The Panic of 1907, The Banker’s Panic that Preceded The Federal Reserve Act
Leading up to the creation of the Federal Reserve Act that created The Federal Reserve was the Panic of 1907. It’s important to note that by now the public had been almost conditioned to seeing Panics and recessions happen very frequently (1893,1896,1899–1900,1902–1904) setting up the narrative for a need for another Central Bank. As a reminder, the prior two Central Banks had seen their charter expire, the most recent Second Bank after a protracted fight led by Andrew Jackson. It was almost as if the powers that be wanted to impress on the public the absolute need for a Central Bank or economic chaos would ensue.
The Panic of 1907 began with an attempt to corner the market in stock in the United Copper Company through a short squeeze scheme developed by the company’s President F. Augustus Heinze, his brother Otto, and Wall Street Banker Charles W. Morse. They attempted to secure financing from the Knickerbocker Trust Company but were rejected and warned that their own funds were not sufficient. The scheme did not work as short sellers could find shares outside of the consortium assembled by Heinze and Morse.
The firm that helped the group arrange the scheme, Gross & Kleeberg, went into bankruptcy along with the State Savings Bank of Butte, which Heinz owned and used United Copper Company stock as collateral. The real cause of the panic started when the Knickerbocker, the third largest trust at the time making its economic and financial power enormous, had a bank run initiated on it when J.P. Morgan controlled National Bank of Commerce announced it would refuse to act as a clearinghouse for Knickerbocker. To be clear here, dear reader, J.P. Morgan’s decision/actions CAUSED this Panic.
Both the stock exchange, the trust corporations, and the banking system now in peril, the stock exchange falling almost 50% off its peak the previous year, a group of powerful oligarchs and financiers stepped in to bail out the insolvent entities. A group of Wall Street bankers, led by J.P. Morgan and backed by the likes of John D. Rockefeller and Lord Rothschild, purchased a wide range of distressed assets and utilized their power to signal to the markets that the worst was over so the Panic subsided. This cabal went so far as to ask President Roosevelt to set aside the Sherman Antitrust Act so they could acquire more assets and power under the guise of protecting the economy and markets.
The shorter to medium term effects of the Panic of 1907 include a rise to 8% unemployment when previously it has been under 3% and a decrease in production by 11%. The longer term effect was the creation of the Federal Reserve Act, the end of hard money, and the end to national sovereignty in monetary policy (the Fed is private, make no mistake), and the beginning of a debt-slavery system in the United States.
Analysis: The Panic of 1907 looks to the suspicious person like a situation that could have been solved before it began as the true initiator of the event was a decision by J.P. Morgan and/or his financial masters to cut off support to the Knickerbocker. What resulted was a Panic or a problem that THEY created that THEY got to ride to the rescue to save the day on, as stated by the press they either owned or had significant control over at the time. The cabal led by J.P. Morgan were then able to purchase assets extremely cheaply to “save the day” that they later profited greatly from. Avoiding Panics like and their effects through central banking currency controls was one of the stated reasons for the foundation of the Federal Reserve through the Federal Reserve Act. At Bullion TP, we smell a massive amount of bullshit, dishonesty, market manipulation, intentional creation of a problem that you have the solution for (more power for you and yours), and propaganda against the People to justify the creation of another Central Bank.