The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that occurred in the United States when the New York Stock Exchange fell almost 50% from its peak the previous year. Primary causes of the run include a retraction of market liquidity by a number of New York City banks and a loss of confidence among depositors, exacerbated by unregulated side bets at bucket shops.
Financial Panic of 1907: A six-week stretch of runs on banks in New York City and other American cities in October and early November of 1907. Triggered by a failed speculation that caused the bankruptcy of two brokerage firms. But the shock that set in motion the events to create the Panic was the earthquake in San Francisco in 1906. The devastation of that city drew gold out of the world’s major money centers. This created a liquidity crunch that created a recession starting in June of…
The ‘Panic of 1907’ caused nationwide bank failures, timber prices collapsed, mine operations ceased, railroads stopped running, a rash of bankruptcies occurred, and a dramatic loss of confidence and a nasty economic downturn sank in for the next year. Although not as severe as many in the past, the Panic made clear the need for national legislation to protect bank depositors.
The trigger of the Panic of 1907 was speculators attempting to corner the copper market. While buying up shares of companies with copper holdings in Montana, they discovered that the shares they purchased had been used as collateral for other purchases. The two leading speculators had used funds they borrowed from the Knickerbocker Trust Company to pay for their shares. When it became known that Knickerbocker had provided their funding, the bank run ensued.
Ghost towns - Rhyolite. The financial panic of 1907 took its toll on Rhyolite and was seen as the beginning of the end for the town. In the next few years mines started closing and banks failed. Newspapers went out of business, and by 1910 the production at the mill had slowed to $246,661 and there were only 611 residents in the town. On March 14, 1911 the directors voted to close down the Montgomery Shoshone mine and mill. In 1916 the light and power were finally turned off in the town.