Harvests and Financial Crises in Gold-Standard America

62 Pages Posted: 15 Dec 2012

See all articles by Christopher Hanes

Christopher Hanes

State University of New York (SUNY) - Binghamton University - Department of Economics

Paul W. Rhode

University of Michigan at Ann Arbor; National Bureau of Economic Research (NBER)

Date Written: December 2012

Abstract

Most American financial crises of the postbellum gold-standard era were caused by fluctuations in the cotton harvest due to exogenous factors such as weather. The transmission channel ran through export revenues and financial markets under the pre-1914 monetary regime. A poor cotton harvest depressed export revenues and reduced international demand for American assets, which depressed American stock prices, drained deposits from money-center banks and precipitated a business-cycle downturn - conditions that bred financial crises. The crises caused by cotton harvests could have been prevented by an American central bank, even under gold-standard constraints.

Suggested Citation

Hanes, Christopher and Rhode, Paul W., Harvests and Financial Crises in Gold-Standard America (December 2012). NBER Working Paper No. w18616, Available at SSRN: https://ssrn.com/abstract=2189754

Christopher Hanes (Contact Author)

State University of New York (SUNY) - Binghamton University - Department of Economics ( email )

Binghamton, NY 13902-6000
United States

Paul W. Rhode

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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