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Journal Article
Stamp scrip: money people paid to use
Substitutes for government-issued money are produced and used from time to time even in countries like the United States. Understanding why people turn to these substitutes and to what degree they are successful?or not?can teach us a lot about the elements essential to a well-functioning currency.
Journal Article
Who is that guy on the $10 bill?
Alexander Hamilton is the least known and most misunderstood of our nation's founders. His contributions include creating a monetary standard, establishing our banking system, and ensuring the young nation's creditworthiness. This Economic Commentary explains how much of our financial strength we owe to Hamilton.
Journal Article
Open and operating: providing liquidity to avoid a crisis
The terrorist attacks of 9/11 triggered a staggering increase in demand for U.S. dollars all over the world, a demand that threatened to disrupt the American payments system but was met swiftly and successfully by the Federal Reserve. Earlier in the nation?s history, the system didn?t respond so well to severe shocks. This Commentary describes financial crises that occurred during one period in which the country had no central bank.
Journal Article
Private money in our past, present, and future
The government isn?t the only entity allowed to issue money. Private citizens and businesses can too, and throughout U.S. history, they often have. But private money?as such money is called?isn?t issued much these days. What lessons have our experiences with private money taught us, and what do they imply for our money today and in the future?
Journal Article
Inflation, banking, and economic growth
The world has seen a dramatic decline in inflation rates in recent decades, but concerns about inflation may still be warranted, especially in some countries. Evidence is mounting that inflation is harmful to economic activity even at fairly modest rates of inflation because of the way it adversely affects the banking sector and investment.
Journal Article
Fear and loathing of central banks in America
The Federal Reserve System is America?s uneasy compromise between our dislike of concentrated financial power and our desire to promote efficiency in our national payments system. In fact, the Federal Reserve is the nation?s third attempt to establish a large national bank?what we now call a central bank?that is in a unique position to influence a nation?s money and credit. This Commentary retells the story of the rise and fall of the two earlier national banks, the Banks of the United States.
Working Paper
National bank notes and silver certificates
From 1883 to 1892, the circulation of national bank notes in the United States fell nearly 50 percent. Previous studies have attributed this to supply-side factors that led to a decline in the profitability of note issue during this period. This paper provides an alternative explanation. The decline in note issue was, in large part, demand-driven. The presence of a competing currency with superior features caused the public to substitute away from national bank notes.
Working Paper
The National Banking System: empirical observations
This paper provides a summary of the main features of U.S. financial and banking data during the period of the National Banking System (1863?1914). The purpose of the paper is to provide an overview of the stylized facts associated with the era, with an emphasis on those impinging on national bank behavior. The paper takes a detailed look at key elements of national bank balance sheets over time, over the seasons, and during panic periods. The interesting and puzzling patterns of interest rate movements during the era also are examined. The paper introduces a new set of disaggregated data on ...
Working Paper
The National Banking System: the national bank note puzzle
The era of the National Banking System (1863?1913) has been a puzzling one for monetary theorists and economic historians for well over a century. The puzzles associated with this period take various forms. Despite calculations of high profit rates on note issue for certain periods of the era, national banks never fully utilized their note-issuing powers. Relatedly, the behavior of interest rates during the period is also puzzling given the regime of bank note issuance put in place by the National Bank Acts. On the surface, it appears that an arbitrage condition is broken. The observed ...