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The 1893 Bank Crashes and Monetary Aggregates


  • David T. Merrett

    (University of Melbourne)


The paper explores the effects of the reconstruction schemes of the twelve banks of issue which suspended payment in early 1893 on the behaviour of monetary aggregates. Earlier estimates of narrow and broad measures of money seriously underestimate the contraction in the money stock by not netting out all of the significant proportion of deposit liabilities whose terms of maturity are so lengthened that they are effectively debentures. The paper proceeds by discussing the treatment of this matter in earlier calculations of the money stock. It then constructs an amended series that adjusts for the ‘locked up’ deposit liabilities and interminable deposit stock. Finally, a further adjustment is made by calculating the market value of the deferred deposit receipts and adding that back into the money supply. Thus a lower and upper bound of an alternative series of Australian monetary aggregates is provided.

Suggested Citation

  • David T. Merrett, 1993. "The 1893 Bank Crashes and Monetary Aggregates," RBA Research Discussion Papers rdp9303, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp9303

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    References listed on IDEAS

    1. Schedvin, C B, 1973. "A Century of Money in Australia," The Economic Record, The Economic Society of Australia, vol. 49(128), pages 588-605, December.
    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, January.
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    Cited by:

    1. Chay Fisher & Christopher Kent, 1999. "Two Depressions, One Banking Collapse," RBA Research Discussion Papers rdp1999-06, Reserve Bank of Australia.

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