Real Shock, Monetary Aftershock: The 1906 San Francisco Earthquake and the Panic of 1907

The Panic of 1907 is an important episode in American financial history because it led, in part, to the creation of the Federal Reserve. Although much has been written about the crisis, little has been said about its underlying causes. This study identifies the San Francisco earthquake and its subsequent conflagration as the proximate cause of the panic. London fire-houses insured San Francisco during this period. The payment of claims by British insurance companies following the quake and fire produced a large capital outflow in the fall of 1906, forcing the Bank of England to nearly double interest rates and discriminate against US trade bills. These actions pushed the US into a recession and made markets vulnerable to shocks that otherwise would have been transitory in nature. World financial markets crashed in October 1907 with the collapse of the Knickerbocker Trust Company in New York.

Real Shock, Monetary Aftershock: The San Francisco Earthquake and the Panic of 1907

Economists have long studied the relationship between the real and monetary sectors. We examine the macroeconomic effects of the 1906 San Francisco earthquake, a shock that immediately reduced United States. GNP by 1.5-1.8 percentage points. The quake's impact manifested itself in gold flows, as British insurance companies paid their San Francisco claims out of home funds in the fall of 1906. The capital outflow prompted the Bank of England to raise interest rates and discriminate against American finance bills. British bank policy pushed the US into recession and set the stage for the 1907 financial crisis. The 1907 panic led to the formation of the National Monetary Commission whose proposals recommended the creation of the Federal Reserve. In this study, we identify the San Francisco earthquake as the shock that triggered the chain of events that culminated in the panic of 1907.

The Butcher-Oemler Effect in Abell 2317

This paper presents deep narrow band photometry of the cluster A2317 (z=0.211) carried out using KPNO 4 m and Steward 2.3 m telescopes. Using rest frame Stromgren photometry, it is determined that A2317 has an unusually high fraction of blue galaxies (the Butcher-Oemler effect) for its redshift (f_B=0.35). We demonstrate that the ratio of blue to red galaxies has a strong dependence on absolute magnitude such that blue galaxies dominate the top of the luminosity function. Spectrophotometric classification shows that a majority of the red galaxies are E/S0's, with a small number of reddened starburst galaxies. Butcher-Oemler galaxies are shown to be galaxies with star formation rates typical of late-type spirals and irregular. Starburst systems were typically found to be on the lower end of the cluster luminosity function. In addition, blue galaxies are preferentially found in the outer edges of the cluster, whereas the red galaxies are concentrated in the cluster core.Comment: 23 pages including 1 table and 6 figures, AASTeX v4.0. Accepted by Ap.J. Data, referee report and response are avaliable from http://zebu.uoregon.edu/~j