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

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  • James, John A.
  • Weiman, David F.

Abstract

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.

Suggested Citation

  • James, John A. & Weiman, David F., 2011. "The National Banking Acts and the Transformation of New York City Banking During the Civil War Era," The Journal of Economic History, Cambridge University Press, vol. 71(2), pages 338-362, June.
    • Handle: RePEc:cup:jechis:v:71:y:2011:i:02:p:338-362_00
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    Citations

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    Cited by:

    1. Matthew Jaremski, 2013. "State Banks and the National Banking Acts: Measuring the Response to Increased Financial Regulation, 1860–1870," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(2‐3), pages 379-399, March.
    2. Sanjiv R. Das & Kris James Mitchener & Angela Vossmeyer, 2018. "Bank Regulation, Network Topology, and Systemic Risk: Evidence from the Great Depression," CESifo Working Paper Series 7425, CESifo.
    3. Rousseau, Peter L., 2011. "The Market for Bank Stocks and the Rise of Deposit Banking in New York City, 1866–1897," The Journal of Economic History, Cambridge University Press, vol. 71(4), pages 976-1005, December.
    4. Mitchener, Kris & Das, Sanjiv & Vossmeyer, Angela, 2018. "Bank Regulation, Network Topology, and Systemic Risk: Evidence from the Great Depression," CEPR Discussion Papers 13416, C.E.P.R. Discussion Papers.
    5. Calomiris, Charles W. & Carlson, Mark, 2017. "Interbank networks in the National Banking Era: Their purpose and their role in the Panic of 1893," Journal of Financial Economics, Elsevier, vol. 125(3), pages 434-453.
    6. Jaremski, Matthew & Rousseau, Peter L., 2018. "The dawn of an ‘age of deposits’ in the United States," Journal of Banking & Finance, Elsevier, vol. 87(C), pages 264-281.
    7. Sanjiv R. Das & Kris James Mitchener & Angela Vossmeyer, 2022. "Bank Regulation, Network Topology, and Systemic Risk: Evidence from the Great Depression," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(5), pages 1261-1312, August.
    8. Hoag, Christopher, 2018. "Clearinghouse loan certificates as a lender of last resort," The North American Journal of Economics and Finance, Elsevier, vol. 45(C), pages 215-229.

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