By Elmus Wicker
This can be the 1st significant examine of post-Civil struggle banking panics in nearly a century. the writer has developed for the 1st time estimates of financial institution closures and their prevalence in all of the 5 separate banking disturbances. the writer additionally reevaluates the position of the recent York Clearing condo in forestalling numerous panics and explains why it didn't achieve this in 1893 and 1907, concluding that structural defects of the nationwide Banking Act weren't the first explanation for the panics.
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Extra info for Banking Panics of the Gilded Age
Nevertheless, the description of banking instability in Chicago had the potential for diffusing depositor uncertainty throughout the Midwest. The NYCH had announced on the 24th the suspension of cash payment. The response of the Chicago Clearing House was immediate. A meeting of the Clearing House that same evening could reach no agreement about either the authorization to issue loan certificates or the equalization of reserves. The motion was defeated by a vote of 11 to 8. By refusing to follow the lead of New York in authorizing loan certificates and the equalization of reserves despite the suspension of cash payment in other large cities, the members revealed a wide disparity of opinion among the bankers themselves about what appropriate action to take.
Only after massive withdrawals of interior banks did the NYCH authorize the issue of loan certificates. In 1907 the delay in Clearing House action arose from a reluctance to extend support to the troubled trust companies who were not members of the Clearing House association. By failing to respond quickly enough, leadership passed to J. P. Morgan, who resorted to the use of "money pools" to contain the panic. It is clear that considerations of self-interest marred the behavior of the NYCH in 1893 and 1907.
Such a policy . . " But to James out of this debacle the banks of Chicago learned a new sense of responsibility: "The panic, in a sense, constituted the birth pains of the central reserve city that was soon to arise" (p. 455). Memphis, like Chicago, continued cash payment after the New York banks suspended payment on September 24. A run without parallel in Memphis history began the same day with large deposit withdrawals at the First National Bank; it was forced to close on the 25th. The Memphis Daily Appeal conjectured that 15,000 to 20,000 panic-stricken depositors withdrew $1 million.
Banking Panics of the Gilded Age by Elmus Wicker