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Dividends of DevelopmentSecurities Markets in the History of U.S. Capitalism, 1866-1922$
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Mary A. O’Sullivan

Print publication date: 2016

Print ISBN-13: 9780199584444

Published to Oxford Scholarship Online: November 2016

DOI: 10.1093/acprof:oso/9780199584444.001.0001

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From Undigested to Indigestible

From Undigested to Indigestible

US Industrials in the Panic of 1907

(p.189) 5 From Undigested to Indigestible
Dividends of Development

Mary A. O’Sullivan

Oxford University Press

The narrowness and thinness of markets for many industrial securities proved to be a major factor in the unfolding of the panic of 1907. Collateral loans from deposit-taking institutions, often allocated to powerful insiders, played an important role in sustaining trading in industrial securities leading up to the panic. The chain of credit that such loans supported assumed a degree of liquidity that did not exist for most industrial securities, even prior to the crisis. And the dangerous implications of building a mountain of credit on such insecure foundations were revealed at each step in the transmission of the panic of 1907 from a copper corner to a systemic financial crisis. As a result, the tight link that the call market maintained between the nation’s deposit-taking institutions and the securities markets became an important focus of concern in the major debate on financial and monetary reform that followed the panic.

Keywords:   copper, panic of 1907, trust companies, call market, industrial securities

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