The Panic of 1837
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Money and the Constitution
Money and the Constitution Jes´usFern´andez-Villaverde1 June 9, 2021 1University of Pennsylvania 1 2 An introduction The text Article. I., Section. 8. The Congress shall have Power ... To coin Money, regulate the Value thereof, and of foreign Coin, ...; To provide for the Punishment of counterfeiting the Securities and current Coin of the United States; Article. I., Section. 10. No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; 3 The Constitutional Convention • Issues related with money (spice money, banknotes, etc.) were contentious issues between the colonies and Britain in the decades before the Revolution. • Later on, the suspicion of paper money will be behind much of the opposition to the First and the Second Bank of the United States. • Nathaniel Gorham (1738-1796; member of the Committee of Detail): no explicit authorization for paper money in the Constitution, but not prohibition either. 4 5 6 Coinage Act of 1792 • The Coinage Act approved by the U.S. Congress on April 2, 1792. • Six measures: 1. It creates the U.S. dollar as the standard unit of money: equal to the value of one Spanish milled dollar (416 grains or 26.96 g. of standard silver; in Spanish: Real de a ocho o Peso). 2. It sets the relative price of gold to silver at 15:1 (bimetallism). 3. It imposes a decimal system. 4. It determines the denomination structure, from eagles ($10) to half cents. 5. It makes the U.S. dollar legal tender. 6. -
The Rising Thunder El Nino and Stock Markets
THE RISING THUNDER EL NINO AND STOCK MARKETS: By Tristan Caswell A Project Presented to The Faculty of Humboldt State University In Partial Fulfillment of the Requirements for the Degree Master of Business Administration Committee Membership Dr. Michelle Lane, Ph.D, Committee Chair Dr. Carol Telesky, Ph.D Committee Member Dr. David Sleeth-Kepler, Ph.D Graduate Coordinator July 2015 Abstract THE RISING THUNDER EL NINO AND STOCK MARKETS: Tristan Caswell Every year, new theories are generated that seek to describe changes in the pricing of equities on the stock market and changes in economic conditions worldwide. There are currently theories that address the market value of stocks in relation to the underlying performance of their financial assets, known as bottom up investing, or value investing. There are also theories that intend to link the performance of stocks to economic factors such as changes in Gross Domestic Product, changes in imports and exports, and changes in Consumer price index as well as other factors, known as top down investing. Much of the current thinking explains much of the current movements in financial markets and economies worldwide but no theory exists that explains all of the movements in financial markets. This paper intends to propose the postulation that some of the unexplained movements in financial markets may be perpetuated by a consistently occurring weather phenomenon, known as El Nino. This paper intends to provide a literature review, documenting currently known trends of the occurrence of El Nino coinciding with the occurrence of a disturbance in the worldwide financial markets and economies, as well as to conduct a statistical analysis to explore whether there are any statistical relationships between the occurrence of El Nino and the occurrence of a disturbance in the worldwide financial markets and economies. -
Friday, June 21, 2013 the Failures That Ignited America's Financial
Friday, June 21, 2013 The Failures that Ignited America’s Financial Panics: A Clinical Survey Hugh Rockoff Department of Economics Rutgers University, 75 Hamilton Street New Brunswick NJ 08901 [email protected] Preliminary. Please do not cite without permission. 1 Abstract This paper surveys the key failures that ignited the major peacetime financial panics in the United States, beginning with the Panic of 1819 and ending with the Panic of 2008. In a few cases panics were triggered by the failure of a single firm, but typically panics resulted from a cluster of failures. In every case “shadow banks” were the source of the panic or a prominent member of the cluster. The firms that failed had excellent reputations prior to their failure. But they had made long-term investments concentrated in one sector of the economy, and financed those investments with short-term liabilities. Real estate, canals and railroads (real estate at one remove), mining, and cotton were the major problems. The panic of 2008, at least in these ways, was a repetition of earlier panics in the United States. 2 “Such accidental events are of the most various nature: a bad harvest, an apprehension of foreign invasion, the sudden failure of a great firm which everybody trusted, and many other similar events, have all caused a sudden demand for cash” (Walter Bagehot 1924 [1873], 118). 1. The Role of Famous Failures1 The failure of a famous financial firm features prominently in the narrative histories of most U.S. financial panics.2 In this respect the most recent panic is typical: Lehman brothers failed on September 15, 2008: and … all hell broke loose. -
Universita' Degli Studi Di Padova
