John A. James

The Development of the National Money Market, 1893-1911

In this article the convergence of U.S. interregional interest rates in the late nineteenth century is examined and two major hypotheses are tested in the framework of a bank portfolio selection model based on the capital-asset-pricing model. Both the spread of the commercial paper market and the lowering of entry barriers through the reduction of national bank minimum capital requirements are rejected as principal explanations. The erosion of local monopoly power is shown to have been of central importance, and this development was due to the growth of state rather than national banks.

The welfare effects of the antebellum tariff: A general equilibrium analysis

Abstract In this paper a general equilibrium model of the United States in 1859 is developed and solved using the Scarf algorithm. Such a formulation allows the U. S. equilibrium to be computed for differing parameter specifications, so that the comparative static effects of policies involving even very complex interactions within the economy may be analyzed. In this case, the general equilibrium effects of the tariff in the United States are examined by comparing the actual, or initial, equilibrium with a hypothetical equilibrium in which the tariff has been eliminated. We find that the South was in fact injured by the tariff; the price of cotton and the return to slaveholding would have both risen significantly with its elimination. The principal beneficiary of the tariff was free labor. Removal of the tariff would have produced a decrease in the real wage and a slight fall in the return to capital. Overall, real income in the United States would have declined by 1.07 to 1.09% as a result of tariff elimination, or by between

Savings and early economic growth in the United States and Japan

44 and

Panics, payments disruptions and the Bank of England before 1826

45 million in current prices. Alternative parameter specifications may produce different results, ranging from the Metzler paradox in the case of very inelastic substitution in R.O.W. consumer demand to cases of increases in real income with tariff elimination in the cases of elastic substitution in either R.O.W. or U. S. consumer demand. A final caveat in judging the results should be inserted here. Factor endowments for 1859 are taken as fixed. The comparative static results here answer the question: What would have the 1859 United States been like if the tariff had been eliminated, allowing time for full adjustment? No dynamic effects are taken into account, such as adjustments in factor supplies. Consequently, the 1859 United States that had consistently followed a free trade policy would have looked quite different from the one that pursued a policy of protection and then eliminated the tariff, which we consider here.

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

Abstract The period of early economic growth in both the United States (the antebellum period) and Japan (the Meiji period) was marked by a pronounced rise in the rates of domestic saving and investment. This paper decomposes the observed changes in saving/investment rates and shows that substantial components – about two-thirds in US and more than one-third in Japan – were due to unexplained shifts in the saving function. In turn we argue that an important factor behind the exogenous shift in savings and hence behind the rise in the net investment rate was the increased degree of financial intermediation in each country.

A Golden Age? Unemployment and the American Labor Market, 1880-1910

The structures of the banking systems in early nineteenth-century England and later nineteenth-century America were quite similar. In each the multitude of independent country or interior bankers maintained correspondent accounts with bankers in the metropolis, London and New York respectively, to hold reserves and to clear and settle financial instruments used in intercity financial transactions. In spite of such similarities in structure, the performances of the two systems were, however, rather different. Although panics were frequent and their extent widespread in late eighteenth- and early nineteenth-century England involving numerous bank failures, there was never a nationwide paralysis of the payments system such as had become a regular event in late nineteenth-century America. This was due to the Bank of Englands functioning as a de facto lender of last resort even though such a role was not explicitly recognized or acknowledged until decades later.

Industrialization and Wage Inequality in Nineteenth-century Urban America

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.

Have American Workers Always Been Low Savers? Patterns of Accumulation Among Working Households, 1885–1910

We calculate the natural rate of unemployment in 1909 by first estimating equations for the incidence and time lost in unemployment on a pooled dataset integrating the manuscript sample of the 1910 census and state BLS surveys and then simulating a counterfactual unemployment rate as if the economy had been on trend that year with business-cycle effects neutralized. Following a similar procedure for the 1960s, we find the natural rate in the earlier period to have been substantially higher. The demise of casual unskilled labor, or floaters, seems to have been an important contributory factor.

The stability of the 19th-century Phillips curve relationship☆

What happened to wage inequality during American industrialization? The paper uses old and new data to address this question. The old data are in the form of pay ratios, while the new capture changes in the overall wage distribution, rather than in just the relative pay of workers at the top and bottom. Using payroll information from the Aldrich report for establishments in construction, railroads and manufacturing, we calculate Theil indices for all production workers. These two data sets provide complementary information but suggest a common conclusion – namely that American wage inequality did not rise perceptibly over the nineteenth century. {Copyright 2000 Elsevier Science Inc. All rights reserved}.

Political economic limits to the fed’s goal of a common national bank money: The par clearing controversy revisited

Based on empirical patterns of annual earnings and saving from new micro-data covering a large sample of American workers around a hundred years ago, we develop a model for simulating the cross-section distribution of wealth at the turn of the twentieth century. Our methodology allows for a direct comparison with the wealth distribution from a sample of families in a comparable part of the contemporary income distribution. Our primary finding is that patterns of wealth accumulation among American workers at the turn of the century bear a striking resemblance to contemporary profiles.