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Essay On The Panic Of 1907

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Why is there a need for internal controls when individuals are committed to their company’s good interests? This is because if everyone trusted blindly in anyone, then life would be too perfect. Everyone makes mistakes whether they were accidental or purposely made and at the end they become a life lesson to take into consideration. And so, it is important to know about and understand the Panic of 1907 and what led to the founding of the United States Federal Reserve. An economic crisis does not come unexpectedly, instead it is the outcome of smaller events that occurred previously. Natural disasters may be predicted but they will always come and cause a change of everyday operations. To start, San Francisco had a terrible earthquake of a magnitude of 8.3 on the morning of October 9, 1906. This natural disaster affected the city since more than half of it got destroyed due to the trembles. The cities infrastructure was destroyed and worsened with fires taking over the buildings. Since building were made out of wood, following came fires that lasted about four days to finally put out. This earthquake especially hurt America since San Francisco, California was the home to a US Mint …show more content…

Likewise, “the Bank of England’s rising interest rates due to British insurance companies paying out so much to American policyholders (The Panic of 1907).” Consequently, it also triggered a global liquidity crisis that affected the productivity of many industries and exports. Due to the lack of regulation with trust companies in this era, they were not required to ask their customers or partners for collateral for loans. All the money that was being borrowed was a major provider of the stock market, and since the disaster was going on there was no money readily available to purchase stocks. As a result, there was a significant drop in the prices of shares in the New York Stock

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