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The National Banking Acts and the Transformation of New York City Banking During the Civil War Era

2011; Cambridge University Press; Volume: 71; Issue: 2 Linguagem: Inglês

10.1017/s0022050711001550

1471-6372

John James, David F. Weiman,

Housing Market and Economics

Focusing on the New York banking sector, we analyze a neglected, but profound impact of the National Banking Acts. By resisting federal banking legislation and “boycotting” newly chartered national banks, the New York Clearing House Association members created market opportunities for the new entrants to dominate the correspondent banking market. The new entrants’ aggressive tactics including interest payments on deposits increased their vulnerability to panicky withdrawals by country banks. They also magnified conflicts of interest within the clearinghouse, which weakened its central banking functions and further destabilized the macroeconomy.