In the eye of a Storm: Manhattan's money center banks during the international financial crisis of 1931

Gary Richardson and Patrick Van Horn

Explorations in Economic History, 2018, vol. 68, issue C, 71-94

Abstract: In the summer of 1931, a financial crisis began in Austria, spread to Germany, forced Britain to abandon the gold standard, crossed the Atlantic, and afflicted financial institutions in the United States. This article describes how banks in New York City, the central money market of the United States, reacted to this trans-Atlantic trauma. New York's money-center banks anticipated the onset of a financial crisis, prepared for it by accumulating substantial reserves, and during the European crisis, continued business as usual. New York's leading bankers deliberately and collectively decided on the business-as-usual policy in order to minimize the impact of the panic in the United States. New York banks’ behavior changed only after the Federal Reserve raised discount rates to stem gold outflows in the fall of 1931.

Keywords: Great depression; Gold standard; Balance-sheet linkages; Banking crises; Financial crises; Financial crisis of 1931 (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 G21 G28 N12 N22 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: In the Eye of a Storm: Manhattan's Money Center Banks during the International Financial Crisis of 1931 (2016)
Working Paper: In the Eye of a Storm: Manhattan's Money Center Banks During the International Financial Crisis of 1931 (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:exehis:v:68:y:2018:i:c:p:71-94

DOI: 10.1016/j.eeh.2017.11.001

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