Harvests and Financial Crises in Gold-Standard America

Christopher Hanes and Paul Rhode

No 18616, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: E32 E4 N11 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
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Published as Hanes, Christopher & Rhode, Paul W., 2013. "Harvests and Financial Crises in Gold Standard America," The Journal of Economic History, Cambridge University Press, vol. 73(01), pages 201-246, March.

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