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One of many such ....Historians have long recognized that the...

  1. 1,383 Posts.
    One of many such ....

    Historians have long recognized that the U.S. bank panic of 1907 was the stimulus for the Federal Reserve Act of 1913 that was designed to regulate the nation's money and supply and credit by buying and selling government bonds and issuing Federal Reserve Notes. By paralyzing the nation's financial network and precipitating an acute depression, the panic demonstrated the frailty of the nation's financial system.

    The primary cause of the U.S. bank panic was the unstable financial system that allowed questionable financial practices by unscrupulous businessmen. On 16 October 1907, F. A. Heinze, president of the Mercantile National Bank of New York City, used the resources of his banks in an attempt to seize control of the copper market from John D. Rockefeller. Rockefeller thwarted his efforts by unloading millions of pounds of copper on the market, which precipitated a drop in the price of copper and caused the value of copper stock to plunge. When Mercantile's depositors learned of Heinze's financial schemes, many began liquidating their accounts.

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