Online investing has increased in popularity over the past couple of years due to the cost effectiveness and convenience of trading online. What the Republican economic policy decisions ultimately did was set the stage for a run on gold when the economy started its downward spiral which led to bank failures and ultimately a crash of major proportions. THIS PANIC WAS the result of several things, 1) the wealthy playing games in the stock market trying to become wealthier, 2) lack of regulation of the stock market, 3) lack of regulation over banks and other financial institutions, and 4) no Federal Reserve, as we know it today.
THE Knickerbocker Trust Company was New York City’s third-largest trust and was controlled by Heinze; it, among many others, helped finance the Heinze-Morris play to corner the market. Next on the failure agenda, early in November of 1907, was one of the New York Stock Exchanges largest brokerage houses, Moore & Schley; it was heavily in debt and in danger of collapse. J. P. Morgan came to the rescue once again, this time bringing U.S. Steel with him to acquire TC&I.
They had used Tennessee Coal, Iron and Railroad Company (TC&I) as collateral and its stock price was in danger of collapsing. With a major railroad company and a major brokerage house about to go bankrupt, the combination potentially would cause a crash of the market. The economy was already contracting prior to the Heinze-Morse stock play set-off the series of bank runs and near stock market crash: their move made it much, much worse. WHEN F. Augustus Heinze ‘s and Charles W. Morse , unsuccessfully attempted to manipulate the stock market in order to accumulate even more wealth, they never realized the sea change in the financial world they were going to visit on America.
Three events motivated the 60th U.S. Congress to begin seeking a solution to avoid future crises such as the one they had just experienced, they were: 1) the high frequency of panics prior the Panic of 1907, 2) the severity of the Panic of 1907, and 3) the ubiquitous power of J.P Morgan to control the American financial market. Congress fought and debated for the next three years, during which time there was one more Panic (1910) and a recession (1913); on December 23, 1913, the Federal Reserve System came into being. Keynesian economics is the most disproven economic model in the history of fiscal theory.
The main causes of this panic were the disruptions in business and the upheaval in the stock market brought on by the enforcement of the Sherman Anti-Trust Act , especially with the breakup of the Standard Oil Company Even unemployment wasn’t badly affected and only rose to 6%. By the time the first part of the recession had run its seven month course, the combined effect of the recession and returning troops and driven unemployment up to 5%, not nearly as bad as past recessions or of what was to come, from 3%. Business activity, however, declined by a whopping 24.5% and industrial activity declined by 14%.