Hostname: page-component-586b7cd67f-g8jcs Total loading time: 0 Render date: 2024-11-28T00:00:12.413Z Has data issue: false hasContentIssue false
  • English
  • Français

The National Banking Acts and the Transformation of New York City Banking During the Civil War Era

Published online by Cambridge University Press:  06 June 2011

John A. James  and
David F. Weiman
John A. James*
Affiliation:
Professor of Economics, Department of Economics, University of Virginia, PO Box 400182, Charlottesville, VA 22904. E-mail: [email protected].
David F. Weiman*
Affiliation:
Professor of Economics, Department of Economics, Barnard College, Columbia University, 3009 Broadway, New York, NY 10027. E-mail: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Focusing on the New York banking sector, we analyze a neglected, but profound impact of the National Banking Acts. By resisting federal banking legislation and “boycotting” newly chartered national banks, the New York Clearing House Association members created market opportunities for the new entrants to dominate the correspondent banking market. The new entrants’ aggressive tactics including interest payments on deposits increased their vulnerability to panicky withdrawals by country banks. They also magnified conflicts of interest within the clearinghouse, which weakened its central banking functions and further destabilized the macroeconomy.

Type
ARTICLES
Information
The Journal of Economic History , Volume 71 , Issue 2 , 06 June 2011 , pp. 338 - 362
Copyright
Copyright © The Economic History Association 2011

