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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  

Gary Richardson

University of California at Irvine; National Bureau of Economic Research

Patrick Van Horn

Southwestern University

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 )

3151 Social Science Plaza
Irvine, CA 92697-5100
United States

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

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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

Patrick Van Horn

Southwestern University ( email )

1001 East University Avenue
Georgetown, TX 78626
United States

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