Real Shock, Monetary Aftershock: The 1906 San Francisco Earthquake and the Panic of 1907
Kerry Odell and
Marc Weidenmier ()
Additional contact information
Kerry Odell: Scripps College
Claremont Colleges Working Papers from Claremont Colleges
The Panic of 1907 is an important episode in American financial history because it led, in part, to the creation of the Federal Reserve. Although much has been written about the crisis, little has been said about its underlying causes. This study identifies the San Francisco earthquake and its subsequent conflagration as the proximate cause of the panic. London fire-houses insured San Francisco during this period. The payment of claims by British insurance companies following the quake and fire produced a large capital outflow in the fall of 1906, forcing the Bank of England to nearly double interest rates and discriminate against US trade bills. These actions pushed the US into a recession and made markets vulnerable to shocks that otherwise would have been transitory in nature. World financial markets crashed in October 1907 with the collapse of the Knickerbocker Trust Company in New York.
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (10) Track citations by RSS feed
Downloads: (external link)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.claremontmckenna.edu/rdschool/papers/2001-07.pdf [301 Moved Permanently]--> https://www.claremontmckenna.edu/rdschool/papers/2001-07.pdf [301 Moved Permanently]--> http://www.cmc.edu/rdschool/papers/2001-07.pdf [301 Moved Permanently]--> https://www.cmc.edu/rdschool/papers/2001-07.pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:clm:clmeco:2001-07
Access Statistics for this paper
More papers in Claremont Colleges Working Papers from Claremont Colleges Contact information at EDIRC.
Bibliographic data for series maintained by ().