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Harvests and Financial Crises in Gold Standard America

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  • Hanes, Christopher
  • Rhode, Paul W.

Abstract

Most American financial crises of the postbellum gold-standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather. The transmission channel ran through export revenues and financial markets under the pre-1914 monetary regime. A poor cotton harvest depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money-center banks and precipitated a business-cycle downturn - conditions that bred financial crises. The crises caused by cotton harvests could have been prevented by an American central bank, even under gold-standard constraints.

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Bibliographic Info

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

Volume (Year): 73 (2013)
Issue (Month): 01 (March)
Pages: 201-246

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Handle: RePEc:cup:jechis:v:73:y:2013:i:01:p:201-246_00

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Cited by:
  1. Carola Frydman & Eric Hilt & Lily Y. Zhou, 2012. "Economic Effects of Runs on Early 'Shadow Banks': Trust Companies and the Impact of the Panic of 1907," NBER Working Papers 18264, National Bureau of Economic Research, Inc.
  2. Christopher Hanes & Paul W. Rhode, 2012. "Harvests and Financial Crises in Gold-Standard America," NBER Working Papers 18616, National Bureau of Economic Research, Inc.

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