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Clearinghouse Membership and Deposit Contraction during the Panic of 1907

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  • MOEN, JON R.
  • TALLMAN, ELLIS W.

Abstract

Was clearinghouse membership a key factor mitigating withdrawals hm intermediaries during the Panic of 1907? Analyzing balance sheet information on institutions in New York and Chicago, we find evidence that clearinghouse members had smaller contractions in demand deposits than did nonmembers. New York City trusts, isolated from the clearinghouse, were subject to heightened perceptions of risk, and suffered large-scale withdrawals because they were outside of the clearinghouse and therefore much less prepared to withstand large-scale depositor runs. We suggest that this aspect of the Panic of 1907 helped to forge support for the creation of a U.S. central bank.

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Bibliographic Info

Article provided by Cambridge University Press in its journal The Journal of Economic History.

Volume (Year): 60 (2000)
Issue (Month): 01 (March)
Pages: 145-163

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Handle: RePEc:cup:jechis:v:60:y:2000:i:01:p:145-163_00

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Cited by:
  1. Hoag, Christopher, 2005. "Deposit drains on "interest-paying" banks before financial crises," Explorations in Economic History, Elsevier, vol. 42(4), pages 567-585, October.
  2. Gary Gorton & Lixin Huang, 2002. "Bank Panics and the Endogeneity of Central Banking," Center for Financial Institutions Working Papers 02-29, Wharton School Center for Financial Institutions, University of Pennsylvania.
  3. Margaret Jacobson & Ellis W. Tallman, 2013. "Liquidity provision during the crisis of 1914: private and public sources," Working Paper 1304, Federal Reserve Bank of Cleveland.
  4. Breitung, Jörg & Eickmeier, Sandra, 2014. "Analyzing business and financial cycles using multi-level factor models," Discussion Papers 11/2014, Deutsche Bundesbank, Research Centre.
  5. Daniel R. Sanches, 2013. "Banking crises and the role of bank coalitions," Working Papers 13-28, Federal Reserve Bank of Philadelphia, revised 04 Feb 2014.
  6. Ellis W. Tallman, 2012. "The Panic of 1907," Working Paper 1228, Federal Reserve Bank of Cleveland.
  7. Laurent Le Maux & Laurence Scialom, 2013. "Central banks and financial stability: rediscovering the lender-of-last-resort practice in a finance economy," Cambridge Journal of Economics, Oxford University Press, vol. 37(1), pages 1-16.
  8. Gary Gorton & Andrew Winton, 2002. "Financial Intermediation," Center for Financial Institutions Working Papers 02-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
  9. Hugh Rockoff, 2013. "O.M.W. Sprague (the Man who “Wrote the Book” on Financial Crises) and the Founding of the Federal Reserve," NBER Working Papers 19758, National Bureau of Economic Research, Inc.
  10. Amir-Ahmadi, Pooyan & Matthes, Christian & Wang, Mu-Chun, 2014. "Drifts, Volatilities, and Impulse Responses Over the Last Century," Working Paper 14-10, Federal Reserve Bank of Richmond.
  11. Ellis W. Tallman & Elmus R. Wicker, 2010. "Banking and financial crises in United States history: what guidance can history offer policymakers?," Working Paper 1009, Federal Reserve Bank of Cleveland.
  12. Simon Gilchrist & Egon Zakrajsek & Cristina Fuentes Albero & Dario Caldara, 2013. "On the Identification of Financial and Uncertainty Shocks," 2013 Meeting Papers 965, Society for Economic Dynamics.
  13. Asaf Bernstein & Eric Hughson & Marc D. Weidenmier, 2008. "Can a Lender of Last Resort Stabilize Financial Markets? Lessons from the Founding of the Fed," NBER Working Papers 14422, National Bureau of Economic Research, Inc.
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  17. Bernstein, Asaf & Hughson, Eric & Weidenmier, Marc D., 2010. "Identifying the effects of a lender of last resort on financial markets: Lessons from the founding of the fed," Journal of Financial Economics, Elsevier, vol. 98(1), pages 40-53, October.
  18. Daniel Sanches, 2013. "On the welfare properties of fractional reserve banking," Working Papers 13-32, Federal Reserve Bank of Philadelphia, revised 04 Feb 2013.

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