DOCSLIB.ORG

A Comparative Study of the Banking Crises in the Panic of 1907 and the Depression of 1929-1933

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
A Comparative Study of the Banking Crises in the Panic of 1907 and the Depression of 1929-1933 Loyola University Chicago Loyola eCommons Master's Theses Theses and Dissertations 1938 A Comparative Study of the Banking Crises in the Panic of 1907 and the Depression of 1929-1933 Esther H. Calvert Loyola University Chicago Follow this and additional works at: https://ecommons.luc.edu/luc_theses Part of the History Commons Recommended Citation Calvert, Esther H., "A Comparative Study of the Banking Crises in the Panic of 1907 and the Depression of 1929-1933" (1938). Master's Theses. 3457. https://ecommons.luc.edu/luc_theses/3457 This Thesis is brought to you for free and open access by the Theses and Dissertations at Loyola eCommons. It has been accepted for inclusion in Master's Theses by an authorized administrator of Loyola eCommons. For more information, please contact [email protected]. This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 License. Copyright © 1938 Esther H. Calvert A COMPARATIVE STUDY OF THE BANKING CRISES IN THE PANIC OP 1907 AND THE DEPRESSION OF 1929-33 BY ESTHER H. CALVERT A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN LOYOLA UNIVERSITY FEBRUARY 1938 ' c " (' ~ ' :' " ' ~ ' / / ' VITA The author, Esther H. Calvert, was graduated from the Englewood High School, and from the Chicago Normal College. She received her P.H.B. Degree in the field or Education at the Un1vera1ty of Chicago, and did graduate work in the field ot History at Loyola University for a Master or Arts Degree. Her teaching experience, which began 1n 1917, in the employ or the Chicago Board ot Education, haa been largely confined to the eighth grade level. PREFACE It is the purpose or this research to determine the contri­ buting factors in the banking crises of 1907 and 1929-33. The latter crisis shows that precautions taken after the catastrophe of 1907 were not auff1c1ent to avert one which proved even more serious. Thia study, however, is limited to those elements which were responsible for the widespread breakdown of the banking system. D1s~u~aions or each of these crises and the legislation which followed, occupied page after page of the country's newspapers for days, weeks, and months. All worthwhile periodical• carried views of the nation's outstanding commentators. The Congressioml Record bore testimony of the debates which preceded all legisla­ tion. Numerous other sources, both primacy and secondary, make possible the weighing of evidence, which alone makes research of value. Thia material may be•found in the Chicago Public Library, the Newberry Library, the Crerar Library, and in the library of the First National Bank of Chicago. G.ratitude !s hereby expressed to Reverend Joseph Roubik, S.J., and Dr. Paul Klniery for the interest shown by them in my work; and in particular to Mr. John A. Zvetina for the many helpful suggestions and constructive criticisms necessary to the writing of this thesis. Esther H. Calvert . Chicago, February 1938 CONTENTS Page Chapter I. HISTORY OF BANKING PRIOR TO 1907 •••••••••• 1 The First United Statee Bank--Seoond United States Bank•-Prea1dent Jackson•a opposition•• Pet Banka--The National Banking Syatem--Use of bank deposits for industrial expansion. Chapter II• THE BANKING CRISIS IN THE .PANIC OF 190'1 • • • Cauee--Erfect upon the nation as a whole--Need tor remedial legislation. Chapter III. THE POSTAL SAVINGS SYSTEM••••••••••••••••• Opposition of the banking groupa--Argumenta ot thoae favoring the bill--Preaident Taft approves the bill, June 25, 1910--Excerpts ot the bill--The bill in operation. Chapter IV. THE FEDERAL RESERVE ACT ••••••••••••••••••• The work of Aldrich--or Glasa--Att1tude of the Democrata--or the Repub11cana--Of' Presi• dent Wilson--Currency Bill approved-·Ita pur­ pose. Chapter V. THE DEPRESSION OF 1929 •••••••••••••••••••• The Stock Market craah of October 1929-­ Events leading to the crash--Effect upon the nat1on--Reconstruction Finance Corporation-­ Glass-Steagall Act, pro and con--Approved b1 Prea1dent Hoover. Chapter VI. INSTABILITY OF BANKING•••••••••••••••••••• Signs or weakening--Fear.f'ul depositors-­ Bank rune and collapsea--Emergenc1 Banking Laws and President F. D. Roosevelt--Banking Act of 1933. Chapter VII. 1907•08 VERSUS 1929-33 •••••••••••••••••••• Comparative study of the causes, effects, res·ults, similarities and d1sa1m1lar1t1es. BIBLIOGRAPHICAL ESSAY •••••••••..