Jon R. Moen

The Bank Panic of 1907: The Role of Trust Companies

The Bank Panic of 1907 was one of the most severe financial crises in the United States before the Great Depression. Although contemporaries realized that the panic in New York City was centered at trust companies, subsequent research has relied heavily on national bank data. Balance sheet data for trust companies and state banks as well as call reports of national banks indicate that the contraction of loans and deposits in New York City during the panic was confined to the trust companies.

Clearinghouse Membership and Deposit Contraction during the Panic of 1907

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.

Immigration, Culture, and Child Labor in the United States, 1880-1920

Alarmed by child labor in factories and mills, Progressive-era reformers criticized immigrants and immigrant cultures for sanctioning exploitation of their young. Neither qualitative nor quantitative appraisals find much evidence that ethnicity had any important effect on the likelihood that a child would work. Relative and absolute poverty were more important influences. Under all conditions, black children were much more likely to work. The use of children as workers, customary in all rural societies including that of the American family farm, reappeared in industrial settings and then quickly declined. Higher male earnings, technological shifts, and changes in law and culture compelled children to become students instead of wage earners.

Retirement at the Turn of the Twentieth Century: A Canadian Perspective

In late-nineteenth-century North America, privately financed retirement emerged as a recognized phenomenon. While scholars acknowledge these origins, the prevalence of retirement remains intensely debated. The 1901 Canadian census explicitly required the enumerator to ask respondents if they had retired. The question makes it possible to correct estimates of labour force participation that are biased upward by the known tendency of men to report their lifelong occupation, even if they had retired. It also permits a separate consideration of this life stage well before formal retirement under public and private pension systems. An analysis of older mens responses from a 5 per cent sample of the 1901 Canadian census demonstrates that retirement was much more extensive than can be calculated from occupational reporting. While most older men reported an occupation and did not report retirement, over a fifth of those in their seventies and eighties reported an occupation but appear to have retired from it. Such a dual report was linked to greater age, being a farmer, urban status, and residence in Ontario. It was also associated with not owning property and a dependent status within households.

New York and the Politics of Central Banks, 1781 to the Federal Reserve Act

The paper provides a brief history of central banking institutions in the United States. Specifically, the authors highlight the role of New York banking interests in the legislations affecting the creation or expiration of central banking institutions. In our previous research we have detected that New York City banking entities usually exert substantial influence on legislation, greater than their large proportion of United States’ banking resources. The authors describe how this influence affected the success or failure of central banking movements in the United States, and the authors use this evidence to support their arguments regarding the influence of New York City bankers on the legislative efforts that culminated in the creation of the Federal Reserve System. The paper argues that successful central banking movements in the United States owed much to the influence of New York City banking interests.

Quels enseignements de la panique de 1907 pour l’analyse de la crise de 2008 ?

L es comparaisons historiques ont beaucoup à nous apprendre sur la crise financière de 2008. L’étude de la panique bancaire américaine de 1907 présente notamment quelques similitudes surprenantes avec la crise récente sur le plan de la chronologie des événements, des structures financières et des marchés. Les deux crises ont engendré une série similaire de faillites et de sauvetages bancaires. Dans les deux cas, seules certaines institutions étaient au début couvertes par les structures de prêt en dernier ressort, la Chambre de compensation de New York (New York Clearing House – NYCH) en 1907 et la Federal Reserve (Fed) en 2008. En 1907, les sociétés fiduciaires (trust companies) n’étaient pas membres de la NYCH, tandis qu’en 2008, les banques d’investissement ne pouvaient pas initialement prétendre au soutien de la Fed. De la même façon, les marchés monétaires à court terme furent les premiers concernés par la panique financière : le call loan market en 1907 et l’overnight repo en 2008. Ces deux marchés proposaient des prêts au jour le jour et des services bancaires parallèles à de grandes entreprises financières et industrielles. Ces marchés, liquides en temps normal, se sont taris sous l’effet de la panique, les prêteurs essayant d’en sortir rapidement.