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The Panic of 1907: Lessons Learned from the Market's Perfect Storm | 
 enlarge | Authors: Robert F. Bruner, Sean D. Carr
Publisher: Wiley
Buy New: $11.53
New (38) Used (12) from $9.55
Media: Paperback
Pages: 288
Number Of Items: 1
Shipping Weight (lbs): 0.8
Dimensions (in): 8.9 x 5.9 x 0.9
ISBN: 0470452587
Dewey Decimal Number: 330
EAN: 9780470452585
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| Editorial Reviews:
Product Description
"Before reading The Panic of 1907, the year 1907 seemed like a long time ago and a different world. The authors, however, bring this story alive in a fast-moving book, and the reader sees how events of that time are very relevant for today's financial world. In spite of all of our advances, including a stronger monetary system and modern tools for managing risk, Bruner and Carr help us understand that we are not immune to a future crisis."
—Dwight B. Crane, Baker Foundation Professor, Harvard Business School "Bruner and Carr provide a thorough, masterly, and highly readable account of the 1907 crisis and its management by the great private banker J. P. Morgan. Congress heeded the lessons of 1907, launching the Federal Reserve System in 1913 to prevent banking panics and foster financial stability. We still have financial problems. But because of 1907 and Morgan, a century later we have a respected central bank as well as greater confidence in our money and our banks than our great-grandparents had in theirs."
—Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, and Professor of Economics, Stern School of Business, New York University "A fascinating portrayal of the events and personalities of the crisis and panic of 1907. Lessons learned and parallels to the present have great relevance. Crises and panics are as much a part of our future as our past."
—John Strangfeld, Vice Chairman, Prudential Financial "Who would have thought that a hundred years after the Panic of 1907 so much remained to be written about it? Bruner and Carr break significant new ground because they are willing to do the heavy lifting of combing through massive archival material to identify and weave together important facts. Their book will be of interest not only to banking theorists and financial historians, but also to business school and economics students, for its rare ability to teach so clearly why and how a panic unfolds."
—Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia University, Graduate School of Business
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| Customer Reviews: Read 38 more reviews...
 Parallels to Todays Crisis are Striking June 10, 2009
Thomas Grover (Naples, Florida)
This is an excellent history of the panic of 1907. The book gives the reader interesting insight into a banking world without a Federal Reserve, or active US Treasury pumping money into a slowing economy. It also clearly shows that in 1907, and today, the worlds financial system was built on confidence. Once that was lost, the troubles began.
The roles of Hank Paulson, Ben Bernanke, and Tim Geithner today was played flawlessly in 1907 by one individual, J.P. Morgan. Morgan engineered the response and ultimate recovery. One man having this kind of power scared the heck out of government leaders and as a result the Federal Reserve was established in 1913.
 This is what reserves are FOR! June 2, 2009
Vincent Poirier (Tokyo, Japan)
The Panic of 1907 was a liquidity crisis unprecedented in US history. The US economy may well owe it's survival at that time to one man, J.P. Morgan, who orchestrated financial rescue efforts. He examined banks under fire, evaluated which were sound and which weren't and saved what could be saved by coordinating the supply of cash to weaker institutions from stronger ones in order to weather runs.
At one point a young manager refused to put more money into the pool for fear that this would take his cash reserves below the regulatory requirement. Exasperated, Morgan belowed out "This is what reserves are for!".
But what does this all mean? How did the panic start? What sparked it? What were the underlying conditions that made the situation so prone to catch fire? Why was it so difficult to coordinate a rescue? And what exactly are reserves for anyway?
Authors Bruner and Carr answer these questions. They describe the 1907 panic in detail starting with the sparks, viz. the failure of two major New York institutions, and the pre-conditions, viz. low liquidity due to money spent rebuilding San Francisco and the absence in the US of a central bank. They then narrate J.P. Morgan's effort to steer the economy back to safe waters.
