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The Panic of 1907: Lessons Learned from the Market's Perfect Storm [Kindle Edition]

Robert F. Bruner , Sean D. Carr
4.1 out of 5 stars  See all reviews (62 customer reviews)

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Book Description

"Before reading The Panic of 1907, the year 1907 seemed like a long time ago and a different world. The authors, however, bring this story alive in a fast-moving book, and the reader sees how events of that time are very relevant for today's financial world. In spite of all of our advances, including a stronger monetary system and modern tools for managing risk, Bruner and Carr help us understand that we are not immune to a future crisis."
—Dwight B. Crane, Baker Foundation Professor, Harvard Business School

"Bruner and Carr provide a thorough, masterly, and highly readable account of the 1907 crisis and its management by the great private banker J. P. Morgan. Congress heeded the lessons of 1907, launching the Federal Reserve System in 1913 to prevent banking panics and foster financial stability. We still have financial problems. But because of 1907 and Morgan, a century later we have a respected central bank as well as greater confidence in our money and our banks than our great-grandparents had in theirs."
—Richard Sylla, Henry Kaufman Professor of the History of Financial Institutions and Markets, and Professor of Economics, Stern School of Business, New York University

"A fascinating portrayal of the events and personalities of the crisis and panic of 1907. Lessons learned and parallels to the present have great relevance. Crises and panics are as much a part of our future as our past."
—John Strangfeld, Vice Chairman, Prudential Financial

"Who would have thought that a hundred years after the Panic of 1907 so much remained to be written about it? Bruner and Carr break significant new ground because they are willing to do the heavy lifting of combing through massive archival material to identify and weave together important facts. Their book will be of interest not only to banking theorists and financial historians, but also to business school and economics students, for its rare ability to teach so clearly why and how a panic unfolds."
—Charles Calomiris, Henry Kaufman Professor of Financial Institutions, Columbia University, Graduate School of Business



Editorial Reviews

From Publishers Weekly

Though business professors Bruner and Carr approach their subject, the spectacular financial crisis that gave America the FDIC and the Federal Reserve, with grave pedantry, they devote the majority of the book to the more colorful events and personalities of the crisis, which even academic prose cannot dull. The chronicle follows one speculator's attempt to corner the copper market, which leads to panic, the failure of banks and trusts and the impending bankruptcy of New York City. In the midst of chaos, one man was able to halt the domino effect with calm, character and capital: J. Pierpont Morgan. The Panic, the authors note, hit America at a moment eerily similar to our own: coming off 50 years of postwar economic expansion with a Republican "moralist" in the White House, an increasingly interventionist government, the formation of enormous new corporate conglomerates and a muckraking news media fueling resentment. Further, in a didactic final chapter, "Financial Crises as a Perfect Storm," the authors list the seven forces that, once converged, trigger alarm in investors, among them "buoyant growth," "inadequate safety buffers," "adverse leadership" and "undue fear, greed, and other aberrations"; that many (if not all) of these conditions are already met by today's market gives this authoritative history a relevance and vitality that should make business types sit up and take notice.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.

Review

"Last year, on the 100th anniversary of their book's subject, Robert F. Bruner and Sean D. Carr published The Panic of 1907: Lessons Learned from the Market's Perfect Storm (John Wiley & Sons). A year later, as we weather a far greater financial storm, the book's lessons are more relevant than ever. From their analysis of one of the worst banking panics in U.S. history, when dozens of banks and trust companies failed, Bruner and Carr conclude that financial crises typically result from the convergence of certain elements into a 'perfect storm.' The book is an engrossing read, featuring characters such as Augustus Heinze, the brash entrepreneur; Charles Barney, the tragic trust president; and, above all, J.P. Morgan, Wall Street's indispensable man." (Edward Teach, CFO Magazine, December 1, 2008)

"The Panic of 1907 is a great tale, and I recommend it to any investor with an interest in history. I also recommend it to any investor who wants to understand what is happening right now." (Cliff Ransom, Ransom Research, Inc., October 31, 2008)

"There is a great book that came out last year, by Robert F. Bruner and Sean D. Carr, entitled The Panic of 1907. It details the fear that gripped the market during that time a century ago. Fear bred mistrust, and mistrust bred repeated runs on the bank. Only when J. Pierpont Morgan himself stepped in to assert authority in the crisis was confidence restored and the downward slide and expanding wave of panic halted. The events of that time are remarkably similar to what is occurring today." (Steven M. Davidoff, The Deal Professor, New York Times, September 18, 2008)

"...a great academic study, which was meant to be a warning. Instead, it reads like a description of what has just happened." (Financial Times)

"A dull textbook it's not: Most chapters amount to six or seven pages of storytelling with cliffhangers… entertaining read..." (Bloomberg News)

"…the de...


