The Panic of 1907, 2nd Edition

Technical Appendix: Analysis of Trust Company Diversity and Deposit Runs

The diversity among trust companies in New York City is a recurrent issue in this narrative. It underpins the difficulty with which J. P. Morgan organized collective action among the trust companies to assist the most‐distressed firms. The nature of this diversity informs the thesis that financial instability broke out in the periphery of the financial community—that is, by their absence from the New York Clearing House, the trust companies set themselves on the periphery of nationally and state‐chartered banks. The narrative also suggests that there was even a periphery within the periphery (the Heinze–Morse affiliates), which was where the trouble really began. Finally, there was an aspect of this diversity among the trust companies that would later appear in the Money Trust hearings, namely, that the financial elites in New York (the Morgan–Baker–Stillman circle) exploited the Panic for their own benefit. Recent studies on trust company performance during the Panic raise insights that highlight sources of diversity and invite future research.

Sources of Division: Business Model, Market Power, Exposure to Market Discipline

What can the movement of deposits during the Panic tell us about the relative significance of sources of division within the Manhattan trust company community? This appendix integrates and examines three perspectives as a supplement to the discussion of trust company diversity in ...