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Harvests and Financial Crises in Gold Standard America

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  • Hanes, Christopher
  • Rhode, Paul W.

Abstract

Most American financial crises of the postbellum gold standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather. The transmission channel ran through export revenues and financial markets under the pre-1914 monetary regime. A poor cotton harvest depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money center banks and precipitated a business cycle downturn—conditions that bred financial crises. The crises caused by cotton harvests could have been prevented by an American central bank, even under gold standard constraints.

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  • Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(1), pages 201-246, March.
    • Handle: RePEc:cup:jechis:v:73:y:2013:i:01:p:201-246_00
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    4. Carola Frydman & Eric Hilt & Lily Y. Zhou, 2015. "Economic Effects of Runs on Early "Shadow Banks": Trust Companies and the Impact of the Panic of 1907," Journal of Political Economy, University of Chicago Press, vol. 123(4), pages 902-940.
    5. David le Bris, 2018. "What is a market crash?," Economic History Review, Economic History Society, vol. 71(2), pages 480-505, May.
    6. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the gobal financial cycle: Central banks and the sterilization of capital flows in the first era of globalization," IBF Paper Series 03-19, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    7. Monnet, Eric & bazot, guillaume & Morys, Matthias, 2019. "Taming the Global Financial Cycle: Central Banks and the Sterilization of Capital Flows in the First Era of Globalization (1891," CEPR Discussion Papers 13895, C.E.P.R. Discussion Papers.
    8. 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.
    9. Christopher Hoag, 2019. "Bank Executive Experience in a Financial Crisis," Working Papers 1902, Trinity College, Department of Economics.
    10. Christopher Hoag, 2015. "Clearinghouse Loan Certificates as a Lender of Last Resort," Working Papers 1503, Trinity College, Department of Economics, revised Jun 2015.
    11. Christopher Hoag, 2019. "Bank Executive Experience with Clearinghouse Loan Certificates," Working Papers 1903, Trinity College, Department of Economics.
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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • N11 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - U.S.; Canada: Pre-1913

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