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Liquidity provision during the crisis of 1914: private and public sources

  • Margaret M. Jacobson
  • Ellis W. Tallman

Caught between the end of the National Banking Era and the beginning of the Federal Reserve System, the crisis of 1914 provides an example of a banking panic avoided. We investigate how this outcome was achieved by examining data on the issues of Aldrich-Vreeland emergency currency and clearing house loan certificates to New York City institutions that identify borrower and quantity requested for each type of temporary liquidity measure. Combined with balance sheet data, we illustrate how temporary liquidity borrowing was essential for maintaining transactions volumes among New York City financial intermediaries. We highlight a significant role for clearing house loan certificates that is distinct from the influence of Aldrich-Vreeland emergency currency issues.

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Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 1304.

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Date of creation: 2013
Date of revision: 01 Oct 2014
Handle: RePEc:fip:fedcwp:1304
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  1. Michael J. Fleming, 2012. "Federal Reserve Liquidity Provision during the Financial Crisis of 2007–2009," Annual Review of Financial Economics, Annual Reviews, vol. 4(1), pages 161-177, October.
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  5. Asani Sarkar & Jeffrey Shrader, 2010. "Financial amplification mechanisms and the Federal Reserve’s supply of liquidity during the crisis," Economic Policy Review, Federal Reserve Bank of New York, issue Aug, pages 55-74.
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  16. A. Piatt Andrew, 1908. "Substitutes for Cash in the Panic of 1907," The Quarterly Journal of Economics, Oxford University Press, vol. 22(4), pages 497-516.
  17. Christopher Hoag, 2012. "Aldrich-Vreeland Emergency Currency as a Lender of Last Resort," The Journal of Economics, Missouri Valley Economic Association, vol. 38(1), pages 73-88.
  18. John A. James & James McAndrews & David F. Weiman, 2013. "Wall Street and Main Street: the macroeconomic consequences of New York bank suspensions, 1866–1914," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 7(2), pages 99-130, May.
  19. Timberlake, Richard H, Jr, 1984. "The Central Banking Role of Clearinghouse Associations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 16(1), pages 1-15, February.
  20. Tao Wu, 2008. "On the effectiveness of the Federal Reserve's new liquidity facilities," Working Papers 0808, Federal Reserve Bank of Dallas.
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