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Harvests and Financial Crises in Gold-Standard America

  • Christopher Hanes
  • Paul W. Rhode

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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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18616.

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Date of creation: Dec 2012
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Publication status: published as Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(01), pages 201-246, March.
Handle: RePEc:nbr:nberwo:18616
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