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Private banks in early Michigan, 1837–1884

Author

Listed:
  • Christopher Bailey

    (Department of Economics, Central Michigan University, Mt. Pleasant, USA)

  • Tarique Hossain

    (International Business and Marketing Department, California State Polytechnic University-Pomona, Pomona, USA)

  • Gary Pecquet

    (Department of Economics, Central Michigan University, Mt. Pleasant, USA)

Abstract

Using a comprehensive new data set on private (noncorporate) banks, we examine the business and business environment of private banking and exchange brokering in the state of Michigan from 1837 to the 1880s. The Michigan experience provides an example of the effect of widespread exchange brokers in an economy. We use econometric models to explain the determinants of the numbers of private banks in the state. We find that private banks were substitutes for locally issued state bank currency and were complements with adjacent states’ bank currency. With the demise of heterogeneous currencies, private banks transitioned their core business from exchange brokering to general banking. In both the antebellum and postbellum eras, private banks tended to exist when and where larger incorporated banks did not. Following the collapse of free banking in Michigan in the antebellum years, this was virtually the entire state. During the 1860s and 1870s, corporate banks used private banks as a root source to build on.

Suggested Citation

  • Christopher Bailey & Tarique Hossain & Gary Pecquet, 2018. "Private banks in early Michigan, 1837–1884," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 12(1), pages 153-180, January.
    • Handle: RePEc:afc:cliome:v:12:y:2018:i:1:p:153-180
    DOI: 10.1007/s11698-016-0155-4
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    More about this item

    Keywords

    Private bank; Exchange broker; Michigan banking; Antebellum banking;
    All these keywords.

    JEL classification:

    • N21 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: Pre-1913
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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