A Failure of Regulation: Reinterpreting the Panic of 1907

The Autumn 2014 issue of Business History Review is out now. It contains my paper on New York city trust companies during the panic of 1907.

This is the abstract for the paper

                 Financial Regulation and the Panic of 1907

 

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.