Having given us the story of the panic, they ask could it happen again. Of course it can, and did. They describe the lessons to be learned and the signals to look for:
-Market wide system like architecture
-Buoyant growth
-Inadequate safety buffers
-Adverse leadership (e.g. hostile politicians)
-Real economic shocks
-Undue fear, greed, and other aberrations
-Failure of collective action (until it's too late)
This book was published at about the time of the sub prime debacle so it was written before the current bubble burst. Surely their peers were aware of these ideas but sadly no one listened.
Vincent Poirier, Tokyo
Panic of 2009 May 2, 2009
Thomas M. Parzinger (Germantown, Tennessee USA)
2 out of 2 found this review helpful
While I was initially very skeptical about this book, it does provide some very interesting food for thought and eerie parallels between 1907 and 2009. If you are seriously interested in where we have been and where we could be heading, I would recommend that you read this book (and also encourage your friends to read this book).
Comments regarding the application of Complex System Theory and the experiences from 1907 appear to be highly pertinent and very timely:
1) Complex systems create convenient pathways for serious problems to travel and expand;
2) Wasted information asymmetry opportunities occur when political and government officials fail to use superior information in a timely and effective manner (or even worse implement policies that elevate exposure to risk of a crisis);
3) With current global financial systems, institutions in different countries are linked and financial crises have increasingly stronger international dimensions;
4) Complex systems can display surprising non-linearities. Orderly systemic structures can produce unpredictable behavior;
5) Highly complex systems make it difficult for anyone to know what is really going on; and,
6) System complexity makes it difficult for all participants in the financial system to be well-informed when needed the most.
Other general observations related to the case study include:
1) Gaining clarity as to which banks are solvent or insolvent might hurt weak banks but could help healthy banks;
2) Every major financial panic has occurred after an episode of rapid economic growth;
3) The "boom" part of the credit cycle tends to erode the shock absorbers that cushion the financial system in a slump;
4) Outlandish rhetoric from President Theodore Roosevelt regarding big business and "the wealthy" added to calls for news laws and increased government regulation;
5) The global financial system is larger, more intertwined, and much more complex than ever;
6) The overall world economy has experienced buoyant growth, thus absorbing liquidity and removing discipline at a critical time;
7) Outlandish rhetoric and counter-productive policies can further erode already weak investor confidence;
8) Any significant financial crisis can lead to further vulnerability from "real" economic/other shocks (e.g., war, oil shortages, pandemics, etc.);
9) Never underestimate the potential impact of fear, greed, and other aberrant behaviors; and,
10) If you believe the comments in the book, you will come to highly admire J. Pierpoint Morgan (at least for his pivotal role in calming the panic of 1907). The only problem is that no one of his stature has at yet stepped forward in 2009.
 A nice story, but left me disappointed April 4, 2009
C. Bentley (Utah)
2 out of 2 found this review helpful
No doubt the event provides the basis for an interesting story, but I thought that this book was low on insight. It's remarkable to read and see some of the similarities between 1907 and 2008, but the authors offer little insight regard causes, solutions, and lessons to be drawn. The final chapter makes an attempt, but was pretty weak, in my opinion.
Perhaps I was expecting too much.
While the story is quite good, there is certainly not even an attempt made at a balanced treatment of J.P. Morgan. That may bother you, and it may not. I was not particularly annoyed by it.
To sum it up, I liked the story, and saw very little in terms of "lessons learned."
Precusor if "IT" March 15, 2009
orlando roncesvalles (rockville, md United States)
2 out of 2 found this review helpful
The value of this historical book is in its bringing together the various strands of thought on how financial crises happen, drawing on Kindleberger, Minsky, Calomiris, et al. Four of the seven ingredients are from the Minsky model, and the rest reflect more recent work and the authors' view that "political leadership" can make or break a crisis. The authors concluded, as of June 2007, that another Great Depression can "almost certainly" happen. Read it also for the high drama, including on the life of J. P. Morgan.
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