••.••••••••••••••••••••••• INTRODUCTION' Many reasons have been advanced regarding the Nation's financial collapse in the year 1907. The· theory or panic cycle• promulgated by some is given little credence. Comparative atu~ hoaever, or the tangible reasons, through the use ot contempor­ aneous materials, replace abstract ideas with concrete tacts. From these facts we hope to arrive at the real solution or our problem. Because the banking problem 1s so very pertinent to our ·subject, the entire first chapter la given over to that field, only to the extent which will serve to make meaningful the related matter. The panic of 1907 is dealt with in a more de­ tailed manner, tor too much emphaa~s cannot be laid upon the \-.,..,,(} /,' I , ) ..,, fact that !t was not a chance happening nor the result or care- fully laid plans, but the outcome or a faulty banking system. The reforms which follow are merely the answer to a direct tieed / . to safeguard the rinances of the pe~~le and nation. \\ .· /< . ,._. (" ., ·' ;., /~ L< , \With the Stock Market crash .or October, 1929, subsequent 1nvest1gat1one and 1ncreae1ng bank failures, the average citizen •as again made aware of the unstable financial structure or the nation's banking institutions~] Once more was seen the need tor legislation which would tend to make more secure the savings of those whose earnings bad been placed in those institutions for safe keeping. This takes us to a discussion of the Glass­ steagall Bill, an amendment which modifies the Federal Reser'Ve Act, and which was passed during the Hoove~ administration; as ~ well as the Banking Act of 1933. A comparative study of the crises will briefly digest the foregoing material, oa.111ng atten­ tion, in particular, to underlying causes, similarities and dis­ similarities, and remedial measures. CHAPTER I. HISTORY OF BANKING PRIOR TO 1907 ------- The First United States Bank••Second United States Bank--Preaident Jackaon•e oppoe1t1on-­ Pet Banka--The National Banking Syatem--Uae of bank depoaite tor induatrial expansion. CHAPTER I. HISTORY OF BANKING PRIOR TO 1907 It was during the Presidency of Washington that Alexander Hamilton, Secretary of the Treasury, fostered the idea of a national bank as a means of improving the national credit of the new government. Such an institution he claimed would be instru­ mental in the sate keeping or public funds, transmission of public monies, collection of revenue, and in the making of loans~ In his "Report on a National Bank", which may be found in The Works of Alexander Hamilton, is the statement " ••• it is the mani­ fest design and scope or the Constitution, to vest in Congress all the powers requisite to the effectual administration of the finances of the United States ••• banks are the usual engine in .. 2 the administration of national finances • • • • Just as there bad been opposition to the adoption of the \Constitution because of its centralizing tendencies, there was oppoait1on to the bank. Its Republican opponents headed by Jefferson, maintained that the Constitution contained no prov1sicn 1• Great ·Debates in American Histoi:z, edltsed by Marion M. Miller tcurrent Literature Pub. Co., N. Y., 1913) Vol. 13. p~ 32 2• The Works ot Alexander Hamilton, Comprisifif His Most Im­ ~tant otHclal Reports, (Williams and w t!ng,.....-;-y-:; 1810) p. ig2. l. 2. empowering Congress to Create the bank. 3 With the success of the Federalists, however, the act 1noor- porating the First United States bank in accordance with the plan submitted by Hamilton, made possible the opening of a central bank at Philadelphia on December 12, 1791. Its charter was for a 4 period of twenty years. We will not concern ourselves with its operations, but will move on hurriedly to the year 1808 when the shareholders began to petition for the renewal of the charter which was to expire in 1811. Note only was this opposed by the adherents to the policy of strict construction of the Constitut1ai, but by the political enemies ot Gallatin, Secretary of the Treasury. He, in his report to the Senate, had stated that the Bank was "wisely and skillfully managed", and had urged that its charter be renewed.5 There was also an unfriendly attitude on the part of the many state banks which had been established since 1790, and which kept an eye to their own interests.a According to Roy Garia, Principles ,.2! Money, Credit ~ Banking, a motion to postpone action on rechartering the bank was passed 65 to 64, on January 24, 1811. On February 20, 1811 a similar bill was passed in the ~•Harold R. Bruce, American Parties !ru! Polit1ca,(Henry Holt and '-B~v!sNA.Y~6tiy~>Fina~§!al Hiatofl ot the United States, Long­ s,•ans, Green and Co. N• Y • 1 192 • p.