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A Failure of Regulation? Reinterpreting the Panic of 1907

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  • Hansen, Bradley A.

Abstract

Lax regulation enabled trust companies to take excessive risks, according to previous studies of the Panic of 1907, leading to a loss of confidence and massive runs. These studies have, however, given relatively little attention to the historical development of trust companies. This article argues that a more historical perspective can lead to a better understanding of the institutional framework and the actions of trust companies. Depositors did not lose confidence because of inadequate regulation; depositors lost confidence in specific trust companies because of false rumors, and diversity among trust companies hindered cooperation to halt the Panic.

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  • Hansen, Bradley A., 2014. "A Failure of Regulation? Reinterpreting the Panic of 1907," Business History Review, Cambridge University Press, vol. 88(3), pages 545-569, October.
    • Handle: RePEc:cup:buhirw:v:88:y:2014:i:03:p:545-569_00
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    Cited by:

    1. Mary Eschelbach Hansen, 2014. "Sources of Credit and the Extent of the Credit Market: A View from Bankruptcy Records, Mississippi 1929-1936," Working Papers 2014-09, American University, Department of Economics.
    2. Escamilla-Guerrero, David & López-Alonso, Moramay, 2023. "Migrant Self-Selection and Random Shocks: Evidence from the Panic of 1907," The Journal of Economic History, Cambridge University Press, vol. 83(1), pages 45-85, March.
    3. Christopher Hoag, 2019. "Bank Executive Experience in a Financial Crisis," Working Papers 1902, Trinity College, Department of Economics.
    4. Hoag, Christopher, 2018. "Clearinghouse loan certificates as a lender of last resort," The North American Journal of Economics and Finance, Elsevier, vol. 45(C), pages 215-229.
    5. Mary T. Rodgers & James E. Payne, 2020. "Post‐financial crisis changes in financial system structure: An examination of the J.P. Morgan & Co. Syndicates after the 1907 Panic," Review of Financial Economics, John Wiley & Sons, vol. 38(S1), pages 226-241, March.
    6. Moen, Jon & Tallman, Ellis, 2018. "Outside Lending in the New York City Call Loan Market," MPRA Paper 88733, University Library of Munich, Germany.
    7. David Escamilla-Guerrero & Moramay Lopez-Alonso, 2019. "Self-selection of Mexican migrants in the presence of random shocks: Evidence from the Panic of 1907," WIDER Working Paper Series wp-2019-23, World Institute for Development Economic Research (UNU-WIDER).
    8. Christopher Hoag, 2019. "Bank Executive Experience with Clearinghouse Loan Certificates," Working Papers 1903, Trinity College, Department of Economics.

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