On this day, October 22nd, in 1907, the Panic of 1907, also known as the 1907 Banker’s Panic, occurred in the United States. This financial crisis started because the New York Stock exchange fell almost 50% from its peak since the year prior. Panic broke out due to the economic recession and eventually spread throughout the nation. Many state and local banks entered bankruptcy as a result.

It has been argued that the primary causes of this financial crisis were the retraction of market liquidity by NYC banks, a loss of confidence among depositors, and more. Fear spread throughout the city, causing regional banks to withdraw their reserves from New York City’s banks. Furthermore, across the nation, a majority of people withdrew their deposits from their regional banks. Unfortunately, at this time in history, the US did not yet have a central bank established to inject liquidity back into the market.