Why didn't the United States establish a central bank until after the panic of 1907?

Monetary historians conventionally trace the establishment of the Federal Reserve System in 1913 to the turbulence of the Panic of 1907. But why did the successful movement for creating a U.S. central bank follow the Panic of 1907 and not any earlier National Banking Era panic? The 1907 panic displayed a less severe output contraction than other national banking era panics, and national bank deposit and loan data suggest only a limited impairment to intermediation through these institutions. ; We argue that the Panic of 1907 was substantially different from earlier National Banking Era panics. The 1907 financial crisis focused on New York City trust companies, a relatively unregulated intermediary outside the control of the New York Clearinghouse. Yet trusts comprised a large proportion of New York City intermediary assets in 1907. Prior panics struck primarily national banks that were within the influence of the clearinghouses, and the private clearinghouses provided liquidity to member institutions that were perceived as solvent. Absent timely information on trusts, the New York Clearinghouse offered insufficient liquidity to the trust companies to quell the panic quickly. ; In the aftermath of the 1907 panic, New York bankers saw heightened danger to the financial system arising from "riskier" institutions outside of their clearinghouse and beyond their direct influence. The reform proposals from New York banking interests advocated universal membership in a centralized reserve system to overcome the risk of financial panic arising from the observed isolation of some intermediaries. Serious consideration of federal legislation to reform the banking system took place because New York bankers changed in their attitude toward a system of reserves beyond their control.Banks and banking - History ; Banks and banking, Central

Liquidity creation without a lender of last resort: clearinghouse loan certificates in the Banking Panic of 1907

We employ a new data set comprised of disaggregate figures on clearinghouse loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearinghouse loan certificates were essentially "bridge loans" arranged between clearinghouse members that enabled and were issued in anticipation of monetary gold imports, which took a few weeks to arrive. The large New York City national banks acted as private liquidity providers by requesting (and the New York clearinghouse issuing) a volume of clearinghouse loan certificates beyond their own immediate liquidity needs. While loan certificates were a temporary solution at best to the liquidity crisis in 1907, their issuance allowed the New York banks to serve their role as central reserve city banks in the national banking system.

Liquidity creation without a lender of last resort: clearing house loan certificates in the Banking Panic of 1907

We employ a new data set comprised of disaggregate figures on clearing house loan certificate issues in New York City to document how the dominant national banks were crucial providers of temporary liquidity during the Panic of 1907. Clearing house loan certificates were essentially “bridge loans” arranged between clearing house members. They enabled and were issued in anticipation of gold imports, which took a few weeks to arrive. The large, New York City national banks acted as private liquidity providers by requesting (and the New York Clearing House issuing) a volume of clearing house loan certificates beyond their own immediate liquidity needs, in accord with their role as central reserve city banks in the national banking system.Financial crises - United States ; Lenders of last resort

Lessons from the panic of 1907

Depressions ; Banks and banking - History

The call loan market in the U.S. financial system prior to the Federal Reserve System

The call loan market in New York City played a central role in funding the expansion of economic growth and capital investment in the United States in the late 1800s and early 1900s. Changes in the identity of the intermediaries providing those funds help explain why the movement for the establishment of a central bank in the United States took hold only after the panic of 1907. The growing significance of nonclearinghouse creditors to the call money market diluted the relative financial influence of the New York City bankers and compromised the apparent “coinsurance” arrangement between brokers and New York Clearinghouse lenders that prevailed during the late nineteenth century.

New York and the politics of central banks, 1781 to the Federal Reserve Act

The paper provides a brief history of central banking institutions in the United States. Specifically, the authors highlight the role of New York banking interests in the legislations affecting the creation or expiration of central banking institutions. In our previous research we have detected that New York City banking entities usually exert substantial influence on legislation, greater than their large proportion of United States’ banking resources. The authors describe how this influence affected the success or failure of central banking movements in the United States, and the authors use this evidence to support their arguments regarding the influence of New York City bankers on the legislative efforts that culminated in the creation of the Federal Reserve System. The paper argues that successful central banking movements in the United States owed much to the influence of New York City banking interests.