- TOU. I !_bad.,p. 126, See a 1so Roy L. Garis, Princ1Elea or Money, Credit !!!_ Banking, Macmillan Co., N.Y., l93i, P• 3S. ~ 6 •Dewey, p. 126. 3. senate, against the bank, at which time the Vice-President voted 7 against it in order to break a tied vote of 17 to 17. Then came the War of 1812, and a disordered condition fol­ lowed making apparent the need of a banking institution which would exert a stabilizing influence upon the Government by 1upplying financial revenue to the Treasury Department, and by restoring a national currency or circulating medium. The Govern­ ment had been forced to depend upon state banks, and when these bad suspended specie payments, the Treasury operations were paralyted.8 It was at thia time that John c.
Load more

Recommended publications
  • “To Establish a More Effective Supervision of Banking:” How the Birth of the Fed Altered Bank Supervision
    “To Establish a More Effective Supervision of Banking:” How the Birth of the Fed Altered Bank Supervision Abstract Although bank supervision under the National Banking System exercised a light hand and panics were frequent, the cost of bank failures was minimal. Double liability induced shareholders to carefully monitor bank managers and voluntarily liquidate banks early if they appeared to be in trouble. Inducing more disclosure, marking assets to market, and ensuring prompt closure of insolvent national banks, the Comptroller of the Currency reinforced market discipline. The arrival of the Federal Reserve weakened this regime. Monetary policy decisions conflicted with the goal of financial stability and created moral hazard. The appearance of the Fed as an additional supervisor led to more “competition in laxity” among regulators and “regulatory arbitrage” by banks. When the Great Depression hit, policy-induced deflation and asset price volatility were misdiagnosed as failures of competition and market valuation. In response, the New Deal shifted to a regime of discretion-based supervision with forbearance. 100th Anniversary of the Jekyll Island Conference Federal Reserve Bank of Atlanta Eugene N. White Rutgers University and NBER Department of Economics New Brunswick, NJ 08901 USA Phone: 732-932-7363 Fax: 732-932-7416 [email protected] October 2010 “An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.”—the title of the Federal Reserve Act of 1913 [emphasis added] While the formation and development of the Federal Reserve has been intensively studied, histories of the Fed, from Milton Friedman and Anna J.
    [Show full text]
  • The Case for a Limited Central Bank Yeareen
    The case for a Limited Central Bank Yun The Case for a Limited Central Bank Yeareen Yun [email protected] MOUNT HOLYOKE COLLEGE Volume 5, Number 1 Journal for Global Business and Community http://jgbc.fiu.edu Consortium for Undergraduate International Business Education The case for a Limited Central Bank Yun In his book, The Alchemists, Neil Irwin (2013) follows the history of the recent financial crisis of 2007, examining the difficult decisions made and the bold actions carried out by three central bankers: Ben Bernanke of the Federal Reserve, Mervyn King of the Bank of England, and Jean-Claude Trichet of the European Central Bank (ECB). Irwin not only justifies the unconventional methods such as quantitative easing, that was used by these three men, but applauds them, for “peace and prosperity… require people like Bernanke, King, and Trichet to safeguard them, often by doing things that are widely unpopular” (p.388). He accepts the expanding role of the central banks as a necessary measure given the changing times. He believes “central banks [should not] let precedent or politics stop them from doing what they need to do to keep their economies healthy” at all costs even, if it means bailing out investment banks, telling Parliament how to manage its books, and propping up financially troubled economies (p.390). Irwin believes we shouldn’t expect perfection, but rather progress, and trust intelligent men to handle economic crises and manage the economies in ways that they best see fit because they are so “technically complex that we can’t put them to a vote” (p.390).
