Book Review: The Panic of 1907

The Panic of 1907 is a short (177 pages excluding appendices) history of the stock market crash of 1907, the events that led up to the crash and the lessons learned as a result. As short as the book is, it provides a concise and easily read history of the crash and is sufficient to understand the causes and consequences of the crisis. The authors (Robert F Bruner and Sean D Carr) are academics who refer to extensive source materials for further or more detailed reading.

The events of 1907 were essentially a monetary crisis rather than a general economic downturn. Some of the more interesting points related to the the contribution of the gold standard to the crisis, the inability of governments to intervene effectively (or at all) and the nature of the banking systems without the equivalent of a central bank (the US Federal Reserve could be argued to be a consequence of the crisis).

It certainly lead me to consider what would have happened in the current crisis (which is also a monetary crisis) in the absence of things that we take for granted in today's banking system: prudential oversight, uniform audited accounting reports, capital adequacy requirements, deposit insurance and transparency/equality of information for investors and depositors.

One area in which I felt that the books was deficient is that it did not bring out the personalities and personal histories of the individual characters, such as Charles T Barney and J P Morgan, who played prominent roles in the crisis and the events that preceded it. A second area is that I did not really feel that my understanding of the historical time in which the events took place was improved by reading this book.

On the whole a good read that is clearly relevant to the crisis we are experiencing today but one that could have benefited from greater depth (in particular on the leading characters).