The Panic of 1907, 2nd Edition

Chapter 3The “Silent” Crash

The whole situation is most mysterious; undoubtedly many men who were very rich have become much poorer, but as there seems to be no one breaking, perhaps we shall get off with the fright only.¹

—J. P. “Jack” Morgan Jr., March 14, 1907

It is a rich‐man’s panic and the results, however serious, will not be disastrous.²

—Barton Hepburn, chairman of Chase Bank, March 15, 1907

By early 1907, it seemed that the progressive tightening of money, which had been accelerated by the massive capital demands of San Francisco’s earthquake, had precipitated a slow decline in equity prices—considered by some contemporaries to be a “silent” crash in the U.S. financial markets.

The Crash

Between its peak in September 1906 and the end of February 1907, the index of 40 industrial stocks fell 10.9 percent,³ a five‐month change in value unremarkable in view of the long history of the market, but pertinent as the precursor to the events of March. Indeed, on March 6, 1907, telegraph correspondence between Jack Morgan and his partner in J. P. Morgan & Company’s London affiliate, Teddy Grenfell, reflected the deepening anxiety between the world’s financial centers:

Grenfell: Can you give us any information and what is your opinion of the immediate future of your market?⁴

Morgan: Do not get any information showing real trouble our market although of course continued liquidation must hurt some people and may do severe damage in places. From what I can make out do not think ...