Why Didn't the United States Establish a Central Bank until after the Panic of 1907?

A refugee leaves the country of his or her national origin because the political community will not or can no longer vouchsafe the refugee\u27s life, liberty, or peace of mind. In many cases, the sovereign of national origin actively and coercively deprives the refugee of those basic components of human dignity. By taking flight, refugees enter a precarious realm between sovereigns. They may no longer rely upon the solicitude of their native sovereign, yet international law gives them no effective replacement for that power. They gain neither a right to asylum in other countries nor one to the assumption of a new nationality. Yet only the tie of nationality furnishes the full protection of international law, since individuals as such have no rights under that body of law. Covenants on the status of refugees and stateless persons and the organization of the United Nations High Commissioner for Refugees (UNHCR) have not changed this aspect of the world order

Grasshopper Community Response to Climatic Change: Variation Along an Elevational Gradient

The impacts of climate change on phenological responses of species and communities are well-documented; however, many such studies are correlational and so less effective at assessing the causal links between changes in climate and changes in phenology. Using grasshopper communities found along an elevational gradient, we present an ideal system along the Front Range of Colorado USA that provides a mechanistic link between climate and phenology.This study utilizes past (1959-1960) and present (2006-2008) surveys of grasshopper communities and daily temperature records to quantify the relationship between amount and timing of warming across years and elevations, and grasshopper timing to adulthood. Grasshopper communities were surveyed at four sites, Chautauqua Mesa (1752 m), A1 (2195 m), B1 (2591 m), and C1 (3048 m), located in prairie, lower montane, upper montane, and subalpine life zones, respectively. Changes to earlier first appearance of adults depended on the degree to which a site warmed. The lowest site showed little warming and little phenological advancement. The next highest site (A1) warmed a small, but significant, amount and grasshopper species there showed inconsistent phenological advancements. The two highest sites warmed the most, and at these sites grasshoppers showed significant phenological advancements. At these sites, late-developing species showed the greatest advancements, a pattern that correlated with an increase in rate of late-season warming. The number of growing degree days (GDDs) associated with the time to adulthood for a species was unchanged across the past and present surveys, suggesting that phenological advancement depended on when a set number of GDDs is reached during a season.Our analyses provide clear evidence that variation in amount and timing of warming over the growing season explains the vast majority of phenological variation in this system. Our results move past simple correlation and provide a stronger process-oriented and predictive framework for understanding community level phenological responses to climate change

Clearinghouse access and bank runs: comparing New York and Chicago during the Panic of 1907

During the Panic of 1907, New York City trust companies were not members of the New York Clearinghouse whereas trust companies in Chicago were members of the Chicago Clearinghouse. We argue that the apparent isolation of New York City trust companies from the pool of bank reserves controlled by the New York Clearinghouse led to the large-scale depositor runs on the New York City trusts. In contrast, Chicago trust companies had direct access to the Chicago Clearinghouse and their pool of reserves and did not suffer large-scale depositor withdrawals. Statistical evidence on a cross-section of intermediaries in both New York and Chicago supports this contention.Bank failures ; Banks and banking - History ; Clearinghouses (Banking) ; Chicago (Ill.) ; New York (N.Y.)

Selection of Reserves for Woodland Caribou Using an Optimization Approach

Habitat protection has been identified as an important strategy for the conservation of woodland caribou (Rangifer tarandus). However, because of the economic opportunity costs associated with protection it is unlikely that all caribou ranges can be protected in their entirety. We used an optimization approach to identify reserve designs for caribou in Alberta, Canada, across a range of potential protection targets. Our designs minimized costs as well as three demographic risk factors: current industrial footprint, presence of white-tailed deer (Odocoileus virginianus), and climate change. We found that, using optimization, 60% of current caribou range can be protected (including 17% in existing parks) while maintaining access to over 98% of the value of resources on public lands. The trade-off between minimizing cost and minimizing demographic risk factors was minimal because the spatial distributions of cost and risk were similar. The prospects for protection are much reduced if protection is directed towards the herds that are most at risk of near-term extirpation