Sunday, December 07, 2008

The Credit Crunch

"Take the panic of 1907, a bad year for for the entire United States. The fall of the Knickerbocker Trust Company in New York caused a panic that affected cities everywhere, including Atlanta.  In Atlanta, the Neal Bank, which had been in business since 1887, fell and more than nine-thousand depositors stood to lose their savings.  That is until in stepped Asa Candler, president at the time of both The Coca-Cola Company and the recently reorganized Central Bank and Trust Company."

This quote is taken from pages 108 and 109 in the book The Real Ones by Elizabeth Candler Graham and Ralph Roberts published by Barricade Books, Inc. in 1992.

Asa Griggs Candler, born in 1851, started the company after buying into the fountain drink business in an Atlanta drug store where he worked.  The story of this man, his family, the times, and the drink are documented in this book by family descendants.  Asa Candler, in 1888, jump-started a medicinal and refreshing drink that later became Classic Coke and The Coca-Cola Company.

The economy in 1907 was similar to ours in 2008 but on a smaller scale.  People were losing jobs, home prices were declining and homeowners were losing their homes. Asa Candler backed the bank in Atlanta, bought a million dollars worth of homes around the city at market value during the panic, sold the houses to buyers of modest means at a low down payment, and financed them for ten years at a low interest rate.  His method became a model for the FHA program that would later be adopted by the United States.  The recession of 1907 lasted around one year.

Our problems in the economy today are enormous compared to the economy of 101 years ago. The global markets of trade, debt, politics, investments, news, and information make our problems today harder to solve.  Solutions will involve more than the actions of a few wealthy individuals.

Have a good week!


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