Its half billion dollars worth of financial interests included a number of insurance companies, industrial enterprises, and the region's largest bank chain.
The Federal Reserve, created in 1913 in response to the Panic of 1907, did not expand national money supply during this time period.
A contagion of fear led to higher short-term demand for currency and further strained the liquidity of banks and as a result made them cash flow insolvent.
After the ensuing Great Contraction, the Fed began to learn to deal with regional banking panics and started to embrace its role as lender of last resort.
The importance of conducting expansionary monetary policy became evident as a result of the consequent Great Depression.