NBER Working Papers by Matthew S. Jaremski

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Working Papers

June 2014American Banking and the Transportation Revolution Before the Civil War
with Jeremy Atack, Peter L. Rousseau: w20198
Studies have shown a connection between finance and growth, but most do not consider how financial and real factors interact to put a virtuous cycle of economic development into motion. As the main transportation advance of the 19th century, railroads connected established commercial centers and made unsettled areas along their routes better candidates for development. We measure the strength of links between railroads and banks in seven Midwest states using an annual transportation GIS database linked to a census of banking. These data indicate that those counties that already had a bank were more likely to see their first railroad go through over the next decade, while new banks tended to enter a county a year or two after it got a railroad. The initial banking system thus helped establi...
April 2014Did Railroads Make Antebellum U.S. Banks More Sound?
with Jeremy Atack, Peter L. Rousseau: w20032
We investigate the relationships of bank failures and balance sheet conditions with measures of proximity to different forms of transportation in the United States over the period from 1830-1860. A series of hazard models and bank-level regressions indicate a systematic relationship between proximity to railroads (but not to other means of transportation) and “good” banking outcomes. Although railroads improved economic conditions along their routes, we offer evidence of another channel. Specifically, railroads facilitated better information flows about banks that led to modifications in bank asset composition consistent with reductions in the incidence of moral hazard.

Forthcoming: Did Railroads Make Antebellum U.S. Banks More Sound?, Jeremy Atack, Matthew S. Jaremski, Peter L. Rousseau. in Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, Collins and Margo. 2014

February 2013National Banking's Role in U.S. Industrialization, 1850-1900
The passage of the National Banking Acts stabilized the existing financial system and encouraged the entry of 729 banks between 1863 and 1866. The national banks not only attracted more deposits than previous state banks, but also concentrated in the area that would eventually become the Manufacturing Belt. Using a new bank census, the paper shows that these changes to the financial system were a major determinant of the geographic distribution of manufacturing. The sudden entry not only resulted in more manufacturing capital and output at the county-level, but also more steam engines and value added at the establishment-level.
April 2012Banks, Free Banks, and U.S. Economic Growth
with Peter L. Rousseau: w18021
The “Federalist financial revolution” may have jump-started the U.S. economy into modern growth, but the Free Banking System (1837-1862) did not play a direct role in sustaining it. Despite lowering entry barriers and extending banking into developing regions, we find in county-level data that free banks had little or no effect on growth. The result is not just a symptom of the era, as state-chartered banks seem to have strong and positive effects on manufacturing and urbanization.

Published: Matthew Jaremski & Peter L. Rousseau, 2013. "Banks, Free Banks, And U.S. Economic Growth," Economic Inquiry, Western Economic Association International, vol. 51(2), pages 1603-1621, 04. citation courtesy of

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