U.S. History 1877-Present 3: Panic of 1907

People seem to panic enough when they run low on money, but when the banks started running out? Pandemonium. And who ya gonna call when there's pandemonium in 1907? Well, not the Ghostbusters...because they didn't exist yet.

LanguageEnglish Language
U.S. HistoryU.S. History 1877-Present

Transcript

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of New York well the name caught on and it ended up

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being a nickname for any New Yorker it also became the name of a bank based in

00:34

New York the Knickerbocker Trust well when that Bank helped to cause the panic

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of 1907 the fun nickname for New Yorkers became associated with crisis and the [Man runs away]

00:43

Knickerbockers as you probably know is also the full name for the NBA's New [Boy spinning basketball on finger]

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York Knicks we probably just blew the minds of everybody out there who thought

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steam was named after some guy named Nick but it's not okay that's enough

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trivia night ammunition for one day let's get back to panic and how it went

00:58

down well it all started in 1906 back then New York was the financial capital

01:02

of the nation so it was the same as today except the finance guys were way [Man top hat and monocle by bank vault]

01:06

cooler hats but back then money left New York every fall with the harvest as

01:11

companies bought up western crops and livestock to resell money went west New

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York banks had less cash stockpiled so they had to bulk up again by raising

01:20

interest rates on loans well this attracted investors from

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Europe if we ever want to go fishing for European investors all we have to do is [Man fishing by dock]

01:27

bait our hook with higher interest rates of loans here well this cycle rolled

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merrily along until 1906 when a few disasters happen first there was an

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earthquake in San Francisco this was a disaster because it sent more money than [Houses fall down from earthquake]

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planned West to rebuild the city also the earthquake was a disaster because it

01:45

was well you know an earthquake after this some British banks raised their own [Banker holding interest report card]

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interest rates to keep money from leaving the country then the Interstate

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Commerce Commission began actually regulating how much railroads charge to

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ship stuff which farmers had been begging them to do for decades so

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because of this railroad company owners and investors were making less money to [Man shoveling cash into furnace]

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stash away in the banks well last but not least since it was the straw that

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broke the Knickerbockers back the copper market collapsed while the Knickerbocker

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Bank had been playing the copper market to try and [Man playing at casino]

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make some money back then but when the whole thing blew up well so did the bank

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not literally that would have led to a different kind of panics the mercantile

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Bank bit the bullet next and then banks all over New York City were losing

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weight fast as people rush to withdraw their money before the banks failed [Woman withdrawing cash from machine]

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which of course caused the bank to fail then banks that managed not to fail

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stopped lending money and the stock market clammed up to since it depended [Man scubadiving]

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on people borrowing money to buy stocks well on October 24th 1907 a dozen banks

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failed well the banks in the US Treasury needed a self-help seminar to learn how [Man discussing how to be a winner]

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to be winners again who did they turn to well JP Morgan of course who came in and

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saved the day after already saving the economy with his personal moolah back in

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1893 this probably officially makes JP the original BBE big bailout emperor no

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biggest baller ever... [Morgan wearing BBE ring]