The stock market fell nearly 50% from its peak. One of New York’s largest trust companies was crashing and burning. Grown bankers cried.
Today’s news? Hardly. 101 years ago, America braved what they called then the Bankers Panic of 1907. It looked like capitalism, early 20th Century vintage, was circling the drain and ready to disappear as they then knew it.
One man, J.P. Morgan, stepped forward. The US had no national bank back then. Morgan convinced New York bankers to stand with him, to stand firm against the panic which endangered our financial system to its core.
Never mind what caused this collapse 101 years ago; all financial catastrophes are unique – each comes from its own set of factors, plus a bit of greed thrown in for good measure. Working all night, Morgan and other bankers injected some $8.5 million dollars in 1907 money to keep the giant Knickerbocker Trust from failing to pay its depositors and increasing the panic to oblivion settings.
One by one, the financial giants of the day ponied up: $10 million from Rockefeller (John D., that is), another less familiar name today, but a powerhouse back then, a Mr. Cortelyou deposited around $25 million into a number of New York banks. Literally overnight, the banks which were teetering happily found themselves suddenly chock full of deposits and ready to ride past the hounds of hell and back to healthy operations.
Where, oh where is the J.P. Morgan-leader of today? We need a strong leader who is more than just reassuring words; we need strong, reassuring action from the private sector to loosen up the money system caught in this horrible freeze-up. And, we need it now.
Where are you J.P., when we really need you?