The Economics of Bank Moratoria: The Milford Plan, Michigan, and Bank Survival During the Great Depression

Abstract

Banks in Michigan were opting for self-imposed moratoria during the Great Depression as early as 1931. These plans largely imitated a plan that began in the township of Milford, Michgan. Eventually, all banks in the state were closed in the national holiday declared by President Roosevelt in March 1933. This paper tests the survival rate of the banks that declared their own moratoria and the balance sheet conditions that led to that decision.

Keywords: Bank Holiday, Great Depression, Bank Crises, Michigan, Milford Plan, Bank Liquidity

JEL Classification: N12, N22