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Baskin, Jonathan Barron, and Miranti, Paul J. Jr. A History of Corporate Finance. New York: Cambridge University Press, 1997.CrossRefGoogle Scholar
Beard, Charles A., and R, Mary. The Rise of American Civilization. New York: The MacMillan Company, 1927.Google Scholar
Bensel, Richard Franklin.Yankee Leviathan: The Origins of Central State Authority in America, 1859–1877. New York: Cambridge University Press, 1990.Google Scholar
Berger, Allen N., and Dick, Astrid A.. “Entry into Banking Markets and the Early-Mover Advantage.” Journal of Money, Credit, and Banking 39, no. 4 (2007): 775–807.CrossRefGoogle Scholar
Bodenhorn, Howard. A History of Banking in Antebellum America. New York: Cambridge University Press, 2000.Google Scholar
Calomiris, Charles W., and Gorton, Gary. “The Origins of Bank Panics: Models, Facts, and Bank Regulation.” In Financial Markets and Financial Crises, edited byGlenn Hubbard, R., 109–73. Chicago: University of Chicago Press, 1991.Google Scholar
Calomiris, Charles W., and Mason, Joseph R.. “Resolving the Puzzle of the Underissuance of National Bank Notes.” Explorations in Economic History 45, no. 4 (2008): 327–55.CrossRefGoogle Scholar
Calomiris, Charles W., and Schweikart, Larry. “The Panic of 1857: Origins, Transmission, and Containment.” The Journal of Economic History 51, no. 4 (2001): 807–34.CrossRefGoogle Scholar
Cannon, J. G.Clearing Houses. Washington, DC: GPO, 1910.Google Scholar
Carlson, Mark. “Causes of Bank Suspensions in the Panic of 1893.” Explorations in Economic History 42, no. 1 (2005): 56–80.CrossRefGoogle Scholar
Chari, V. V., and Kehoe, Patrick J.. “Hot Money.” Journal of Political Economy 111, no. 6 (2003): 1262–92.CrossRefGoogle Scholar
Chase, Salmon P., and Niven, John. The Salmon P. Chase Papers, Vol. 1: Journals, 1829–1872. Kent, OH: Kent State University Press, 1993.Google Scholar
Chase, Salmon P., and Niven, John. The Salmon P. Chase Papers, Vol. 3: Correspondence, 1858–March 1863. Kent, OH: Kent State University Press, 1996.Google Scholar
Cleveland, Harold van B., and Huertas, Thomas F.. Citibank, 1812–1970. Cambridge, MA: Harvard University Press, 1985.Google Scholar
Curry, Leonard P.Blueprint for Modern America; Non-Military Legislation of the First Civil War Congress. Nashville, TN: Vanderbilt University Press, 1968.Google Scholar
Egnal, Marc. Clash of Extremes: The Economic Origins of the Civil War. New York: Hill and Wang, 2009.Google Scholar
Fleming, Michael J.“Measuring Treasury Market Liquidity.” Federal Reserve Bank of New York Economic Policy Review 9, no. 3 (2003): 83–108.Google Scholar
Foner, Eric. Free Soil, Free Labor, Free Men: The Ideology of the Republican Party Before the Civil War. New York: Oxford University Press, 1995.Google Scholar
Gibbons, J. S.The Banks of New York, Their Dealers, the Clearing House, and the Panic of 1857. New York: D. Appleton and Co., 1858.Google Scholar
Gibson, William E.“Deposit Demand, 'Hot Money,' and the Viability of Thrift Institutions.” Brookings Papers on Economic Activity, no. 3 (1974): 593–632.CrossRefGoogle Scholar
Gilbert, R. Alton.“Economies of Scale in Correspondent Banking: Note.” Journal of Money, Credit, and Banking 15, no. 4 (1983): 483–88.CrossRefGoogle Scholar
Gische, David M.“The New York City Banks and the Development of the National Banking System, 1860–1870.” American Journal of Legal History 23, no. 1 (1979): 21–67.CrossRefGoogle Scholar
Goodhart, Charles. The Evolution of Central Banks. Cambridge, MA: MIT Press, 1988.Google Scholar
Gorton, Gary. “Clearinghouses and the Origin of Central Banking in the United States.” The Journal of Economic History 45, no. 2 (1985): 277–83.CrossRefGoogle Scholar
Hammond, Bray. Sovereignty and an Empty Purse: Banks and Politics in the Civil War. Princeton, NJ: Princeton University Press, 1970.Google Scholar
Hoag, Christopher. “Deposit Drains on 'Interest-Paying' Banks Before Financial Crises.” Explorations in Economic History 42, no. 4 (2005): 567–85.CrossRefGoogle Scholar
Homans Bankers' Almanac and Register. New York: Homans Publishing Co., 1870.Google Scholar
James, John A.Money and Capital Markets in Postbellum America. Princeton, NJ: Princeton University Press, 1978.Google Scholar
James, John A., McAndrews, James, and Weiman, David F.. “Panics and the Disruptions of Private Payments Networks: The United States in 1893 and 1907.” Unpublished Manuscript, 2010.Google Scholar
James, John A., and Weiman, David F.. “Financial Clearing Systems.” In The Limits of Market Organization, edited byNelson, Richard R., 114–55. New York: Russell Sage Foundation, 2005.Google Scholar
James, John A.“From Drafts to Checks: The Evolution of Correspondent Banking Networks and the Formation of the Modern U.S. Payments System, 1850–1914.” Journal of Money, Credit, and Banking 42, no. 2–3 (2010): 237–65.CrossRefGoogle Scholar
