The Economics of Market Coordination for the Check-Clearing System in the Late 19th Century United States

Explorations in Economic History, Vol. 45, pp. 445-461, 2008

38 Pages Posted: 7 Oct 2005 Last revised: 3 May 2009

See all articles by Howard H. Chang

Howard H. Chang

Global Economics Group, LLC

Maria Danilevsky

Law and Economics Consulting Group (LECG), LLC

David S. Evans

Global Economics Group; University College London

Daniel D. Garcia-Swartz

Charles River Associates - Chicago Office

Date Written: October 1, 2007

Abstract

On the basis on anecdotes centered on the alleged circuitous routing of checks, researchers focusing on the pre-Fed check-clearing system have usually argued that it was inefficient. In this paper we study a 1910 check remittance register from the State National Bank of Bloomington, Illinois - we dissect the way the bank forwarded checks to various destinations for clearing and collection. We find that the bank followed an orderly process of check remittance according to which checks tended to move in the right direction. This casts doubts on the alleged pervasiveness of cycling and circuitous routing of an extreme nature in the pre-Fed check-clearing process.

Keywords: Monetary systems, Pre-Fed check-clearing system, 19th-century US banking system, exchange charges, the shortest-path problem

JEL Classification: N11, N21, N41, O16

Suggested Citation

Chang, Howard H. and Danilevsky, Maria and Evans, David S. and Garcia-Swartz, Daniel D., The Economics of Market Coordination for the Check-Clearing System in the Late 19th Century United States (October 1, 2007). Explorations in Economic History, Vol. 45, pp. 445-461, 2008. Available at SSRN: https://ssrn.com/abstract=816245

Howard H. Chang

Global Economics Group, LLC ( email )

140 S. Dearborn, Suite 1000
Chicago, IL 60603
United States
312-533-4602 (Phone)

HOME PAGE: http://www.globaleconomicsgroup.com

Maria Danilevsky

Law and Economics Consulting Group (LECG), LLC

United States

David S. Evans

Global Economics Group ( email )

111 Devonshire St.
Suite 900
Boston, MA 02108
United States

University College London ( email )

Gower St
London WC1E OEG, WC1E 6BT
United Kingdom

Daniel D. Garcia-Swartz (Contact Author)

Charles River Associates - Chicago Office ( email )

1 S.Wacker Drive # 3400
Chicago, IL 60606
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
122
Abstract Views
1,604
rank
230,198
PlumX Metrics