UNIVERSITA’ DEGLI STUDI DI PADOVA DIPARTIMENTO DI SCIENZE ECONOMICHE ED AZIENDALI “M.FANNO” CORSO DI LAUREA MAGISTRALE / SPECIALISTICA IN BUSINESS ADMINISTRATION TESI DI LAUREA “The American banking system before the FED” RELATORE: CH.MO PROF. GIANFRANCO TUSSET LAUREANDO: CARLO RUBBO MATRICOLA N. 1121213 ANNO ACCADEMICO 2016 – 2017 ANNO ACCADEMICO 2016 – 2017 Il candidato dichiara che il presente lavoro è originale e non è già stato sottoposto, in tutto o in parte, per il conseguimento di un titolo accademico in altre Università italiane o straniere. Il candidato dichiara altresì che tutti i materiali utilizzati durante la preparazione dell’elaborato sono stati indicati nel testo e nella sezione “Riferimenti bibliografici” e che le eventuali citazioni testuali sono individuabili attraverso l’esplicito richiamo alla pubblicazione originale. Firma dello studente _________________ INDEX INTRODUCTION ........................................................ 2 CHAPTER ONE ........................................................... 4 THE INDEPENDENCE WAR AND THE BANK OF NORTH AMERICA .... 5 THE FIRST BANK OF THE UNITED STATES 1791 – 1811 ........................... 8 THE SECOND BANK OF THE UNITED STATES 1816-1833 ....................... 13 THE DECENTRALIZED BANKING SYSTEM 1837 – 1863 .......................... 17 CIVIL WAR FINANCING AND THE NATIONAL BANKING SYSTEM ... 23 PANICS OF THE END OF THE CENTURY AND ROAD TO THE FED .... 27 CHAPTER TWO ........................................................ 39 THE ROLE OF THE U.S. SUPREME COURT ................................................ 40 THE SUFFOLK SYSTEM: A “FREE MARKET CENTRAL BANK” .......... 45 DO THE U.S. NEED A CENTRALIZED BANKING SYSTEM? ................... 49 FINAL REFLECTIONS ............................................ 64 BIBLIOGRAPHY ....................................................... 69 1 INTRODUCTION The history of the American banking system is not well-known but it is very important, since it has shaped the current financial market of the country. The U.S. -
History of Financial Turbulence and Crises Prof
History of Financial Turbulence and Crises Prof. Michalis M. Psalidopoulos Spring term 2011 Course description: The outbreak of the 2008 financial crisis has rekindled academic interest in the history of fi‐ nancial turbulence and crises – their causes and consequences, their interpretations by eco‐ nomic actors and theorists, and the policy responses they stimulated. In this course, we use the analytical tools of economic history, the history of economic policy‐ making and the history of economic thought, to study episodes of financial turbulence and crisis spanning the last three centuries. This broad historical canvas offers such diverse his‐ torical examples as the Dutch tulip mania of the late 17th century, the German hyperinflation of 1923, the Great Crash of 1929, the Mexican Peso crisis of 1994/5 and the most recent sub‐ prime mortgage crisis in the US. The purpose of this historical journey is twofold: On the one hand, we will explore the prin‐ cipal causes of a variety of different manias, panics and crises, as well as their consequences – both national and international. On the other hand, we shall focus on the way economic ac‐ tors, economic theorists and policy‐makers responded to these phenomena. Thus, we will also discuss bailouts, sovereign debt crises and bankruptcies, hyperinflations and global re‐ cessions, including the most recent financial crisis of 2008 and the policy measures used to address it. What is more, emphasis shall be placed on the theoretical framework with which contemporary economists sought to conceptualize each crisis, its interplay with policy‐ making, as well as the possible changes in theoretical perspective that may have been precipi‐ tated by the experience of the crises themselves. -
The Many Panics of 1837 People, Politics, and the Creation of a Transatlantic Financial Crisis
The Many Panics of 1837 People, Politics, and the Creation of a Transatlantic Financial Crisis In the spring of 1837, people panicked as financial and economic uncer- tainty spread within and between New York, New Orleans, and London. Although the period of panic would dramatically influence political, cultural, and social history, those who panicked sought to erase from history their experiences of one of America’s worst early financial crises. The Many Panics of 1837 reconstructs the period between March and May 1837 in order to make arguments about the national boundaries of history, the role of information in the economy, the personal and local nature of national and international events, the origins and dissemination of economic ideas, and most importantly, what actually happened in 1837. This riveting transatlantic cultural history, based on archival research on two continents, reveals how people transformed their experiences of financial crisis into the “Panic of 1837,” a single event that would serve as a turning point in American history and an early inspiration for business cycle theory. Jessica M. Lepler is an assistant professor of history at the University of New Hampshire. The Society of American Historians awarded her Brandeis University doctoral dissertation, “1837: Anatomy of a Panic,” the 2008 Allan Nevins Prize. She has been the recipient of a Hench Post-Dissertation Fellowship from the American Antiquarian Society, a Dissertation Fellowship from the Library Company of Philadelphia’s Program in Early American Economy and Society, a John E. Rovensky Dissertation Fellowship in Business History, and a Jacob K. Javits Fellowship from the U.S. -
Davis S Dissertation 2010.Pdf
