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Alexander Hamilton, Central Banker: Crisis Management during the U.S. Financial Panic of 1792

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  • Sylla, Richard
  • Wright, Robert E
  • Cowen, David J

Abstract

Most scholars know little about the panic of 1792, America's first financial market crash, during which securities prices dropped nearly 25 percent in two weeks. Treasury Secretary Alexander Hamilton adroitly intervened to stem the crisis, minimizing its effect on the nascent nation's fragile economic and political systems. U.S. policymakers soon forgot the crisis-management techniques Hamilton invented but failed to codify. Many of them were later rediscovered and became theoretical and practical standards of modern central-bank crisis management. Hamilton, for example, formulated and implemented “Bagehot's rules” for central-bank crisis management eight decades before Walter Bagehot wrote about them in Lombard Street.

Suggested Citation

  • Sylla, Richard & Wright, Robert E & Cowen, David J, 2009. "Alexander Hamilton, Central Banker: Crisis Management during the U.S. Financial Panic of 1792," Business History Review, Cambridge University Press, vol. 83(1), pages 61-86, April.
    • Handle: RePEc:cup:buhirw:v:83:y:2009:i:01:p:61-86_00
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    Cited by:

    1. Peter L. Rousseau, 2010. "Monetary Policy and the Dollar," NBER Chapters, in: Founding Choices: American Economic Policy in the 1790s, pages 121-149, National Bureau of Economic Research, Inc.
    2. Michael D. Bordo & Christopher M. Meissner, 2015. "Growing Up to Stability? Financial Globalization, Financial Development and Financial Crises," NBER Working Papers 21287, National Bureau of Economic Research, Inc.
    3. Saumitra Jha, 2012. "Sharing the Future: Financial Innovation and Innovators in Solving the Political Economy Challenges of Development," International Economic Association Series, in: Masahiko Aoki & Timur Kuran & Gérard Roland (ed.), Institutions and Comparative Economic Development, chapter 7, pages 131-151, Palgrave Macmillan.
    4. Maria Eug?nia Mata & Jos? Rodrigues da Costa & David Justino, 2018. "Finance, a New Old Science," HISTORY OF ECONOMIC THOUGHT AND POLICY, FrancoAngeli Editore, vol. 2018(2), pages 75-93.
    5. Allen, Franklin, et al., 2010. "How Important Historically Were Financial Systems for Growth in the U.K., U.S., Germany, and Japan?," Working Papers 10-27, University of Pennsylvania, Wharton School, Weiss Center.
    6. Thomas L. Hogan, Daniel J. Smith, Robin Aguiar-Hicks, 2018. "Central Banking without Romance," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 15(2), pages 293-314, December.
    7. Charles Calomiris, 2009. "Banking Crises and the Rules of the Game," NBER Working Papers 15403, National Bureau of Economic Research, Inc.
    8. Naoise McDonagh, 2021. "The evolution of bank bailout policy: two centuries of variation, selection and retention," Journal of Evolutionary Economics, Springer, vol. 31(3), pages 1065-1088, July.
    9. Joao Rafael Cunha, 2020. "The Financial Regulatory Cycle," Discussion Paper Series, School of Economics and Finance 202006, School of Economics and Finance, University of St Andrews.
    10. Vitor Gaspar, 2014. "The Making of a Continental Financial System: Lessons for Europe from Early American History," IMF Working Papers 2014/183, International Monetary Fund.

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