    [Show full text]
  • October 19, 1987 – Black Monday, 20 Years Later BACKGROUND
    October 19, 1987 – Black Monday, 20 Years Later BACKGROUND On Oct. 19, 1987, “Black Monday,” the DJIA fell 507.99 (508) points to 1,738.74, a drop of 22.6% or $500 billion dollars of its value-- the largest single-day percentage drop in history. Volume surges to a then record of 604 million shares. Two days later, the DJIA recovered 289 points or 16.6% of its loss. It took two years for the DJIA to fully recover its losses, setting the stage for the longest bull market in U.S. history. Date Close Change Change % 10/19/87 1,738.70 -508.00 -22.6 10/20/87 1,841.00 102.30 5.9 10/21/87 2,027.90 186.90 10.2 Quick Facts on October 11, 1987 • DJIA fell 507.99 points to 1,738.74, a 22.6% drop (DJIA had opened at 2246.74 that day) o Record decline at that time o Friday, Oct. 16, DJIA fell 108 points, completing a 9.5 percent drop for the week o Aug. 1987, DJIA reached 2722.42, an all-time high; up 48% over prior 10 months o Today, DJIA above 14,000 • John Phelan, NYSE Chairman/CEO -- Credited with effective management of the crisis. A 23-year veteran of the trading floor, he became NYSE president in 1980 and chairman and chief executive officer in 1984, serving until 1990 NYSE Statistics (1987, then vs. now) 1987 Today (and current records) ADV - ytd 1987 (thru 10/19): 181.5 mil ADV – 1.76 billion shares (NYSE only) shares 10/19/1987: 604.3 million shares (reference ADV above) 10/20/1987: 608.1* million shares (reference ADV above) Oct.
    [Show full text]
  • Bubbles, Manias and Market Failures
    7 February 2019 Bubbles, Manias and Market Failures PROFESSOR D’MARIS COFFMAN transcribed by Mr Imad Uddin Ahmed Thank you all, it’s a great honour to be here. This is actually my second time lecturing in this hall. I was first here about 5 years ago in 2013 when I was talking about something else entirely. I’m thrilled to be back, and I would like to thank Michael Mainelli, who is not here, for in fact convincing me to do this for a second time. Tonight, I’ll talk about bubbles, manias and market failures and particularly about the unintended consequences of regulatory responses to these events. And I think when you begin talking about the subject, it’s almost imperative that you start with Tulipmania which is the paradigmatic early-modern financial crisis. Some of you may recognise this wonderful print from 1637/38 by Peter Nolpe which shows a fool’s cap in which people are playing a gambling game that was played in the inns near the flower markets. It was a kind of auction game, bit of a spread-betting game in which they bid up the price of tulips. And this print shows the devastation that Tulipmania was supposed to have caused to the morals and the economic welfare of the Dutch republic. Now most of when we actually see copies of this print, don’t see the copies from the 1636-37 but rather recycled copies from the 1720s in a much different context. We’ll talk in a moment about that context.
