Clearinghouse Access and Bank Runs: Comparing New York and Chicago During the Panic of 1907
The Journal of Economic History, Vol. 60, No. 1, pp. 145-163, 2000
WP 95-9
Posted: 2 Jul 1998 Last revised: 6 Aug 2014
Date Written: March 1, 1996
Abstract
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.
JEL Classification: N21, G21
Suggested Citation: Suggested Citation