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 Despite the grumblings of certain bankers, the question of currency/banking reform could wait so long as economic conditions allowed it to be ignored. After the 1907 Crisis, bankers ''as a class'' could no longer ignore it. As they so often do, the crash followed a period of feverish speculation. By the fall of 1906, this boom was beginning to drain English gold across the Atlantic, and the Bank of England took notice. As Frank Vanderlip reported to James Stillman, “The Bank of England is extremely nervous on the subject of gold exports.”<ref>Lowenstein, Roger. ''America’s Bank: The Epic Struggle to Create the Federal Reserve''. New York: Penguin Press, 2015. p 58</ref> In the fall of 1906, the Bank of England dropped the hammer.<blockquote>London raised its interest rate from 3.5 percent to 6 percent. The Reichsbank in Berlin raised rates as well. Since international capital ever flows to where the yield is highest, these moves inevitably induced investors to ship their gold back across the Atlantic. The Bank of England further insulated the mother country from the overheated American economy by directing British banks to liquidate the finance bills—short-term loans—that they provided to American firms, thereby tightening credit.<ref>Lowenstein, Roger. ''America’s Bank: The Epic Struggle to Create the Federal Reserve''. New York: Penguin Press, 2015. p 59</ref></blockquote>When the Mercantile National Bank, along with a number of failing trusts, appealed to the Clearing House for aid, the Clearing House demanded the "immediate resignation of Messrs. Heinze, Morse, and Thomas from all their banking connections."<ref>Allen, F.L., G. Morgenson, and M.C. Miller. ''The Lords of Creation: The History of America’s 1 Percent''. Forbidden Bookshelf Series. Open Road Integrated Media, Incorporated, 2017. <nowiki>https://books.google.com/books?id=4fwnswEACAAJ</nowiki>. 111</ref> For days on end the newspapers blared the casualties of the Clearing House sterilization campaign. As the spectacle grew, the public began to balk, and a run on banks and banking trusts was the result.
-Already, the American economy was headed toward crisis. More immediately, the crisis was caused by the failure of a bid to corner the copper market by F. Augustus Heinze of the United Copper Company in collaboration with his brother Otto and the notorious Charles W. Morse. Over mid-October an attempt was made to squeeze short sellers, but the attempt failed. Heinze and company were ruined.<blockquote>the damage done by these failures would probably have been limited had Heinze and his friends not been bankers as well as gamblers. Heinze was president of the Mercantile National Bank; Morse and Thomas were directors of it... depositors naturally became suspicious and began to withdraw their funds. Suspicion spread to the Morse chain of banks, too. The Mercantile, finding its cash being drained away by uneasy depositors, applied to the New York Clearing House for help.<ref>Allen, F.L., G. Morgenson, and M.C. Miller. ''The Lords of Creation: The History of America’s 1 Percent''. Forbidden Bookshelf Series. Open Road Integrated Media, Incorporated, 2017. <nowiki>https://books.google.com/books?id=4fwnswEACAAJ</nowiki>. p109</ref></blockquote>Because of the extreme degree to which the boards of these banks and trusts interlocked, the crisis was virulent. Morse was associated with Charles T. Barney of Knickerbocker Trust Company, who lent him money on occasion. One of the largest in New York, Knickerbocker Trust was targeted by the Clearing House, which demanded resignations. This, coupled with the National Bank of Commerce's refusal to any longer clear their checks, spelled destruction for the trust. On October 21st executives met in a popular restaurant to discuss the emergency. They resolved that only Morgan could save them, and called on him early the following morning.
+Already, the American economy was headed toward crisis. More immediately, the crisis was caused by the failure of a bid to corner the copper market by F. Augustus Heinze of the United Copper Company in collaboration with his brother Otto and the notorious Charles W. Morse. Over mid-October an attempt was made to squeeze short sellers, but the attempt failed. Heinze and company were ruined.<blockquote>the damage done by these failures would probably have been limited had Heinze and his friends not been bankers as well as gamblers. Heinze was president of the Mercantile National Bank; Morse and Thomas were directors of it... depositors naturally became suspicious and began to withdraw their funds. Suspicion spread to the Morse chain of banks, too. The Mercantile, finding its cash being drained away by uneasy depositors, applied to the New York Clearing House for help.<ref>Allen, F.L., G. Morgenson, and M.C. Miller. ''The Lords of Creation: The History of America’s 1 Percent''. Forbidden Bookshelf Series. Open Road Integrated Media, Incorporated, 2017. <nowiki>https://books.google.com/books?id=4fwnswEACAAJ</nowiki>. p109</ref></blockquote>Because of the extreme degree to which the boards of these banks and trusts interlocked, the crisis was virulent. Morse was associated with Charles T. Barney of Knickerbocker Trust Company, who lent him money on occasion. One of the largest in New York, Knickerbocker Trust was targeted by the Clearing House, which demanded resignations. This, coupled with the National Bank of Commerce's refusal to any longer clear their checks, spelled destruction for the trust. On October 21st executives met in a popular restaurant to discuss the emergency. They resolved that only Morgan could save them
