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Harvests and Financial Crises in Gold-Standard America

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  • Christopher Hanes
  • Paul W. Rhode

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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  • Christopher Hanes & Paul W. Rhode, 2012. "Harvests and Financial Crises in Gold-Standard America," NBER Working Papers 18616, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18616
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    2. 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.
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    6. Christopher Hoag, 2019. "Bank Executive Experience in a Financial Crisis," Working Papers 1902, Trinity College, Department of Economics.
    7. Christopher Hoag, 2015. "Clearinghouse Loan Certificates as a Lender of Last Resort," Working Papers 1503, Trinity College, Department of Economics, revised Jun 2015.
    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.
    9. Kupiec, Paul H. & Ramirez, Carlos D., 2013. "Bank failures and the cost of systemic risk: Evidence from 1900 to 1930," Journal of Financial Intermediation, Elsevier, vol. 22(3), pages 285-307.
    10. José L. Martínes-González, 2015. "Did Climate Change Influence English Agricultural Development? (1645-1740)," Working Papers 0075, European Historical Economics Society (EHES).
    11. Christopher Hoag, 2019. "Liquidity and Borrowing from a Lender of Last Resort during the Crisis of 1884," Working Papers 1901, Trinity College, Department of Economics, revised Jul 2019.
    12. 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.
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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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