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Clearinghouse Membership and Deposit Contraction during the Panic of 1907

Published online by Cambridge University Press:  26 July 2012

Jon R. Moen  and
Ellis W. Tallman
Jon R. Moen
Affiliation:
Associate Professor, Department of Economics and Finance, School of Business Administration, 333 Holman, University of Mississippi, University, MS 38677. E-mail: moen@bus.olemiss.edu.
Ellis W. Tallman
Affiliation:
Assistant Vice President and Senior Economist, Federal Reserve Bank of Atlanta, Research Department, 104 Marietta Street NW, Atlanta, GA 30303-2713. E-mail: ellis.tallman@atl.frb.org.
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Extract

Was clearinghouse membership a key factor mitigating withdrawls from intermediaries during the Panic of 1907? Analyzing balnace-sheet information on institutions in New York and Chicago, we find ecidence that clearinghouse memebers had institutions in New York and Chicago, we find evidence that clearinghouse members had smaller contractions in demand deposits than did nonmembers. New York City trusts, isolated from the clearinghouse, were subject to heightened perceptions of risk, and suffered large-scale withdrawals because they were outside of the clearinghouse and therefore much less prepared to withstand large-scale depositor runs. We suggest that this aspect of the Panic of 1907 helped to forge support for the creation of a U.S. central bank.

Type
Articles
Information
The Journal of Economic History , Volume 60 , Issue 1 , March 2000 , pp. 145 - 163
Copyright
Copyright © The Economic History Association 2000

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