Product Details

  • File Size: 1276 KB
  • Print Length: 284 pages
  • Page Numbers Source ISBN: 047015263X
  • Publisher: Wiley; 1 edition (October 14, 2008)
  • Sold by: Amazon Digital Services, Inc.
  • Language: English
  • ASIN: B001JPH9DQ
  • Text-to-Speech: Enabled
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  • Lending: Enabled
  • Amazon Best Sellers Rank: #281,259 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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Customer Reviews

Most Helpful Customer Reviews
46 of 48 people found the following review helpful
Format:Hardcover|Verified Purchase
Edwin Lefevre's anecdotal account of the cash crunch of October 1907 in his timelessly street smart REMINISCENCES OF A STOCK OPERATOR (1923) has always begged for further commentary. His colorful recollection of how J.P. Morgan "saved" the New York Stock Exchange - "A day I shall never forget, October 24, 1907" - is in this current history placed in the larger context of a more general U.S. monetary crisis. Contributing events included the sudden, unexpected demand for capital following the San Francisco earthquake (1906), a Bank of England decision to slow the flow of gold to the U.S., a recklessly leveraged stock scheme hatched on Wall Street, and the absence of a central banking authority. Plunging asset values, impaired loan collateral values, a general loss of confidence, bank runs, financial ruin, and personal tragedy were the consequences of a "panic" that gripped the markets in that year. Even as one private individual, J.P. Morgan, provided the leadership and liquidity to the banking system, the City of New York, and the New York Stock Exchange, the events of 1907 dramatically underscored the need for a central bank to watch over the monetary needs of the country. The U.S. Federal Reserve as a lender of last resort was created in 1913.

The authors summarize the lessons of 1907 in a final chapter. I'm not sure that new ground is broken here, and the "perfect storm" cliche' is overdone these days, but it can be forgiven in this highly readable account. The point is that multiple contributing causes are in evidence in a financial crisis. Among those causes that stand out are an economy growing strongly where potential risks are marginalized (e.g.
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124 of 141 people found the following review helpful
2.0 out of 5 stars J. Pierpont Morgan Saves the World September 6, 2007
Format:Hardcover|Verified Purchase
This is a very short book about a fairly complex event. While it is accessable to the general reader, the book comes alive only when describing the recovery efforts of a group of private financiers led by J. Pierpont Morgan. More focus is needed to show how the problem developed and to help explain the dynamics of investor panic contagion. Further, government officials are given short shrift as either creators of the problem (President Roosevelt) or as Morgan's lackeys (Secretary of the Treasury Cortelyou).

The authors portray Morgan as a giant among dwarves. He almost singlehandedly ends the panic with visionary, unselfish, decisive and commanding presence. In regard to the latter attribute, Morgan is shown summoning the United States Treasury Secretary to New York, warning short sellers that they will be "properly attended to" after the crisis and ordering bank presidents to work. At one point, Morgan is almost godlike as he decides which savings institutions will be supported and which will be allowed to die.

Thus, The Panic of 1907 becomes the story of J. Pierpont Morgan vs. panic and greed. Government is given little credit for helping solve the crisis (except when the president agrees to interrupt his breakfast to promise he won't interfere with Morgan's plans). As an example of "adverse leadership," Theodore Roosevelt is listed as a primary cause of problems due to "rising regulation of an activist President."

