Banks, Free Banks, and U.S. Economic Growth

Jaremski, Matthew; Rousseau, Peter L.

doi:10.3386/w18021

Cited by 16 publications

(19 citation statements)

References 16 publications

(30 reference statements)

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“…Furthermore, the supply of formal credit from banks did not serve rural and agricultural needs during this period, especially in the South (Fite 1984;Jaremski and Rousseau 2013;Koudijs and Salisbury 2016;Nier 2007). 46 As we will discuss more in detail later, most of the funding in the agricultural sector was coming from local country stores (Atherton 1949;McCurry 1997;Sparks 1932) or from wealthier landowners providing credit for other farmers during bad times or between harvests (Jaremski and Fishback 2018;McCurry 1997;Ramcharan 2008, 2011).…”

Section: The Role Of Credit Markets In the Extent Of Capital Devastationmentioning

confidence: 99%

“…Third, we also provide evidence on the importance of credit-market frictions in the recovery of the agricultural sector. As is well known, the antebellum banking sector did not serve rural and agricultural needs, especially in the South (Fite 1984;Jaremski and Rousseau 2013;Koudijs and Salisbury 2016;Nier 2007). Instead, many small farmers relied on country stores (Atherton 1949;McCurry 1997;Sparks 1932;Bremer 2011) and local wealthy elites for financing between harvests (Rajan and Ramcharan 2011;Jaremski and Fishback 2018;Martin 2016;McCurry 1997).…”

Section: Introductionmentioning

confidence: 99%

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Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Feigenbaum¹,

Lee²,

Mezzanotti³

2018

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Using General William Sherman's 1864--65 military march through Georgia, South Carolina, and North Carolina during the American Civil War, this paper studies the effect of capital destruction on short-and long-run local economic activity, and the role of financial markets in the recovery process. We match an 1865 US War Department map of Sherman's march to county-level demographic, agricultural, and manufacturing data from the 1850-1920 US Censuses. We show that the capital destruction induced by the March led to a large contraction in agricultural investment, farming asset prices, and manufacturing activity. Elements of the decline in agriculture persisted through 1920. Using information on local banks and access to credit, we argue that the underdevelopment of financial markets played a role in weakening the recovery. * We thank

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Section: The Role Of Credit Markets In the Extent Of Capital Devastationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Feigenbaum¹,

Lee²,

Mezzanotti³

2018

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“…A recent empirical investigation of the nineteenth-century United States, however, finds that "slight differences" had profound effects. Jaremski and Rousseau (2013) show that the urbanization rate in counties with banks in 1850 increased between 6 and 11% in the subsequent decade.…”

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confidence: 99%

Financial Development and City Growth: Evidence from Northeastern American Cities, 1790-1870

Bodenhorn¹,

Cuberes²

2010

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In this paper we argue that in 19th century U.S, households and firms that were located in cities with banks enjoyed a higher level of both consumption and production amenities than those who were located in cities without banks. We use data on banks location and city population growth in the Northeastern United States in 1830-1870 and document a positive and strong correlation between financial development and subsequent population growth. The correlation is robust to controls for geographical characteristics of the city, the percentage of population working in different sectors, and its initial population. Propensity score matching estimators that compare similar cities in terms of observables also yield a positive association between finance and urban growth. Our estimates suggest that the presence of a bank at a given location in the late 1830s is associated with increases its population growth in the 1840s by one to one and a half percentage points per year. Because urban growth was correlated with economic development in the nineteenth-century U.S, we believe our results provide further support for the financegrowth nexus.

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“…Despite establishing liquidity on the frontier, it is not clear that free banks promoted development in their immediate locations, and free banks had a greater propensity to close than charter banks (Jaremski and Rousseau 2012). Such closures would sometimes occur before free banks could have positive effect on their communities.…”

mentioning

confidence: 99%

“…Whether the new free banks met this intense need and explicitly contributed to growth in their localities is an open question and recent evidence from Jaremski and Rousseau (2012) suggests that they did not. But immediate impact is not always the appropriate gauge with which to measure success.…”

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confidence: 99%

Politics on the Road to the U.S. Monetary Union

Rousseau

2015

Current Federal Reserve Policy Under the Lens of Economic History

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Is it possible to have a successful monetary union without a political one? It would seem that the early United States is a leading example from history of political union as a precondition for monetary stability. But this view is misleadingly simple. I review the historical record and reveal signs that the United States did not achieve a stable monetary union, if measured by a uniform currency and adequate safeguards against systemic risk, until well after the Civil War and probably not until the founding of the Federal Reserve. Political change and shifting policy positions end up as key factors in shaping the monetary union that did ultimately emerge.JEL Codes: N11, N21, E42, E44

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Banks, Free Banks, and U.S. Economic Growth

Cited by 16 publications

References 16 publications

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Capital Destruction and Economic Growth: The Effects of Sherman's March, 1850-1920

Financial Development and City Growth: Evidence from Northeastern American Cities, 1790-1870

Politics on the Road to the U.S. Monetary Union

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