Fetters of Debt, Deposit, or Gold During the Great Depression? The International Propagation of the Banking Crisis of 1931

47 Pages Posted: 23 Mar 2007 Last revised: 24 Dec 2022

See all articles by Gary Richardson

Gary Richardson

University of California at Irvine; National Bureau of Economic Research

Patrick Van Horn

Scripps College

Date Written: March 2007

Abstract

A banking crisis began in Austria in May 1931 and intensified in July, when runs struck banks throughout Germany. In September, the crisis compelled Britain to quit the gold standard. Newly discovered data shows that failure rates rose for banks in New York City, at the center of the United States money market, in July and August 1931, before Britain abandoned the gold standard and before financial outflows compelled the Federal Reserve to raise interest rates. Banks in New York City had large exposures to foreign deposits and German debt. This paper tests to see whether the foreign exposure of money center banks linked the financial crises on the two sides of the Atlantic.

Suggested Citation

Richardson, Gary and Van Horn, Patrick, Fetters of Debt, Deposit, or Gold During the Great Depression? The International Propagation of the Banking Crisis of 1931 (March 2007). NBER Working Paper No. w12983, Available at SSRN: https://ssrn.com/abstract=975924

Gary Richardson (Contact Author)

University of California at Irvine ( email )

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HOME PAGE: http://www.socsci.uci.edu/~garyr/welcome.html

National Bureau of Economic Research ( email )

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HOME PAGE: http://www.nber.org

Patrick Van Horn

Scripps College ( email )

Claremont, CA 91711
United States

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