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Higher Member Bank Reserve Ratios in 1936 and 1937 Did Not Cause the Relapse into Depression

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  • L. G. Telser

Abstract

Examination of both sides of member banks’ balance sheets reveals evidence that refutes the claim that higher member bank reserve ratios imposed by the Federal Reserve Board of Governors in 1936 and 1937 caused the relapse of the U.S. economy into depression. Member banks responded to higher reserves by selling some of their U.S. Treasury paper and did not reduce their loans to business.

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  • L. G. Telser, 2001. "Higher Member Bank Reserve Ratios in 1936 and 1937 Did Not Cause the Relapse into Depression," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(2), pages 205-216, December.
    • Handle: RePEc:mes:postke:v:24:y:2001:i:2:p:205-216
    DOI: 10.1080/01603477.2001.11490323
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    References listed on IDEAS

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    1. John M. Firestone, 1960. "Federal Receipts and Expenditures during Business Cycles, 1879-1958," NBER Books, National Bureau of Economic Research, Inc, number fire60-1, March.
    2. Philip Cagan, 1965. "Determinants and Effects of Changes in the Stock of Money, 1875–1960," NBER Books, National Bureau of Economic Research, Inc, number caga65-1, March.
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    Cited by:

    1. Francois R. Velde, 2009. "The recession of 1937 - a cautionary tale," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 33(Q IV), pages 16-37.
    2. Thomas Mayer & Thomas F. Cargill, 2004. "THE EFFECT OF CHANGES IN RESERVE REQUIREMENTS DURING THE 1930s:," Working Papers 317, University of California, Davis, Department of Economics.
    3. Roger J. Sandilands, 2010. "Hawtreyan ‘Credit Deadlock’ or Keynesian ‘Liquidity Trap’? Lessons for Japan from the Great Depression," Palgrave Macmillan Books, in: Robert Leeson (ed.), David Laidler’s Contributions to Economics, chapter 15, pages 335-371, Palgrave Macmillan.
    4. Haelim Park & Patrick Van Horn, 2015. "Did the Reserve Requirement Increases of 1936–37 Reduce Bank Lending? Evidence from a Quasi‐Experiment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(5), pages 791-818, August.
    5. Gabriel P. Mathy, 2014. "Uncertainty Shocks and Equity Return Jumps and Volatility During the Great Depression," Working Papers 2014-02, American University, Department of Economics.
    6. Douglas A. Irwin, 2011. "Gold Sterilization and the Recession of 1937-38," NBER Working Papers 17595, National Bureau of Economic Research, Inc.
    7. Roger Sandilands, 2009. "An Archival Case Study: Revisiting The Life and Political Economy of Lauchlin Currie," Working Papers 0906, University of Strathclyde Business School, Department of Economics.
    8. Eggertsson, Gauti B. & Pugsley, Benjamin, 2006. "The mistake of 1931: A general equilibrium analysis," CFS Working Paper Series 2007/06, Center for Financial Studies (CFS).

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