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The First Bank of the United States and the Securities Market Crash of 1792

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  • Cowen, David J.

Abstract

In 1791 the $10 million capitalization of the First Bank of the United States was vastly greater than the combined capital of all other banks. The Bank had an enormous impact on the economy within two months of opening its doors for business by flooding the market with its discounts and banknotes and then sharply reversing course and curtailing liquidity. Although the added liquidity initially helped push a rising securities market higher, the subsequent drain caused the first U.S. securities market crash by forcing speculators to sell their stocks. Several reasons are analyzed for the Bank's credit restriction.

Suggested Citation

  • Cowen, David J., 2000. "The First Bank of the United States and the Securities Market Crash of 1792," The Journal of Economic History, Cambridge University Press, vol. 60(4), pages 1041-1060, December.
    • Handle: RePEc:cup:jechis:v:60:y:2000:i:04:p:1041-1060_02
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    Cited by:

    1. 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.
    2. Curott, Nicholas & Watts, Tyler, 2016. "What Caused the Recession of 1797?," Studies in Applied Economics 48, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.
    3. Peter L. Rousseau, 2013. "Politics on the road to the U.S. monetary union," Vanderbilt University Department of Economics Working Papers 13-00006, Vanderbilt University Department of Economics.
    4. Kaloyan Ganev, 2014. "Early theories of business cycle and their role on the development of economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 39-56.
    5. Robert L. Hetzel, 2014. "The Real Bills Views of the Founders of the Fed," Economic Quarterly, Federal Reserve Bank of Richmond, issue 2Q, pages 159-181.
    6. Nicholas A. Curott & Tyler A. Watts, 2018. "A Monetary Explanation for the Recession of 1797," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(3), pages 381-399, June.

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