 When U.S. President Andrew Jackson allowed the charter of the Second Bank of the United States to expire in 1836 , the U.S. was without any sort of central bank , and the money supply in New York City fluctuated with the country 's annual agricultural cycle . Each autumn money flowed out of the city as harvests were purchased and — in an effort to attract money back — interest rates were raised . Foreign investors then sent their money to New York to take advantage of the higher rates . From the January 1906 Dow Jones Industrial Average high of 103 , the market began a modest correction that would continue throughout the year . The April 1906 earthquake that devastated San Francisco contributed to the market instability , prompting an even greater flood of money from New York to San Francisco to aid reconstruction . A further stress on the money supply occurred in late 1906 , when the Bank of England raised its interest rates , partly in response to UK insurance companies paying out so much to US policyholders , and more funds remained in London than expected . From their peak in January , stock prices declined 18 % by July 1906 . By late September , stocks had recovered about half of their losses . 
