How Banking Has Changed Since the Year You Were Born

Bob Haegele   Sun, January 24, 2021

A world without banking is a world that’s difficult to even imagine in modern times. Although banking has been around in some form for thousands of years, modern banking has a much briefer and more recent history, marked by everything from people emptying their savings accounts in a panic to giving women access to credit and completely changing how they operate in society.

In fact, it was the panic of 1907 that led to the establishment of the Federal Reserve. Since then, several more federal organizations and laws were created that helped shape modern banking. This gallery will give you a glimpse of how things have changed over the years and how we got to where we are today.

1900s: The Panic of 1907

The Panic of 1907 began when F. Augustus Heinze and Charles Morse made a failed attempt to corner the market for shares in Heinze’s United Copper Company. When the scheme failed, there was a run on banks which led to a nearly 50 percent drop in the stock market. It also caused the failure of Knickerbocker Trust Company. JP Morgan had a chance to rescue Knickerbocker but initially declined. However, as more and more banks and trusts entered bankruptcy, Morgan stepped up to stop the run on the banks.

1910s: The Federal Reserve Bank is Formed in 1913

The Panic of 1907 along with other financial panics led to a call for more centralized control of the monetary supply. Given that it was only the actions of a private citizen that was able to stop the run on the banks in 1907, there was a clear need for a federal agency that could inject liquidity during these crises. As a result, the Federal Reserve Act of 1913 established the Fed. Although the Federal Reserve brought much-needed stability to the business world, additional crises would lead to expansion of the Federal Reserve’s responsibilities over the years.

1920s: The Roaring Twenties and the Stock Market Crash

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