Eugene N. White

The Regulation and Reform of the American Banking System, 1900-1929

Examining the regulation of banking in the United States between 1900 and the Great Depression, Eugene Nelson White shows how Congress and the state legislatures tried to strengthen the banking system by creating new institutions, rather than by changing nineteenth-century laws that perpetuated the unit structure of the banking industry.Originally published in 1983.The Princeton Legacy Library uses the latest print-on-demand technology to again make available previously out-of-print books from the distinguished backlist of Princeton University Press. These paperback editions preserve the original texts of these important books while presenting them in durable paperback editions. The goal of the Princeton Legacy Library is to vastly increase access to the rich scholarly heritage found in the thousands of books published by Princeton University Press since its founding in 1905.

A Reinterpretation of the Banking Crisis of 1930

The banking crisis of 1930 is one of the central events of the Great Depression. The causes of this wave of bank failures are examined using individual bank balance sheet data. Both real and monetary factors are found to have forced the closure of banks, many of which were already weakened by regulatory constraints and regional economic difficulties. The bank failures in this crisis do not seem to have been different in character from failures in previous years, suggesting that the rise in the number of failures may have marked only the beginning of a recession rather than a depression.

A Tale of Two Currencies: British and French Finance During the Napoleonic Wars

The record of British and French finance during the Napoleonic wars presents the striking picture of a financially strong nation abandoning the gold standard, borrowing heavily, and generating inflation, while a financially weaker country followed more “orthodox†policies. This paradoxical behavior is explained by Britains strong credibility that allowed more flexible policies, while Frances poor reputation forced reliance on taxation.

The Political Economy of Banking Regulation, 1864–1933

The laws and regulations that shaped the structure of the banking industry from the Civil War to the Great Depression were strongly influenced by the banking community. In this period legal constraints on banks were weakened by competition between state and federal regulators trying to increase membership in their banking systems. The elimination of regulation was not completed, however, because the politically most powerful group in the industry, the unit banks, had an interest in preserving some regulations.

The Panics of 1854 and 1857: A View from the Emigrant Industrial Savings Bank

Using records of individual depositors’ accounts, this article provides a detailed microeconomic analysis of two banking panics. The panics of 1854 and 1857 were not characterized by an immediate mass panic of depositors and had important time dimensions. We examine depositor behavior using a hazard model. Contagion was the key factor in 1854 but it created only a local panic. The 1857 panic began with runs by businessmen and banking sophisticates followed by less informed depositors. Evidence suggests that this panic was driven by informational shocks in the face of asymmetric information about the true condition of bank portfolios. B anking panics were a much-feared feature of the nineteenth-century American business cycle. Although they typically did not ignite a recession, the rapid withdrawal of deposits forced a contraction of credit that contributed independently to downswings. To eliminate these crises, the Federal Reserve Act and New Deal banking reforms were passed in the wake of the panics of 1907 and the early 1930s. Yet, although panics were an important weakness in the financial system, there is widespread disagreement about the forces that prompted bank runs and even about the dating of banking panics. In this article, we examine the behavior of individual depositors in the panics of 1854 and 1857 for insight into the precipitating factors and dynamics of a bank run. Often the term banking panic has been used to identify an event where banks fail in the midst of a recession or stock market crash. The result has been substantial differences in the number of panics, as counted by different authors. Looking at the period 1890–1910, O. M. W. Sprague emphasized three crises (1890, 1893 and 1907), whereas his contemporary Edwin Kemmerer found six major panics (1890, 1893, 1899, 1901, 1903, and 1907) plus 15 minor panics. Modern authors such as Milton Friedman and Anna Schwartz and Jeffrey Miron also differ on what episodes constituted

State-Sponsored Insurance of Bank Deposits in the United States, 1907–1929

Before the creation of the Federal Deposit Insurance Corporation in 1933, several states established deposit guarantee funds. The key factor influencing the adoption of deposit insurance by a state was the structure of its banking industry. In states where small unit banks were dominant, there was strong support for guarantee funds to protect deposits; in other states there was more interest in branch banking. The failure to design the guarantee funds in accordance with sound principles of insurance brought about their demise and led to increased branch banking.

The French Revolution and the Politics of Government Finance, 1770–1815

Although largely neglected in most histories of the French Revolution, the central government’s persistent budget deficit was a factor of paramount importance. The fiscal crisis inherited from the monarchy defied solution because of the war of attrition fought by economic interest groups. The struggle produced radical changes in macroeconomic policy to shift the burden of adjustment, altering the course of and prolonging the Revolution.

Was There a Solution to the Ancien Régime's Financial Dilemma?

The fiscal policy accomplishments of the ancien rA©gime during its last two decades in France have been greatly underappreciated. While the collapse of the monarchy has been attributed to persistent peacetime deficits, these did not appear until the mid-1780s when earlier reforms and successful budget policies were abandoned by reactionary finance ministers. Had the earlier policies been continued, it is unlikely that a severe crisis would have occurred in 1788/89.

Bubbles and Busts: The 1990s in the Mirror of the 1920s

This paper surveys the twentieth century booms and crashes in the American stock market, focusing on a comparison of the two most similar events in the 1920s and 1990s. In both booms, claims were made that they were the consequence a %u201Cnew economy%u201D or %u201Cirrational exuberance.%u201D Neither boom can be readily explained by fundamentals, represented by expected dividend growth or changes in the equity premium. The difficulty of identifying the fundamentals implies that central banks would not be successful in preventing pre-emptive policies, although they still would have a critical role to play in preventing crashes from disrupting the payments system or sparking an intermediation crisis.

How it all began: the rise of listing requirements on the London, Berlin, Paris, and New York stock exchanges

Abstract The issue of accounting standards for foreign securities listed on a stock exchange arose gradually over the period 1825–1914 among the leading exchanges in the first global financial market—London, New York, Paris, and Berlin. Comparing their listing requirements on the eve of World War I, we find that the London and New York exchanges were most detailed, reflecting their common-law legal environments and their status as self-regulating organizations. The evolution of listing requirements in London and New York therefore influenced the development of accounting standards in those countries. By contrast, Paris and Berlin relied on validation of a security by political authorities. One result of these differences in legal and political environments was that American railroads issued the only securities to be listed on each of the four exchanges.