4 - The Banking Panic of 1893

Summary

The banking panic of 1893 was unique among pre–World War I financial disturbances: Its origin was in the interior, primarily in the transappalachian West rather than New York City. It therefore bears a closer resemblance to the banking panics of the Great Depression than it does to the banking disturbances of 1873, 1884, 1890, and 1907, whose origin was New York City. Moreover, the central money market banks were less responsive to disturbances originating in the interior than they had been to shocks originating in the central money market itself, just as the Federal Reserve during the Great Depression had been less responsive to bank failures in the interior than it had been to disturbances in the New York money market. For that reason alone the 1893 panic warrants serious reconsideration.

But there is even a more compelling reason for revisiting the 1893 panic, namely, the existence of an unexploited data source of all bank suspensions for the period from January to September 1893. Bradstreet's listed all individual bank suspensions by seven geographical regions and five bank classifications: national, state, private, saving, and loan and investment companies. Given were not only closure dates but also dates when and if the closed banks resumed normal operations. Estimates were given of total assets and liabilities of each bank presumably at the time of suspension, but there were no separate estimates for deposits.