 4%. The great majority of the country's 16,000 banks suspended cash payments, and private, unauthorized currency was issued in many towns (pp. 290–291).
2. The premium began at the end of October with offers from western banks to pay a bonus for large amounts of cash, joined by orders from manufacturers needing cash for payroll. For much of November, with the exchange rate above the gold export point (over 4.88 against London), over $63,000,000 in gold was imported (pp. 291–292).
3. Daily premium table (began on Oct 31 with a high of 3% and low of 2%; reached 4% on Nov 6, 12, and 13; was around 1% in December; and "no premium" on Dec 31) (pp. 292–293).
4. In the reports of the Comptroller of the Currency of August 22 and December 3, cash in the national banks of New York City decreased by $43,000,000, while in other national banks it increased by $2,000,000. Combined with +$72,000,000 in government deposits, $70,000,000 in gold imports, and +$50,000,000 in national bank notes, at least $233,000,000 in currency disappeared from the banks (p. 293).
5. On October 26, at J.P. Morgan's request, Astor Safe Deposit surveyed 33 companies in the city and found that 789 safe deposit boxes (about 6 times the normal rate) were rented from Tuesday to Friday of the panic week (Oct 22–25). A weekly table from 9 companies shows 228 boxes for the week of Oct 26 (40 the previous week). Many were not "timid small depositors" but businesses preparing for payrolls (pp. 294–295).
6. National banks in the South and West built up cash reserves far exceeding the legal requirement around the time of the panic (cash held by banks outside of reserve cities: 8.25% on August 22 → 9.45% on December 3, +$47,000,000). Banks in central reserve cities lost approximately $58,000,000. 'Many bankers, along with the public, fell into a panic and adopted an every-man-for-himself policy' (pp. 296–299).

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