Howard Bodenhorn

Short-Term Loans and Long-Term Relationships: Relationship Lending in Early America

Recent banking theory holds that durable firm–bank relationships are valuable to both parties. This paper uses the contract-specific loan records of a 19th-century U.S. bank and shows that firms with extended relationships received three principal benefits. First, firmswith extended relationships had lower credit costs. Second, long-term customers provided fewer personal guarantees, which were an alternative to collateral. Third, long-term customers were more likely to have loan terms renegotiated during a credit crunch. These findings support theories that banks realize cost advantages through the use of proprietary information.

A history of banking in antebellum America : financial markets and economic development in an era of nation-building

1. Introduction: historical setting and three views of banking 2. Financial development and economic growth in Antebellum America 3. Financing entrepreneurship: banks, merchants and manufacturers 4. The integration of short-term capital markets in Antebellum America 5. Banks, brokers, and capital mobility 6. Conclusion: how banks mattered.

The Complexion Gap: The Economic Consequences of Color Among Free African Americans in the Rural Antebellum South

Historians of U.S. race relations typically portray southern whites as reluctant to recognize or act favorably upon complexion-based differences within the African American community. Historians contend that mixed-race African Americans (mulattoes) received few advantages as a result of their partly white heritage. This paper shows that a there was a distinct complexion gap in late antebellum America. Mulatto men were more likely than black men to own farms or operate them as tenants, whereas black men were more likely to find employment as farm laborers throughout their lives. Quantile regressions also reveal a complexion gap in wealth accumulation. Mulattoes acquired more property than blacks, particularly at the upper end of the wealth distribution. Thus, an analysis of data included in the 1860 census implies a complex social hierarchy based on subtle gradations in skin color. At the upper end of the wealth distribution, light-complected mulattoes demonstrated a greater propensity to socioeconomic advancement than dark-complected blacks.

Sample-Selection Biases and the Industrialization Puzzle

Understanding long-term changes in human well-being is central to understanding the consequences of economic development. An extensive anthropometric literature purports to show that heights in the United States declined between the 1830s and the 1890s, which is when the US economy industrialized and urbanized. Most research argues that declining heights reflects the impact of the industrialization process. This interpretation, however, relies on sources subject to selection bias. Changes in that selection mechanism may account for the declining heights. We show that the evidentiary basis of the puzzle is not as robust as previously believed. Our meta-analysis of more than 150 studies shows that declining-heights finding emerges primarily in selected samples. Finally, we offer a parsimonious diagnostic test for revealing (but not necessarily correcting for) selection bias. The diagnostic applied to four samples that underlay the industrialization puzzle shows compelling evidence of selection.

Small-Denomination Banknotes in Antebellum America

. . . speculators went to the banks, borrowed five, ten, twenty, fifty thousand dollars in paper, in small notes, usually under twenty dollars, and engaged to carry these notes off to a great distance, sometimes five hundred or a thousand miles; . . . many of these small notes would never return at all, and their loss would be a gain to the bank; others would not return for a long time; and the bank would draw interest on them for years before they had to redeem them. Thomas Hart Benton, 1854

Height and body mass index values of nineteenth-century New York legislators

Previous studies of mid-nineteenth-century American BMI values have used data created by military academies and penitentiaries. This paper uses an alternative data set, constructed from legislative documents in which the heights and weights of New York State legislators were recorded. The results reveal that middle- to upper-middle class Americans maintained BMI values closer to the modern standard than did students and prisoners. The average BMI value among this group was 24 and their height-weight combinations did not greatly diverge from historical mortality risk optima.

Was There a Note Issue Conundrum in the Free Banking Era

MORE THAN EIGHTY YEARS AGO Spurgeon Bell (1912) uncovered a paradox that has since vexed banking and monetary historians. He found that national banks failed to expand their note issues despite the apparent profitability of doing so. Subsequent writers refined Bells original profit calculations and most have shown that, if anything, Bells calculations understated the profits left unexploited by the banks. Explanations of the paradox abound. Bell (1912) and Goodhart (1965) argued that banks failed to increase their note issues fearing revocation of the circulation privilege. James (1976) argued that pronounced regional interest rate differentials during the postbellum era made it more profitable for banks in some regions to focus on lending low-cost deposits rather than high-cost notes. Champ (1990) and Kuehlwein (1992) stressed term-structure and holding-period risks. Cagan and Schwartz (1991) believed that banks simply acted irrationally. Champ, Wallace, and Weber (1992) accounted for costs and risks other writers overlooked and found rates of return to note issue substantially below those previously reported, but it was still profitable for national banks to issue more notes than they did. Despite this outpouring of work, the national bank note paradox remains unsolved, some might say insoluble. Our paper offers a look at note issues of state banks during the Free Banking Era

Height, weight and body mass index values of mid-19th century New York legislative officers.

Previous studies of mid-19th century American heights and body mass index values have used potentially unrepresentative groups-students in military academies, prisoners, and African Americans. This paper uses an alternative source with heights and weights of ordinary people employed in a wide variety of occupations. The results reveal the operation of the antebellum paradox in that average heights declined between men born circa 1820 and those born circa 1840. Average weights also declined for adult males, suggesting a decline in mid-19th century nutritional status.

Single Parenthood and Childhood Outcomes in the Mid-Nineteenth-Century Urban South

Data from the urban South reveal two notable consequences of single parenthood during the mid-nineteenth century. First, white children residing with single mothers left school earlier than children residing with two parents, and black children in single mother homes started school later and left school earlier. Second, white youths in single-mother homes faced an increased incidence of labor-force participation, but black youths in the same situation did not. Single parenthood imposed costs, in terms of foregone human-capital formation, on children in the mid-nineteenth century, but the consequences of single motherhood were mitigated by social norms regarding childhood education.

Voting Rights, Shareholdings, and Leverage at Nineteenth-Century U.S. Banks

Modern corporate governance is concerned with the tension between the separation of ownership and control and the potential for large controlling shareholders to expropriate from minority shareholders. This article considers this tension in a historical context. Limits were sometimes placed on the number of votes that controlling shareholders could cast in corporate elections. These limits protected minority shareholders by giving them relatively more voting than cash-flow rights. The evidence shows that voting limits led to less shareholder concentration and less leverage. Banks with less concentrated ownership adopted policies that notably reduced insolvency risk.