Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907
AbstractWe employ a new data set comprised of disaggregate figures on clearinghouse loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearinghouse loan certificates were essentially "bridge loans" arranged between clearinghouse members that enabled and were issued in anticipation of monetary gold imports, which took a few weeks to arrive. The large New York City national banks acted as private liquidity providers by requesting (and the New York clearinghouse issuing) a volume of clearinghouse loan certificates beyond their own immediate liquidity needs. While loan certificates were a temporary solution at best to the liquidity crisis in 1907, their issuance allowed the New York banks to serve their role as central reserve city banks in the national banking system.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2006-23.
Date of creation: 2007
Date of revision:
Other versions of this item:
- Ellis W. Tallman & Jon R. Moen, 2010. "Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907," Working Paper 1010, Federal Reserve Bank of Cleveland.
- NEP-ALL-2006-12-16 (All new papers)
- NEP-BAN-2006-12-16 (Banking)
- NEP-HIS-2006-12-16 (Business, Economic & Financial History)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Gorton, Gary & Huang, Lixin, 2006. "Bank panics and the endogeneity of central banking," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1613-1629, October.
- Gary Gorton & Lixin Huang, 2002. "Bank Panics and the Endogeneity of Central Banking," NBER Working Papers 9102, National Bureau of Economic Research, Inc.
- Champ, B. & Snith, B.D. & Williamson, D.S., 1991.
"Currency Elasticity and Banking Panics: Theory and Evidence,"
RCER Working Papers
292, University of Rochester - Center for Economic Research (RCER).
- Bruce Champ & Bruce D. Smith & Stephen D. Williamson, 1996. "Currency Elasticity and Banking Panics: Theory and Evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 29(4), pages 828-64, November.
- Champ, B. & Smith, B.D., 1991. "Currency Elasticity and Banking Panics: theory and Evidence," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9109, University of Western Ontario, The Centre for the Study of International Economic Relations.
- Miron, Jeffrey A. & Romer, Christina D., 1990.
"A New Monthly Index of Industrial Production, 1884–1940,"
The Journal of Economic History,
Cambridge University Press, vol. 50(02), pages 321-337, June.
- Christina Romer & Jeffrey A. Miron, 1989. "A New Monthly Index of Industrial Production, 1884-1940," NBER Working Papers 3172, National Bureau of Economic Research, Inc.
- Donaldson, R. Glen, 1992. "Costly liquidation, interbank trade, bank runs and panics," Journal of Financial Intermediation, Elsevier, vol. 2(1), pages 59-82, March.
- Ellis W. Tallman & Jon R. Moen, 1993.
"Liquidity shocks and financial crises during the national banking era,"
93-10, Federal Reserve Bank of Atlanta.
- Tallman, Ellis & Moen, Jon, 1998. "Gold Shocks, Liquidity, and the United States Economy during the National Banking Era," Explorations in Economic History, Elsevier, vol. 35(4), pages 381-404, October.
- Gorton, Gary, 1985. "Clearinghouses and the Origin of Central Banking in the United States," The Journal of Economic History, Cambridge University Press, vol. 45(02), pages 277-283, June.
- Ellis W. Tallman & Jon R. Moen, 1995. "Private sector responses to the Panic of 1907: a comparison of New York and Chicago," Economic Review, Federal Reserve Bank of Atlanta, issue Mar, pages 1-9.
- James J. McAndrews & Simon M. Potter, 2002. "Liquidity effects of the events of September 11, 2001," Economic Policy Review, Federal Reserve Bank of New York, issue Nov, pages 59-79.
- Ellis W. Tallman & Elmus R. Wicker, 2010.
"Banking and financial crises in United States history: what guidance can history offer policymakers?,"
1009, Federal Reserve Bank of Cleveland.
- Tallman, Ellis W & Wicker, Elmus R., 2009. "Banking and Financial Crises in United States History: What Guidance can History Offer Policymakers?," MPRA Paper 21839, University Library of Munich, Germany.
- Viral V. Acharya & Denis Gromb & Tanju Yorulmazer, 2012.
"Imperfect Competition in the Interbank Market for Liquidity as a Rationale for Central Banking,"
American Economic Journal: Macroeconomics,
American Economic Association, vol. 4(2), pages 184-217, April.
- Acharya, Viral V & Gromb, Denis & Yorulmazer, Tanju, 2008. "Imperfect Competition in the Inter-Bank Market for Liquidity as a Rationale for Central Banking," CEPR Discussion Papers 6984, C.E.P.R. Discussion Papers.
- Jon R. Moen & Ellis W. Tallman, 2013. "Close but not a central bank: The New York Clearing House and issues of clearing house loan certificates," Working Paper 1308, Federal Reserve Bank of Cleveland.
- Norman, Ben & Shaw, Rachel & Speight, George, 2011. "The history of interbank settlement arrangements: exploring central banks’ role in the payment system," Bank of England working papers 412, Bank of England.
- Ellis W. Tallman, 2012. "The Panic of 1907," Working Paper 1228, Federal Reserve Bank of Cleveland.
- Gary B. Gorton, 2012. "Some Reflections on the Recent Financial Crisis," NBER Working Papers 18397, National Bureau of Economic Research, Inc.
- Mark A. Carlson, 2013. "Lessons from the historical use of reserve requirements in the United States to promote bank liquidity," Finance and Economics Discussion Series 2013-11, Board of Governors of the Federal Reserve System (U.S.).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Meredith Rector).
If references are entirely missing, you can add them using this form.