Part 8/10:
On April 17, 1906, an earthquake of devastating complexity struck San Francisco, delivering a severe blow to an already unstable financial environment. The destruction resulted in property losses estimated at $400 million—over $12 billion today—while massive fire outbreaks exacerbated the disaster. As insurance companies grappled with claims that exceeded their payout abilities, monetary conditions tightened further, spinning the economy into a liquidity crisis.
The Bank of England responded to this outflow of wealth by raising interest rates to attract gold deposits, effectively withdrawing capital from American markets. Rising interest rates pushed investors into panicked selling, creating a silent market crash by March 1907.