From Clarence Barron’s purchase of the Wall Street Journal in 1902 until 1907, America was on one of its cyclic booms. In 1907, however, “The Panic of 1907” hit Wall Street and the country. It was also called the “1907 Bankers’ Panic.” The New York Stock Exchange fell close to 50% from its peak the previous year. Both banks and businesses went into bankruptcy.
While the primary causes of the run on banks included a retraction of market liquidity by a number of New York City Banks and a loss of confidence among depositors, it was exacerbated by a lack of governmental regulation of markets and market traders. The crises was triggered by the failed attempt in October 1907 to corner the market on stock of the United Copper Company. When this bid failed, banks that had lent money to the cornering scheme suffered runs that later spread to affiliated banks and trusts, leading a week later to the downfall of the Knickerbocker Trust Company — New York City’s third largest trust. The collapse of the Knickerbocker spread throughout the city’s trusts as regional banks withdrew reserves from New York City banks. Panic ensued.
The United States throughout the 19th century experienced numerous booms, busts, and panics because there was no central bank to moderate interest rates and money supply. The Panic of 1907 was the last straw. People wanted a more stable economic system. As a result, in 1913, Congress established the Federal Reserve.
In boom times, people want to read financial news, check the markets. Even as markets are going down, there is heavy reading of financial news, but once the bottom hits, no one wants to hear about the market. The wind is out of the sails. In New York City, Jessie Waldron Barron was beginning to need help running the Wall Street Journal. Things were changing—readership, circulation, slumping advertising sales, bill collection. She called upon her son-in-law, Hugh Bancroft, the young lawyer from Massachusetts.
Together, Jessie and Hugh would fight to keep the Journal above water, an,d like everyone else, survive the recession. It was hard work and a tough job. Hugh was in over his head. His background was neither finance nor publishing but gentility and ceremonial pursuits. Unknown to Jessie, he also suffered from clinical depression, something that was not known about in those days. Nevertheless, he worked with Jessie in management and dedicated himself to the task. This would be the introduction of Bancroft lineage into the Wall Street Journal and their ultimate ownership of what would become a financial reporting empire.
I write of the Wall Street Journal, Clarence Barron, Jessie Waldron, and Hugh Bancroft in my book: “Observer: The Ronnie Lee and Jackie Bancroft Spencer Morgan Story, a tale of people, greed, envy, manipulation — even crime”.
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