Throughout American history there have been various banking crisis’s. A banking crisis usually refers to a situation in a general “market adjustment” when faith in banking institutions falls, and people start trying to move their money to other places for safe keeping. This is called a “run on the banks.” This article will take you through a few of the banking panics that have happened in U.S. history.
Panic of 1873
The Panic of 1873 began with the failure of a prominent investment firm located in Philadelphia called Jay Cooke and Company. The firm was the principal backer of the Northern Pacific Railroad and had handled most of the government’s wartime loans, using a widespread sales campaign back by advertising to sell bonds to people who had never before owned securities. The company speculated, which means they took a risk to try to make more money. Their speculation failed and the firm went bankrupt, along with several other commercial and investment banks. The stock market closed for 10 days and many businesses were forced to shut down after.
Panic of 1907
The Panic of 1907 was a six-week stretch of runs on banks in New York City and other American cities in October and early November of 1907.It was triggered by a failed speculation that caused the bankruptcy of two brokerage firms. One of those failed speculations came from F.A. Heinz who tried to manipulate the price of a company’s shares. When his attempt failed, the stock market crashed, causing a panic. This also led to “runs” on banks across the nation. In other words, businesses and individuals all tried to withdraw their money at the same time. This run caused banks to collapse, the stock market to crash, and businesses to fail. This is what created a recession in the start of June in 1907.
Stock Market Crash of 1929
The stock market crash of 1929, also called the Great Crash , was a sharp decline in U.S. stock market values began on Black Tuesday on October 29, 1929. It contributed to the Great Depression of the 1930’s. The Great Depression lasted approximately 10 years and affected both industrialized and non industrialized countries in many parts of the world.