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 thenelli01

History of Banking in the US

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I am looking for a book that gives a detailed account of history of banking and regulations in the United States.

 

One that specifically addresses the "frequent bank crashes" before heavy regulation. Period from 1790-1930's.

 

Any suggestions?

Edited by thenelli01

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Murray rothbards history of money and bqnking in the us.

richard timberlakes monetary history of us: aj intellectual and institutional history.

and if you are up to, milton friedman and anna schwarts monetary history.

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my favorite book on this is the creature from jekyll island. Although it doesnt go back as far as  you're mentioning, it covers the most significant part of US central banking

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None of these are exactly on your topic, but they're closely related:

 

James Grant has a book titled "Money of the Mind" that is related to the topic, but is a bit like a series of essays than a book with chapters. Nevertheless, interesting reading. 

 

"Lombard Street" - by Walter Bagehot is a classic, dealing with the Bank of England's early days: how it acted as de facto central banker, and how it handled bank runs that happened every decade or two in gold-based fractional-banking systems.

 

For a more detailed understanding of how the Bank of England came to be (might be too detailed, depending on your purpose): History of the Bank of England, - Andreas Michael Andreades

 

Despite it's misleading title, Benjamin Anderson's "Economics and the Public Welfare" covers the post FED handling. It has a short bit on the handling of the post WW1 recession, when the FED was still not quite established and things were handled in a more or less traditional way, and then the handling of the great Depression. He also narrates how Britain and France went off gold. The downside of the book is that the author does not spend enough time drawing out principles, leaving that hard work to the reader. Still, a must-read for anyone interested in business-cycles, and the related central-bank and fiscal responses.

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Let's not forget this week marks the 100th birthday of the Federal Reserve System, signed into law by President Wilson in 1913! OH BOY! ... Why do I not hear of any national celebrations of this glorious event? Let's see, the Great Depression, the Stagflation of the 1970s, and most recently, the Great Recession. It's enough to give one a greater appreciation for JP Morgan. But seriously, there have been a few articles written on the metaphoric significance of The Wonderful Wizard of Oz, by Frank L. Baum, and how this children's fantasy reflected the Populist Movement at the end of the 19th Century, and the demand for "soft" money. Anyone searching for greater understanding of America's banking history might find it an amusing connect between Oz, and the once (oz.) of silver. If any cares, I could look for one of the articles or Youtube presentations that actually explain the symbolism.

Edited by Repairman

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http://mises.org/document/1022

 

History of Money and Banking in the United States: The Colonial Era to World War II Murray N. Rothbard

 

The master teacher of American economic history covers money and banking in the whole of American history, to show that the meltdown of our times is hardly the first. And guess what caused them in the past? Paper money, loose credit, reckless lending standards, government profligacy, and central banking

 

When will we learn? When people understand the cause and effect in the history of these repeating calamities

 

In a complete revision of the standard account, Rothbard traces inflations, banking panics, and money meltdowns from the Colonial Period through the mid-20th century to show how government's systematic war on sound money is the hidden force behind nearly all major economic calamities in American history. Never has the story of money and banking been told with such rhetorical power and theoretical vigor.

Here is how this book came to be. Rothbard died in 1995, leaving many people to wish that he had written a historical treatise on this topic. But the the archives assisted: Rothbard had in fact left several large manuscripts dedicated to American banking history.

 

In the course of his career, meanwhile, he had published other pieces along the same lines, but they appeared in venues not readily accessible. Given the desperate need for a single volume that covers the topic, the Mises Institute put together this thrilling book. So seamless is the style and argument, and comprehensive is coverage, that it might as well have been written in exactly the format.

 

 

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Well my own research focuses on the National banking period in particular (1863-1913), so that's what I know the most about, but that is also when most of the nationwide panics occurred, so that might be of interest to you.  There's a good paper available here that gives an introduction to the regulatory structure of the national banking system, by Bruce Champ . There are also a few other papers in that series that discuss the national bank note puzzle and silver certificates.  Also, Banking Panics of the Gilded Age is the most recent comprehensive study of financial panics during the National Banking period, and the role of the New York clearinghouse in responding to the panics.  It's a bit academic, but it might also be interesting to the layman. Here is an online article on the National Banking period that provides a brief overview and also cites numerous other academic sources.

 

Hopefully in a year or so I'll have a paper out on one particular financial panic during this period.

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That reminds me: The Panic of 1907, by Bruner and Cox is interesting.It's focus is on Morgan, and the style is narrative rather than numerical or formal. This panic was the proximate excuse for the founding of the Fed, so it is interesting to see how things were handled just one panic prior to the Fed. Then, look at Benjamin Andersen's description (post above) of the 1921 crisis, and finally to the Great Depression. The 1907 episode is closer to the older Bank of England episodes.

 

Not sure if you want "pure banking" as in Milton Friedman's (extremely detailed and nitty-gritty, but boring) tome, or if business-cycle books are game as well. If the latter, here are some additions:

 

Amity Shlaes's "Forgotten Man of the Depression" is an interesting read, but be warned that it is not strong on economics. It is more about the political and social occurrences. 