While it may seem like a small error, the authors mistakingly credit novelist Sinclair Lewis with reporting about the meatpacking business rather than Upton Sinclair. This carelessness causes me some concern about other details presented in this work.
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25 of 27 people found the following review helpful
5.0 out of 5 stars a must read for anyone interested in American finance September 4, 2007
Format:Hardcover|Verified Purchase
Bruner's book is a must read for anyone interested in the history of American finance, or in the intricacies & complexities of financial crises in the US & elsewhere. The 1907 Panic was at once a watershed event in US finance, since it was the immediate stimulus for the creation of our first real central bank, the Federal Reserve. But it also was (and is) typical of financial crises generally. Those of the 19th century that immediately preceded it (that is, in the post-Civil War "Gilded Age"), and those of our own time (that is, Enron, Long-Term Capital Management, Continental Illinois, etc.). Bruner has done an fine job digging up the details of what actually happened in the October/November 1907 crisis, the personalities & institutions, and in showing how these events overlaid on an already unstable economic situation that were lowering public confidence. The book is very well written, if not novel-like, certainly approaching the form. I read nearly all of it in one sitting.
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40 of 46 people found the following review helpful
5.0 out of 5 stars An Insightful Look at a Financial Perfect Storm November 27, 2007
Format:Hardcover|Verified Purchase
Shortly before 10:00 on the morning of November 14, 2007 Charles T. Barney walked into his second-story Park Avenue, took the pistol containing three bullets kept there for protection and fired one bullet into his head.

Up to that moment, he was a man of the Gilded Age. The son of a prosperous Cleveland merchant, he married into the Whitney family, was a director of 33 companies and had served as the top officer of the Knickerbocker Trust Company up until a few short weeks prior.

He had been asked to resign. The reason: early the previous month, he, along with several other New York City trust companies had funded an attempt to corner the market in the stock of a copper mining company. The attempt had failed. As word of his involvement spread, his investors and depositors panicked and started a run on his bank that would eventually lead to its closing.

The country had lost confidence in its financial system. It would take leadership, largely from one man, J. P. Morgan, to restore it.

Robert F. Bruner and Sean D. Carr take the reader day-to-day through this crisis. Beginning with the famed San Francisco earthquake and culminating with Barney's suicide, they draw seven lessons that are, perhaps more instructive today, than they would have been in 1907. They are:

1. Complexity makes it difficult to know what is happening and establish linkages that enable the crisis to spread.
2. Economic expansion creates rising demands for capital and liquidity. The mistakes that accompany those rising demands must eventually be corrected.
3. In the late stages of an economic expansion borrowers and creditors overreach in their application of debt. This lowers the financial system's safety margin.
4.
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Most Recent Customer Reviews
5.0 out of 5 stars A well written important book
Bruner does a fantastic job of helping us the see the Panic of 1907--well written and on point. He also helps those who might believe that a GOLD standard can work see that it will... Read more
Published 7 months ago by John L. Glascock
4.0 out of 5 stars Fast, interesting read
I have to admit that I enjoyed this book, although I did think it was slanted in favor or Mr. Morgan. Read more
Published 10 months ago by Dr. Oceanfront
4.0 out of 5 stars Panic of 1907
I actually read this twice, trying to understand what it was trying to teach (I'm no economist). It tries to give an historical perspective of how and why markets can malfunction... Read more
Published 13 months ago by parker
4.0 out of 5 stars A Good Contribution to Our Understanding About Financial Crises
This 2007 book explains the drivers behind the 1907 global financial crisis in terms easily translatable to 2008. Read more
Published 14 months ago by Andrew Frankling
3.0 out of 5 stars A mixed bag, without a convincing analysis
This was an interesting book about a crisis that perhaps got overshadowed by 1929 in the popular imagination. Read more
Published 16 months ago by jao
5.0 out of 5 stars Enjoyable
The book arrived in better than advertised condition. Was a joy to learn about the panic of 1907 - many lessons for today's times.
Published 18 months ago by James A. Doucette
4.0 out of 5 stars Excellent book. Fascinating history.
This book bring the period and the people into focus and takes into the times. The one thing I felt it lacked was a chapter that discussed the workings of the gold standard. Read more
Published 20 months ago by Luis Watts
3.0 out of 5 stars Entertaining but lopsided and not deep
The Panic of 1907--Lessons Learned from the Market's Perfect Storm"

This was an easy and entertaining read. One gets a real sense of what a bank run feels like. Read more
Published 22 months ago by D. B. Collum
4.0 out of 5 stars good popular economics
Unusual, but this is a book of popularizing economics for the lay person.

The thesis of this book, expressed in it's final sentence, is that great leaders solve crises. Read more
Published on January 21, 2013 by gt surber
5.0 out of 5 stars A lesson for today
I was glad to have been able to read this book. It clearly outlines the factors involved in the panic or 1907. Read more
Published on August 14, 2012 by H. VanderWeide
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