Do Bank Bailouts Work? The Effect of Reconstruction Finance Corporation Aid During the Crisis of 1933

Do bank bailouts work? Government aid initiatives implemented to stem the current crisis raise important questions about the role of monetary policy in preventing bank failures. The scale of this bailout program defies comparison with any other aid package implemented in the post-World War II period. Fortunately, the operations of the Reconstruction Finance Corporation (RFC) during the Great Depression provide a historical experiment to examine the effects of government rescue programs on financial institutions. This paper examines the effects of the RFC\u27s loan and preferred stock programs on bank failure rates during the crisis of 1933. Using a new database on Michigan banks, I employ survival analysis to examine the effectiveness of the RFC\u27s loan program and preferred stock purchases on bank failure rates. My analysis suggests that the loan program increased the failure rates of banks during the crisis by increasing the indebtedness of financial institutions. Conversely, I find that the RFC\u27s purchases of preferred stock increased the chances that a bank survived the financial crisis. Injections of capital helped repair the balance sheets of banks and restored confidence in the financial system. Ultimately, this historical experiment provides some insight into how government aid programs might curtail banking crises

Low-Cost Experiments with Everyday Objects for Homework Assignments

We describe four classical undergraduate physics experiments that were done with everyday objects and low-cost sensors: mechanical oscillations, transmittance of light through a slab of matter, beam deformation under load, and thermal relaxation due to heat loss. We used these experiments to train students for experimental homework projects but they could be used and expanded in a variety of contexts: lecture demonstrations, low cost students' labs, science projects, distance learning courses...Comment: details on students where added : a section dedicated to the student difficulties and general feedback on this teaching unit. Minor typos were fixed. Published in Physics Educatio

The earthly structures of divine ideas : influences on the political economy of Giovanni Botero

Giovanni Botero’s (1544-1617) treatise The Reason of State (1589) seemed somewhat uncharacteristic of sixteenth-century political thought, considering the pride of place given to economics in his text. The Age of Reformation constituted not only a period of new ideas on faith but also one of new political thinking, and as the research into the influences on Botero’s economic thought progressed, I began to consider the period as one where economic thinking was becoming more common among theologians of the reforming churches and bureaucrats of the developing states. Having been trained in the schools of the Jesuits, Botero was exposed to one of the most potent and intellectually uniform of all the reforming movements of the period, and I argue it was here that he first considered economics as an aspect of moral philosophy. While it cannot be proven positively that Botero studied or even considered economics during his association with the Jesuits (roughly from 1559-1580), the fact that a number of those who shaped the Jesuit Order in its first few generations discussed economics in their own treatises leads one to a strong circumstantial conclusion that this is where the economic impulse first rose up in his thinking. Indeed, it was this background that readied Botero to consider economics as an important part of statecraft with his reading of Jean Bodin’s (1530-1596) The Six Books of the Republic (1576), in which economics is featured quite prominently. Bodin’s own economic theory was informed primarily by his experience as a bureaucrat in the Parlement of Paris, where questions on the value of the currency and on the king’s ability to tax his subjects were in constant debate among the advocates. I argue further that, upon his reading of Bodin’s Republic, Botero saw how economics could be fused with politics, and he then set out to compose his own treatise on political economy (although he certainly would not have called it such). In The Reason of State, Botero brought his Jesuit conception of economic morality together with Bodin’s writings on political economy to create a work, neither wholly Jesuit nor wholly Bodinian, which in the end outlined an overall political and economic structure of society quite distinct from the sum of its parts

Retelling Allotment: Indian Property Rights and the Myth of Common Ownership

The division of Native American reservations into individually owned parcels was an unquestionable disaster. Authorized by the General Allotment Act of 1887, allotment cost Indians two-thirds of their land and left much of the remainder effectively useless as it passed to successive generations of owners. The conventional understanding, shared by scholars, judges, policymakers, and activists alike, has been that allotment failed because it imposed individual ownership on people who had never known private property. Before allotment, so this story goes, Indians had always owned their land in common. Because Indians had no conception of private property, they were unable to adjust to the culture of private land rights and were easy targets for non-Indians anxious to acquire their land. Professor Bobroff argues that this story is wrong. Attempting to draw on often ignored Indian voices and considering anthropological and historical accounts, he reviews evidence that before allotment and continuing on reservations today, Native American societies have had a wide range of property systems. These native property systems vary across climates, resources, cultures, and historical periods, but many have recognized private property rights in land. Bobroff argues that allotment failed not because Indians had never known private property, but because it imposed a single dysfunctional property system on all Indian tribes and prohibited those tribes from changing it. Once an Indian reservation was allotted, tribal property laws were replaced and could no longer evolve. They could only be changed, quite literally, by an act of Congress. This insight into allotment is important because it suggests that the solution to the problem of highly fractionated Indian land titles is neither, as previous reforms attempted, to return all allotted land to tribal ownership nor to remove all restrictions from allotted lands. Rather, the solution lies with tribes and allotment owners reestablishing functional property systems that allow efficient use and rational inheritance of allotted lands. Having created the monster of allotment in 1887, it is only fair that Congress should provide resources and assistance to help tribal property systems succeed

The earthly structures of divine ideas : influences on the political economy of Giovanni Botero

Giovanni Botero’s (1544-1617) treatise The Reason of State (1589) seemed somewhat uncharacteristic of sixteenth-century political thought, considering the pride of place given to economics in his text. The Age of Reformation constituted not only a period of new ideas on faith but also one of new political thinking, and as the research into the influences on Botero’s economic thought progressed, I began to consider the period as one where economic thinking was becoming more common among theologians of the reforming churches and bureaucrats of the developing states. Having been trained in the schools of the Jesuits, Botero was exposed to one of the most potent and intellectually uniform of all the reforming movements of the period, and I argue it was here that he first considered economics as an aspect of moral philosophy. While it cannot be proven positively that Botero studied or even considered economics during his association with the Jesuits (roughly from 1559-1580), the fact that a number of those who shaped the Jesuit Order in its first few generations discussed economics in their own treatises leads one to a strong circumstantial conclusion that this is where the economic impulse first rose up in his thinking. Indeed, it was this background that readied Botero to consider economics as an important part of statecraft with his reading of Jean Bodin’s (1530-1596) The Six Books of the Republic (1576), in which economics is featured quite prominently. Bodin’s own economic theory was informed primarily by his experience as a bureaucrat in the Parlement of Paris, where questions on the value of the currency and on the king’s ability to tax his subjects were in constant debate among the advocates. I argue further that, upon his reading of Bodin’s Republic, Botero saw how economics could be fused with politics, and he then set out to compose his own treatise on political economy (although he certainly would not have called it such). In The Reason of State, Botero brought his Jesuit conception of economic morality together with Bodin’s writings on political economy to create a work, neither wholly Jesuit nor wholly Bodinian, which in the end outlined an overall political and economic structure of society quite distinct from the sum of its parts