A Brief Popular Account of all the Financial Panics and Commercial Revulsions in the US from 1690 to 1857

"The New York Press book is a compilation of popular accounts of the crises assembled by the press. There are poems, jokes and articles about those pre-Civil War crises – there is everything here. They were correct in putting the 1837 and 1857 panics on the cover as they were the important panics prior to the Civil War. So, this book was written after 1857, looking back and saying: ‘Look! We’ve had all these other panics – 1690, 1748, 1780…’ The idea is similar in a way to my idea – pointing out the precedents in history. Well, I think the first thing to learn is that these events are not so unique, that you don’t have to have specific policies for each event, that there is a commonality which is to do with how banking is structured. Before the Civil War banks printed their own money – bank notes represented the each bank’s private money. The problem then was that people could run en masse on banks demanding their money back. In 1837 the Free Banking Act was passed in New York State which required banks to back their note issue with state bonds. But, these bonds were risky so it did not prevent panics. During this period checking accounts grow significantly. Then, after the Civil War the government takes over the money supply. The problem is no longer runs on private bank notes, but from 1857 until 1934 there were repeated panics to do with checks: everyone demanding to withdraw all their money from their checking accounts. We finally get deposit insurance in 1934 even though there was a lot of opposition, including economists. Roosevelt was also not a proponent."