The panic of 1907

Why Would You Want To Read a book about a financial crisis that struck in the US a hundred years ago? Simply because what was true then is true now. That when human insecurity and greed meet with market imperfections, financial disasters will occur.

That’s why Bruner and Carr—the former is the Dean of the Darden Graduate School of Business Administration and the latter Director of Corporate Innovation Programmes at Darden’s Batten Institute—treat the financial crisis that shook the US between 1906 and 1907 as a case study to investigate why investors panic and markets crash. Written in the spirit of a financial thriller, the book brings alive the moments and characters that dominated those intense 15 months.

So, what does their investigation into the Panic of 1907 tell them about the causes of financial market crises? The authors say there are certain conditions that come together to create the perfect storm. In the case of financial market crises, the factors range from system-like architecture of the markets to rapid economic growth to inadequate safety buffers to human greed and insecurity. “Every major financial panic has occurred after an episode of rapid economic growth,” write Bruner and Carr. That means, India (and China) is never too far away from a financial crisis.