NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Fetters of Debt, Deposit, or Gold during the Great Depression? The International Propagation of the Banking Crisis of 1931

Gary Richardson, Patrick Van Horn

NBER Working Paper No. 12983
Issued in March 2007
NBER Program(s):Development of the American Economy, International Finance and Macroeconomics, Monetary Economics

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.

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Document Object Identifier (DOI): 10.3386/w12983

Published: Richardson Gary & Van Horn Patrick, 2011. "Fetters of Debt, Deposit, or Gold during the Great Depression? The International Propagation of the Banking Crisis of 1931," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 52(2), pages 29-54, December. citation courtesy of

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