Panic of 1907

The Panic of 1907 was a financial crisis in the United States caused by a sudden loss of confidence in the banking system. It occurred when several banks and trust companies faced insolvency, triggering a chain reaction of withdrawals and failures. The crisis was worsened by speculation and lack of a central banking authority to stabilize the economy. It led to a severe recession, with many businesses failing and stock prices plummeting. The panic highlighted the need for financial reforms, ultimately leading to the creation of the Federal Reserve System to better regulate and stabilize the economy during future crises.