Kemmerer, Edwin Walter.Seasonal Variations in the Relative Demand for Money and Capital in the United States: A Statistical Survey. Washington, DC: GPO, 1910.Google Scholar
Kindleberger, Charles P.Historical Economics: Art or Science? Available at http://ark.cdlib.org/ark:/13030/ft287004zv/. Berkeley: University of California Press, 1990Google Scholar
Kinley, David. The Independent Treasury of the United States and Its Relations to the Banks of the Country. Washington, DC: GPO, 1910.Google Scholar
Knodell, Jane. “The Role of Private Bankers in the U.S. Payments System, 1835–1865.” Financial History Review 17, no. 2 (2010): 239–62.CrossRefGoogle Scholar
Miron, Jeffrey A.“Financial Panics, the Seasonality of the Nominal Interest Rate, and the Founding of the Fed.” American Economic Review 76, no. 1 (1986): 125–40.Google Scholar
Moen, Jon R., and Tallman, Ellis W.. “Clearinghouse Membership and Deposit Contraction During the Panic of 1907.” The Journal of Economic History 60, no. 1 (2000): 145–63.CrossRefGoogle Scholar
Myers, Margaret G.The New York Money Market, Volume I, Origins and Development. New York: Columbia University Press, 1931.CrossRefGoogle Scholar
New York Clearing House Association [NYCHA]. “Clearing House Association Minutes, Vol. 1, 1853–1865.” In New York Clearing House Association Archives. New York.Google Scholar
New York Clearing House Association [NYCHA]. Report on the National Bank Currency Act: Its Defects and Its Effects. New York: C. S. Westcott, 1863.Google Scholar
New York Clearing House Association [NYCHA]. “Minutes of Meetings of Bank Officers from Aug. 27, 1864.” In New York Clearing House Association Archives. New York.Google Scholar
New York Clearing House Association [NYCHA]. “Clearing House Association Minutes, Vol. 2, 1865–1873.” In New York Clearing House Association Archives. New York.Google Scholar
New York Clearing House Association [NYCHA]. “Clearing House Admissions Committee Minutes, 1865–1901.” In New York Clearing House Association Archives. New York.Google Scholar
New York Clearing House Association [NYCHA]. Report to the New York Clearing House Association of a Committee Upon Reforms in the Banking Business … 1873. New York: W. H. Arthur & Co., 1873.Google Scholar
New York State Banking Department. Annual Report of the Superintendent of the Banking Department. Albany: various publishers, 1855–1869.Google Scholar
Oberholtzer, Ellis P.Jay Cooke, Financier of the Civil War, Vol. 1. Philadelphia, PA: George W. Jacobs and Co., 1907.Google Scholar
Porter, Glenn, and Livesay, Harold C.. Merchants and Manufacturers. Baltimore, MD: The Johns Hopkins Press, 1971.Google Scholar
Redenius, Scott A.“Designing a National Currency: Antebellum Payment Networks and the Structure of the National Banking System.” Financial History Review 14, no. 2 (2007): 207–27.CrossRefGoogle Scholar
Redlich, Fritz. The Molding of American Banking. New York: Johnson Reprint Corp., 1968.Google Scholar
Rousseau, Peter L. “The Market for Bank Stocks and the Rise of Deposit Banking in New York City, 1866–1897.” NBER Working Paper, No. 15770, Cambridge, MA, February 2010.Google Scholar
Sprague, O. M. W.History of Crises Under the National Banking System. Washington, DC: GPO, 1910.Google Scholar
Sylla, Richard E.“Federal Policy, Banking Market Structure, and Capital Mobilization in the United States, 1863–1913.” The Journal of Economic History 24, no. 4 (1969): 657–86.CrossRefGoogle Scholar
The Bankers' Magazine and Statistical Register. Various issues, 1855–1865.Google Scholar
The Commercial and Financial Chronicle. Various issues, 1866–1875.Google Scholar
The Merchants' Magazine and Commercial Review. Various issues, 1862–1865.Google Scholar
The New York Times. Various issues, 1855–1865.Google Scholar
Timberlake, Richard H.“The Central Bank Role of Clearinghouse Associations.” Journal of Money, Credit, and Banking 16, no. 1 (1984): 1–15.CrossRefGoogle Scholar
U.S. Comptroller of the Currency. Annual Reports. Washington, DC: GPO, 1864–1873.Google Scholar
U.S. Department of the Treasury. Report of the Secretary of the Treasury on the State of the Finances for the Year 1869. Washington, DC: GPO, 1869.Google Scholar
Weber, Warren E.“Interbank Payments Relationships in the Antebellum United States: Evidence from Pennsylvania.” Journal of Monetary Economics 50, no. 2 (2003): 455–74.CrossRefGoogle Scholar
Weiman, David F., and James, John A.. “The Political Economy of the U.S. Monetary Union: The Civil War Era as a Watershed.” American Economic Review 97, no. 2 (2007): 271–75.CrossRefGoogle Scholar
Weiman, David F., and James, John A.. “Towards a More Perfect American Payments Union: The Civil War as a Political Economic Watershed.” Unpublished Manuscript, 2009.Google Scholar
Wicker, Elmus. Banking Panics of the Gilded Age. New York: Cambridge University Press, 2000.CrossRefGoogle Scholar