Panic of 1907 Law and Legal Definition
The Panic of 1907, also known as the 1907 Bankers' Panic, was a financial crisis that occurred in the United States when the New York Stock Exchange fell close to 50% from its peak the previous year. Panic occurred, as this was during a time of economic recession, and there were numerous runs on banks and trust companies. The 1907 panic eventually spread throughout the nation when many state and local banks and businesses entered into bankruptcy.
The Panic of 1907 was one of the most severe of the bank panics that plagued the National Banking Era of the United States. Severe panics also happened in 1873, 1884, 1890, and 1893, although numerous other smaller financial crises cropped up from time to time. Bank panics were characterized by the widespread appearance of bank runs, attempts by depositors to simultaneously withdraw their deposits from the banking system. Because banks did not (and still do not) keep a 100% reserve against deposits, it paid to be near the front of the line of depositors demanding their money when a panic blew up.