The Trend Towards The Debasement Of American Currency A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy at George Mason University By Steven Davis Master of Science Stanford University, 2003 Master of Science University of Durham, 2002 Bachelor of Science University of Pennsylvania, 2001 Director: Dr. Richard Wagner, Professor Department of Economics Fall Semester 2010 George Mason University Fairfax, VA Copyright: 2010 by Steven Davis All Rights Reserved ii ACKNOWLEDGEMENTS I would like to thank Professors Richard Wagner, Robin Hanson, and John Crockett for their insight, feedback, and flexibility in their positions on my dissertation committee. Additional thanks to Professor Wagner for his guidance in helping me customize my academic program here at George Mason. I would also like to thank Mary Jackson for her amazing responsiveness to all of my questions and her constant supply of Krackel candy bars. Thanks to Professor “Doc” Bennett for being a great “RA-employer” and helping me optimize my Scantron-grading technique. Thanks to the Economics Department for greatly assisting my studies by awarding me the Dunn Fellowship, as well as providing a great environment for economic study. Thanks to my Mom and Dad for both their support and their implicit contribution to the Allen Davis game. Finally, thanks to the unknown chef of the great brownies available in the small Enterprise Hall cafeteria. Hopefully, they will one day become a topping at Mr. Yogato or at its successor, Little Yohai. iii TABLE OF CONTENTS Page LIST OF TABLES .......................................................................................................... v LIST OF FIGURES ........................................................................................................ vi ABSTRACT ................................................................................................................. viii Chapter 1: Introduction .................................................................................................. -
China, the Silver Question, and the Rise of the American West
CALIFORNIA STATE UNIVERSITY, NORTHRIDGE YELLOW MONEY: CHINA, THE SILVER QUESTION, AND THE RISE OF THE AMERICAN WEST A thesis submitted in partial fulfillment of the requirements For the degree of Master of Arts in History By Kashia Amber Arnold August 2013 The thesis of Kashia Amber Arnold is approved: ______________________________________ Date______________________ Thomas W. Devine, PhD ______________________________________ Date______________________ Merry Ovnick, PhD ______________________________________ Date______________________ Chair, Richard S. Horowitz, PhD California State University, Northridge ii DEDICATION This thesis is dedicated to my husband Jeff, whose ceaseless support and encouragement is a blessed gift in my life. For my three girls, McKenzie, Tylar, and Kennedy, thank you for sacrificing your mother the times she needed it the most. To my fellow colleagues Cheryl Wilkinson, Rebekah Harding, and Joe Monteferante, thank you for always being there for me. I am also grateful for my committee members Dr. Tom Devine and Dr. Merry Ovnick. Dr. Devine has patiently tolerated my passion for eccentric topics in economic history, and I have highly regarded and appreciated his insights on how to improve my work. Dr. Ovnick gave me a special gift when she accepted my first article for publication, for which I will always be thankful. Her attention to detail has taught me how to be a better researcher. I am incredibly indebted to my chair, Dr. Richard Horowitz, who despite his busy schedule agreed to guide my thesis research. He has been the ideal blend of tough yet supportive, giving me the confidence I needed that my topic has potential. I also want to thank other faculty members at CSUN who have played a pivotal role in my development as both an undergraduate and graduate student, including Dr. -
The Panic of 1837 and the Contraction of 1839-43: a Reassessment of Its Causes from an Austrian Perspective and a Critique of the Free Banking Interpretation
The Panic of 1837 and the Contraction of 1839-43: A Reassessment of its Causes from an Austrian Perspective and a Critique of the Free Banking Interpretation By H.A. Scott Trask, Ph.D. [email protected] Kurzweg Fellow, Mises Institute Read at the LVMI, March 2002 The standard interpretation of the Panic of 1837 and subsequent recession blamed state- bank monetary inflation abetted by President Jackson's removal of the federal deposits from the Bank of the United States. This interpretation was rooted in sound economic analysis by contemporary Jeffersonian and hard-money critics of Jackson such as Nathan Appleton (the Massachusetts' conservative textile manufacturer and banker), Albert Gallatin (Jefferson's treasury secretary and now a New York banker) and Condy Raguet (the Philadelphia political economist and free-trade leader). It was extended and refined in the late nineteenth century by William Graham Sumner, the Yale political economist, classical liberal, and economic historian. In the twentieth century, advocates of the Federal Reserve System subtly but significantly modified this interpretation to support the supposed need for a government central bank to regulate the money supply and banking system. They blamed the Panic of 1837 on Jackson's policy of "destroying" the second B.U.S. by depriving it of its regulatory powers over the state banks and providing the latter with the public money as a speculating fund. To students and superficial observers the two interpretations appeared to be the same, or at least complementary; but the two were not the same, as we shall see below. Peter Temin's The Jacksonian Economy (1969) has become the standard and definitive work on the causes of the Panic of 1837 for both libertarian free bankers and many Austrian 100 percent reservists. -
