How Contagious Was the Panic of 1907? New Evidence from Trust Company Stocks
- (pp. 514-19)
Abstract
Using a new dataset of all NYC trust company stocks, we study the impact of the Panic of 1907 and the ensuing cash infusion by JP Morgan and the Treasury. Using synthetic controls, we find that three "troubled" trusts performed far worse than the other trusts, whose valuations rebounded within a year. Moreover, trust companies connected to "money trust" banks maintained higher valuation than independents and rebounded much faster. The desire to prevent panic from spreading from infected trusts to financial institutions in his purview could explain Morgan's rapid intervention to stem the contagion.Citation
Fohlin, Caroline, and Zhikun Lu. 2021. "How Contagious Was the Panic of 1907? New Evidence from Trust Company Stocks." AEA Papers and Proceedings, 111: 514-19. DOI: 10.1257/pandp.20211097Additional Materials
JEL Classification
- G01 Financial Crises
- N11 Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: U.S.; Canada: Pre-1913
- N21 Economic History: Financial Markets and Institutions: U.S.; Canada: Pre-1913
- G23 Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- D22 Firm Behavior: Empirical Analysis
- N81 Micro-Business History: U.S.; Canada: Pre-1913