    [Show full text]
  • Interview of George Mehales About the Stock Market Crash of 1929, December 1938
    Interview of George Mehales about the Stock Market Crash of 1929, December 1938 One day, one of my customers showed me how much money he was making in the market. I had never even thought about the stock market before. For a few days, I looked at the market page in the newspaper. It looked good to me, and I bit with what you folks call 'hook, line and sinker.' All the money I took in, I put into stocks. The first day of October in 1929 made me feel like I was rich. The stocks I bought had gone up and up. I sold some of them and bought others. I often thought about what my mother had said and that was “You'll get rich in America someday!' I should have paid for my fixtures, but I figured I could pay them any time. You might think I would have known better, but I didn't. I figured I could pay my debts any time, and I just let them ride. Trouble hit me hard during the last day of October of that year. I had become so interested with the market that I let my own business go down. I wasn't there half the time. I need my own place of business as a place to hang around in. Business dropped off, but I didn't care “cause I was making plenty money in the market. During the last days of October, my stocks began to drop. I was gambling on the margin. My brother called me and told me I would have to put up more cash.
    [Show full text]
  • JP Morgan and the Money Trust
    FEDERAL RESERVE BANK OF ST. LOUIS ECONOMIC EDUCATION The Panic of 1907: J.P. Morgan and the Money Trust Lesson Author Mary Fuchs Standards and Benchmarks (see page 47) Lesson Description The Panic of 1907 was a financial crisis set off by a series of bad banking decisions and a frenzy of withdrawals caused by public distrust of the banking system. J.P. Morgan, along with other wealthy Wall Street bankers, loaned their own funds to save the coun- try from a severe financial crisis. But what happens when a single man, or small group of men, have the power to control the finances of a country? In this lesson, students will learn about the Panic of 1907 and the measures Morgan used to finance and save the major banks and trust companies. Students will also practice close reading to analyze texts from the Pujo hearings, newspapers, and reactionary articles to develop an evidence- based argument about whether or not a money trust—a Morgan-led cartel—existed. Grade Level 10-12 Concepts Bank run Bank panic Cartel Central bank Liquidity Money trust Monopoly Sherman Antitrust Act Trust ©2015, Federal Reserve Bank of St. Louis. Permission is granted to reprint or photocopy this lesson in its entirety for educational purposes, provided the user credits the Federal Reserve Bank of St. Louis, www.stlouisfed.org/education. 1 Lesson Plan The Panic of 1907: J.P. Morgan and the Money Trust Time Required 100-120 minutes Compelling Question What did J.P. Morgan have to do with the founding of the Federal Reserve? Objectives Students will • define bank run, bank panic, monopoly, central bank, cartel, and liquidity; • explain the Panic of 1907 and the events leading up to the panic; • analyze the Sherman Antitrust Act; • explain how monopolies worked in the early 20th-century banking industry; • develop an evidence-based argument about whether or not a money trust—a Morgan-led cartel—existed • explain how J.P.
    [Show full text]
  • 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.
    [Show full text]
  • Emotional Investor Series the Stock Market Crash of 1987 White Paper
    BULL AND BEAR Emotional Investor Series The Stock Market Crash of 1987 White Paper The Emotional Investor Series explores how current events could lead investors to what we call Emotional Market Timing. The Stock Market Crash of 1987 white paper discusses investor’s reaction to the S&P 500’s drastic drop of 20.47% on “October 19, 1987, commonly known as “Black Monday”. 1 The Stock Market Crash of 1987 Imagine finding out that today, the S&P 500 lost 20.47%. This actually happened on October 19, 1987, when the S&P 500 lost 20.47% in a single day.1 How would you react? Would you hold firm with your investment or would you employ what we callEmotional Market Timing and sell all of your stock investments at a loss? We define Emotional Market Timing as when an investor, nervous about domestic, world or market events, in essence panics and engages in an almost spontaneous act of selling their investments. While every market is different, and past performance is never an indication of future results, in our view, Emotional Market Timing may not be the ideal strategy to use when dealing with stock market fear because it centers on alarm rather than conscious rational action. We believe that the key to grasping the dangers of Emotional Market Timing lies in the understanding that markets will generally rise and fall in cycles, typically moving in large chunks and many times in what we consider to be short time periods. After a major event like the crash of October 19, 1987, an investor employs Emotional Market Timing and panics out of the market, in essence locking in their losses, and may find themselves sitting on the sidelines as the market is moving back up with nothing but their losses and what is left of their investment.
