Morgan's Solution
Morgan knew that financial panics could not keep occurring, especially since he had lived through those of 1873 and 1893. In addition to protecting his investments, Morgan wanted to stabilize the dollar for future generations. With the support of notable industrialists such as John D. Rockefeller (middle) and Andrew Carnegie (left), Morgan injected $25 million into the economy to keep it from collapsing. Morgan's influential reputation restored citizens' faith in banks and encouraged them to re-deposit.
"If people will keep their money in the banks, everything will be all right" (Morgan). |
George Perkins (Photo Courtesy of The Ohio State University)
"One broker after another came into our office, begging us to do something — many with tears in their eyes and others almost weak with the shock of being suddenly faced with failure. They had the securities on which to raise money but there was no money to be had" (Perkins). |
(Photo Courtesy of The New York Times, 1907)
"... One of the conferrees called several of the others outside and spoke for a moment. They returned and said they would agree, and so the pool was made, and before the trading closed $25,000,000 of 'Morgan money' poured into the Stock Exchange to 'save the situation'" (New York Times). |
(Photo Courtesy of Armstrong Economics)
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"J.P. Morgan found it hard to put down a massive "fire" in the financial system, eventually leading up the creation of Federal Reserve...Without the government, investors often ran like headless chicken & things fell like dominoes. Someone had to take the job of fire control and only J.P. Morgan had any credibility in the system" (Vishwanathan). |
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(Personal Interview with Professor Ghironi from the University of Washington Department of Economics)
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