-Morgan had a reputation for fixing these kind of problems. Back in 1893 he had all but single-handedly diffused a similar crisis. In 1890 when the Barings bubble collapsed in Argentina, British capital fled the new world, spurred along by fears that the US government would begin experimenting with bimetallic currency.<ref>Chernow, Ron. ''The House of Morgan'', p 105</ref> In 1893, with US gold reserves evaporating, Grover Cleveland approached John Pierpont Morgan Sr. and August Belmont Jr., the American representative of the London Rothschilds.<ref>Spence, Richard B. ''Wall Street and the Russian Revolution: 1905-1925'', p42</ref> They offered him him $50 million at 3.75%, an outrageous rate which Cleveland declined. But on the night of February 7th Morgan and his coterie arrived at the white house; informed that they could not simply drop in on the President of the United States, Morgan replied “I have come down to see the president, and I am going to stay here until I see him,” and there he waited, playing solitaire through the night.<ref>Chernow, ''The House of Morgan,'' 109</ref> In the morning they were received, and Cleveland told them a public issue of bonds, as opposed to their private scheme, had been decided on. Morgan declared this impossible, and Cleveland asked for his alternative.<blockquote>Pierpont laid out an audacious scheme. The Morgan and Rothschild houses in New York and London would gather 3.5 million ounces of gold, at least half from Europe, in exchange for about $65 million worth of thirty-year gold bonds. He also promised that gold obtained by the government wouldn’t flow out again. This was the showstopper that mystified the financial world—a promise to rig, temporarily, the gold market .... When the syndicate bonds were offered, on February 20, 1895, they sold out in two hours in London, in only twenty-two minutes in New York.<ref>Chernow, ''The House of Morgan,'' 110</ref></blockquote>So in 1907, when the sky was falling on top of New York finance, Morgan seemed the man to call. Morgan formed a team of young bankers loyal to him, including Henry P. Davison of First National Bank and Benjamin Strong of his own Bankers Trust. He sent these men to audit Knickerbocker's books, and found them wanting. Knickerbocker was allowed to fail October 22.<ref name=":2">Chernow, ''The House of Morgan.'' 166-67</ref>
+Back in 1893 he had all but single-handedly diffused a similar crisis. In 1890 when the Barings bubble collapsed in Argentina, British capital fled the new world, spurred along by fears that the US government would begin experimenting with bimetallic currency.<ref>Chernow, Ron. ''The House of Morgan'', p 105</ref> In 1893, with US gold reserves evaporating, Grover Cleveland approached John Pierpont Morgan Sr. and August Belmont Jr., the American representative of the London Rothschilds.<ref>Spence, Richard B. ''Wall Street and the Russian Revolution: 1905-1925'', p42</ref> They offered him him $50 million at 3.75%, an outrageous rate which Cleveland declined. But on the night of February 7th Morgan and his coterie arrived at the white house; informed that they could not simply drop in on the President of the United States, Morgan replied “I have come down to see the president, and I am going to stay here until I see him,” and there he waited, playing solitaire through the night.<ref>Chernow, ''The House of Morgan,'' 109</ref> In the morning they were received, and Cleveland told them a public issue of bonds, as opposed to their private scheme, had been decided on. Morgan declared this impossible, and Cleveland asked for his alternative.<blockquote>Pierpont laid out an audacious scheme. The Morgan and Rothschild houses in New York and London would gather 3.5 million ounces of gold, at least half from Europe, in exchange for about $65 million worth of thirty-year gold bonds. He also promised that gold obtained by the government wouldn’t flow out again. This was the showstopper that mystified the financial world—a promise to rig, temporarily, the gold market .... When the syndicate bonds were offered, on February 20, 1895, they sold out in two hours in London, in only twenty-two minutes in New York.<ref>Chernow, ''The House of Morgan,'' 110</ref></blockquote>So in 1907, when the sky was falling on top of New York finance, Morgan seemed the man to call. Morgan formed a team of young bankers loyal to him, including Henry P. Davison of First National Bank and Benjamin Strong of his own Bankers Trust. He sent these men to audit Knickerbocker's books, and found them wanting. Knickerbocker was allowed to fail October 22.<ref name=":2">Chernow, ''The House of Morgan.'' 166-67</ref>
 At this point, even Morgan felt himself out of his depth, and he sought government assistance. Already, back in September, with crisis all but inevitable, Morgan had appealed directly to Theodore Roosevelt. At that time, the Treasury shifted millions of dollars to commercial bank deposits around the nation and tried to limit government withdrawals. Now, October 23, Morgan and other bankers met at a Manhattan hotel with Treasury Secretary George B. Cortel, and the following day Cortel put $25 million in government funds at Pierpont’s disposal.<ref name=":2" /> Through the rest of October and into November Morgan affected a series of last minute miracles, saving the New York Stock Exchange, a number of trusts, and New York City itself. By November, the Treasury was again intervening, issuing "$150 million in low-interest bonds and certificates and permitted the banks to use the government securities as collateral for creating new currency — an expedient device for pumping up the money supply in a hurry."<ref>Greider, William. ''Secrets of the Temple: How the Federal Reserve Runs the Country''. Simon and Schuster, 1989. p278</ref> Effectively, the alliance between Morgan and the US treasury was attempting to act as a central bank by providing emergency liquidity.