    [Show full text]
  • You Can Download November's Newsletter Here
    TRADING JUSTICE November Newsletter Vol. 14 It’s All The Fugazi Part II: The Man Trading Justice Newsletter TABLES OF CONTENTS Some men just want to watch the world burn 4. B.F., A.F. 5. From Fugazi to Real Value: Alchemy 13. Trading Justice Newsletter – Give up. Just quit. Because in this life, you can’t win. Yeah, you can try. But in the end, you’re just going to lose, big time. Becau- se the world is run by The Man. – Who? – The Man. Oh, you don’t know The Man? He’s everywhere. In the White House, down the hall… Miss Mullins, she is The Man! (children are in shock) —SCHOOL OF ROCK (2003)— In the October 2018 edition of the Trading Justice pure or awesome because The Man is just going newsletter, we’ve talked about hyperinflation, which to call them a fat washed up loser and crush their consists of a steep devaluation of a country’s cur- souls. They can’t even stick it to the man anymore, rency, causing its citizens to lose confidence in it. In because the rock ‘n roll was also ruined by The a hyperinflationary environment, we experience a Man when he created this little thing called MTV. rapid and continuing increase in the cost of goods, Just give up. and also in the supply of money creating a vicious circle, requiring ever-growing amounts of new mo- In this edition, we’re back in the realms of the Fu- ney creation to fund government deficits. gazi to explore the root of all this evil: The Man.
    [Show full text]
  • 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.
    [Show full text]
  • Scandals and Abstraction: Financial Fiction of the Long 1980S
    Scandals and Abstraction Scandals and Abstraction financial fiction of the long 1980s Leigh Claire La Berge 1 1 Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford New York Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto With offices in Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary Italy Japan Poland Portugal Singapore South Korea Switzerland Thailand Turkey Ukraine Vietnam Oxford is a registered trade mark of Oxford University Press in the UK and certain other countries. Published in the United States of America by Oxford University Press 198 Madison Avenue, New York, NY 10016 © Oxford University Press 2015 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without the prior permission in writing of Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with the appropriate reproduction rights organization. Inquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above. You must not circulate this work in any other form and you must impose this same condition on any acquirer. Library of Congress Cataloging-in-Publication Data La Berge, Leigh Claire. Scandals and abstraction : financial fiction of the long 1980s / Leigh Claire La Berge. pages cm Includes index. ISBN 978-0-19-937287-4 (hardback)—ISBN 978-0-19-937288-1 (ebook) 1.
    [Show full text]
  • Evidence from the Panic of 1873
    Banks, Insider Connections, and Industrialization in New England: Evidence from the Panic of 1873 Eric Hilt Wellesley College and NBER Abstract: Using newly collected data from Massachusetts, this paper documents the extent of bank director representation non-financial firms’ boards, and investigates whether bank-affiliated companies fared better during the recession that followed the Panic of 1873. Around 59 percent of all non-financial corporations had at least one bank director on their boards. These firms survived the recession of the 1870s at higher rates, and among the surviving firms, those with bank affiliations saw their growth rates and credit ratings decline less than firms without bank affiliations. Consistent with banker-directors helping to resolve problems related to asymmetric information, these effects were strongest among younger firms, and those with lower shares of fixed assets on their balance sheets. In contrast, the presence of bank cashiers on firms’ boards, which created an association with a bank without significantly increasing the likelihood of a credit relationship, had no effect. These results imply that during New England’s industrialization, affiliations with commercial banks helped nonfinancial corporations survive economic downturns. Email [email protected]. I would like to thank Katharine Liang, Paige Kirby, Chloe Peters, and June Wang for research assistance. 1 1. Introduction The contribution of commercial banks to the development of the American economy remains an unsettled issue. Although some have argued that America’s early financial development stimulated its industrialization (Rousseau and Sylla, 2005), part of that financial development may have been undertaken in anticipation of the economic growth that followed.
    [Show full text]