 

For an Austrian-oriented and more theoretical book, I think, The Great Depression, by Lionel Robbins's is better than Rothbard's, book. (Robbin's is said to have later retracted much of the content, but that's his problem, not ours.)

 

If one is reading about the business-cycles, I think it important to get to some of the more centrist and even slightly Keynesian books. Charles Kindleberger's "The World in Depression" is perfectly suited, because he was fairly eclectic. A good addition in the same vein would be "Crashes and Panics" by Eugene White. If you want to be daring and read something more explicitly Keynesian that will make you think, I suggest  "The Holy Grail of Macro-Economics" by Richard Koo.

Edited by softwareNerd

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Murray Rothbard was a fraud and a faker. 

 

A History of Money and Banking in the United States: The Colonial Era to World War II by Murray N. Rothbard, Von Mises Institute, 2002.  Pages 119-122 on the Suffolk System.  Rothbard begins: “But Dr. George Tivoli, whose excellent monograph, The Suffolk System, we rely on in this study …” Where does Tivoli's work end?  On page 120 is a footnote 102 to John Jay Knox's A History of Banking in the United States in support of a quote.   Then follows more narrative.  Is this a continued paraphrasing of Tivoli? And where is the publication citation for that monograph? I found that original publication about the Suffolk Banking System. Rothbard just used scissors and paste on what was then an obscure work. Today, we have the Internet.
 
What Has Government Done to Our Money?, 2nd ed (Santa Ana: Rampart College, 1974.) Section 7, pages 8-10, ending with footnote 9.  No mention of actual private gold coins issued by Bechtlers, Templeton Reid or many others, or of private copper such as Higley's "Granby tokens" or many others throughout history, including “Hard Times” and Civil War issues (Patriotics and Store Cards). 
 
“Privately-minted gold coins circulated in California as late as 1848.” (page 10 closing Section 7).  The actual use of fractional dollar gold coins in California in 1848-1849 is still much debated.  Private gold had a 20-year run in North Carolina, 1831-1852.   And again private gold in California was not used "until 1848," but starting in 1848.  The coins of Wass-Molitor & Co. (1852-1855), Kellogg & Co. (1854-1855), Schultz & Co. (1851), Mormon Gold (1849-1860), and many other issues would have informed any researcher seeking to understand the substantive topic.
 
Rothbard claimed that kings minted coins.  Indeed, they did.  So did perhaps a thousand other authorities: bishops, counts, town councils, etc.  Kings held no monopolies until much later, and even then only tenuously.
 
Again, relying on my faith in Rothbard, I was brought up short in an online discussion via Usenet's rec.collecting.coins by Francois Velde, a Federal Reserve economist who authored and co-authored books on medieval economics.  While I disagree with Velde's theories, I have to accept his facts, which are available to anyone who cares to do the research -- which I did for an article, "Champagne: the Athens of the Middle Ages" for The Celator – and which Rothbard apparently did not.
 
Rothbard completely ignored the error in “Gresham's Conjecture” the evidence of the silver half dime and nickel 5-cent circulating in parallel (as did the nickel 3-cent and silver 3-cent).
 
The National Bank Acts of 1863 required the deposit of gold with the Treasury.  In return, banks got Treasury bonds, against which they could issue their own National Bank Notes up to 90% of the value.  This was, in fact, a gold-based demand banking system.  Moreover, contrary to the baseless claims of Rothbard, state banks did revive and continue up to the 1933 mass closings.  Rothbard just tailored his history.  And he ignored the rich, varied, and informative history of the Wildcat Era, focusing only on the Federal government as the bogeyman.
 
Discussing the origins of the evil Federal Reserve Bank, Rothbard writes of the Panic of 1907 without a word of the Clearinghouse Scrip that served the banks through the crisis.  The vouchers demonstrate an ad hoc market solution to the (highly putative) "problem" of credit contraction.  It would have helped to prove the case that the Federal Reserve System was not necessary.  

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Well my own research focuses on the National banking period in particular (1863-1913), so that's what I know the most about, but that is also when most of the nationwide panics occurred, so that might be of interest to you.  There's a good paper available here that gives an introduction to the regulatory structure of the national banking system, by Bruce Champ . There are also a few other papers in that series that discuss the national bank note puzzle and silver certificates.  Also, Banking Panics of the Gilded Age is the most recent comprehensive study of financial panics during the National Banking period, and the role of the New York clearinghouse in responding to the panics.  It's a bit academic, but it might also be interesting to the layman. Here is an online article on the National Banking period that provides a brief overview and also cites numerous other academic sources.

 

Hopefully in a year or so I'll have a paper out on one particular financial panic during this period.

 

Precisely what I was looking for. Thank you.

 

All the rest were great suggestions that I am going to put on my reading list. I have a few books that were listed, just so hard to find time to read them all.

Edited by thenelli01

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