C:\Corruption\Bank Chartering Revision September 2004.Wpd
Bank Chartering and Political Corruption in Antebellum New York: Free Banking as Reform Howard Bodenhorn Lafayette College and NBER bodenhoh @ lafayette.edu Revised April 2004 Current revision September 2004 Abstract: One traditional and oft-repeated explanation of the political impetus behind free banking connects the rise of Jacksonian populism and a rejection of the privileges associated with corporate chartering. A second views free banking as an ill-informed inflationist, pro-business response to the financial panic of 1837. This essay argues that both explanations are lacking. Free banking was the progeny of the corruption associated with bank chartering and reflected social, political and economic backlashes against corruption dating to the late-1810s. Three strands of political thought -- Antimasonic egalitarianism, Jacksonian pragmatism, and pro-business American Whiggism -- converged in the 1830s and led to economic reform. Equality of treatment was the political watchword of the 1830s and free banking was but one manifestation of this broader impulse. Prepared for NBER Conference on Corruption and Reform. I thank Lee Alston, Michael Bordo, Andrew Economopoulos, Ed Glaeser, Stephen Quinn, Hugh Rockoff, Jay Shambaugh, John Wallis, Eugene White, Robert E. Wright, as well as seminar participants at Rutgers University, NYU and the NBER for many useful comments and suggestions on earlier drafts. Special thanks go to Claudia Goldin who provided extensive and valuable comments. I thank Pam Bodenhorn for valuable research assistance. -1- “He saw in the system what he thought a most dangerous political engine, which might in the hands of bad men be used for bad purposes.”1 1. Introduction Government policies toward business can be categorized into three types: minimal, maximal, and decentralized (Frye and Shleifer 1997). -
Will US Dollar Ever Loose It's Kingpin Status? Written by : Nazir Ahmed
Will US Dollar ever loose it’s Kingpin Status? Written by : Nazir Ahmed Shaikh At the conclusion of the Islamic summit in Malaysia, Prime Minister Mahathir Mohamad praised Iran and Qatar for withstanding economic embargoes and said it was important for the Muslim world to be self-reliant to face future threats. He said “With the world witnessing nations making unilateral decisions to impose such punitive measures, Malaysia and other nations must always bear in mind that it can be imposed against any of us”. Iran, Malaysia, Turkey and Qatar are considering trading among themselves in gold and through a barter system as a hedge against any future economic sanctions on them. Prime Minister Mahathir said “I have suggested that we re-visit the idea of trading using the gold dinar and barter trade among us.” He was referring to the Islamic medieval gold coin. “We are seriously looking into this and we hope that we will be able to find a mechanism to put it into effect.” In 1776, Adam Smith, described barter trade as primitive in his seminal “The Wealth of Nations” book. Before the invention of money (coin or paper) there was barter trading, a form of exchange without the use of a monetary medium such as coinage, paper money, or electronic cash. Since the 2008 global financial crisis, there has been an increase in barter trade by many countries. The possible reasons could be: They were heavily indebted with insufficient foreign reserves Effected by the sanctions imposed by U.S. (for example Iran, North Korea, Russia, etc.) To avoid the use of dollars in local, regional and international trade Interested in reducing current account and trade deficits With growing resistance to use US dollar, in international trade, by China, Russia, Turkey, Venezuela, Iran, North Korea, and Cuba; how much longer can the US dollar keep its “Kingpin” currency status? The quick rise of Chinese economy and constant threat of Russia will challenge the dollar dominance, and maybe the latest theatrical trade war between the United States and China is the best or only response the U.S. -
W O R K I N G P a P
working paper 10 09 Banking and Financial Crises in United States History: What Guidance Can History Offer Policymakers? by Ellis W. Tallman and Elmus R. Wicker FEDERAL RESERVE BANK OF CLEVELAND Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded offi cial Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. Working papers are now available electronically through the Cleveland Fed’s site on the World Wide Web: www.clevelandfed.org/research. Working Paper 10-09 July 2010 Banking and Financial Crises in United States History: What Guidance Can History Offer Policymakers? by Ellis W. Tallman and Elmus R. Wicker This paper assesses the validity of comparisons between the current fi nancial crisis and past crises in the United States. We highlight aspects of two National Banking Era crises (the Panic of 1873 and the Panic of 1907) that are relevant for comparison with the Panic of 2008. In 1873, overinvestment in railroad debt and the default of railroad companies on that debt led to the failure of numerous brokerage houses, precursor to the modern investment bank. During the Panic of 1907, panic-related deposit withdrawals centered on the less regulated trust companies, which had only indirect access to the existing lender of last resort, similar to investment banks in 2008.