The 1907 Panic That Gave America the Federal Reserve

Lucas and Luna revisit the Panic of 1907, a banking crisis that nearly collapsed the U.S. financial system and directly led to the creation of the Federal Reserve in 1913. They zero in on the specific trigger: a failed attempt to corner the copper market by a speculator named F. Augustus Heinze. When Heinze's scheme unraveled, it brought down a chain of banks and trust companies, sparking a nationwide run. The key figure who stepped in to stop the panic was J.P. Morgan, who personally organized a private rescue of the banking system from his library in Manhattan. This episode contrasts the ad hoc response by Morgan with the permanent lender-of-last-resort structure the Fed later provided. Lucas argues that the Panic of 1907 is a textbook lesson in why centralized liquidity matters during a financial crisis, and Luna pushes back on whether the Fed has always used its powers wisely. A specific, high-stakes historical case with clear modern relevance. #PanicOf1907 #FederalReserve #JPMorgan #FAugustusHeinze #KnickerbockerTrust #BankingCrisis #LenderOfLastResort #CentralBank #CopperCorner #FinancialHistory #EconomicHistory #BankRun #TrustCompanies #Economics #FexingoBusiness #BusinessPodcast #HistoryLessons #FinancialCrisis Keep every episode free: buymeacoffee.com/fexingo