So, what happened during
bank panics? During the nineteenth and early twentieth centuries, the banks themselves developed increasingly sophisticated ways to respond to panics.
The debate over the gold standard and the free coinage of silver,
bank panics, and the establishment of the Federal Reserve are basic to much of economic and political history.
While a run on the deposits of a single, solvent bank may be satisfied by disposing of its assets to other banks, this is not true if there is a generalised
bank panic affecting the banking system as a whole.
bank panic was the unstable financial system that allowed questionable financial practices by unscrupulous businessmen.
Another facet of ending
bank panics entailed creating an "elastic currency." Under the National Banking Act passed during the Civil War, the national banks chartered by the comptroller of the currency could only issue bank notes, which circulated as currency, if backed by government bonds.
In other words, Friedman conceives of the
bank panics as an enormous shock to aggregate demand.
The failure in November of the privately owned Banco del Cafe (BANCAFE) set off a
bank panic and demands in the National Assembly for legal action against bank officers and major stockholders held responsible.
There will be more arrests, connected to the
bank panic of last week, said Interior Minister Tsvetlin Yovchev in Parliament.According to him the new arrests will most likely be this week.Yovchev added that the situation was already calming and urged the people to put their savings back in the banks which are absolutely stable.
The 1907
bank panic is interesting because the precipitating event was the decision by the National Bank of Commerce on October 21, 1907, to stop clearing checks for the Knickerbocker Trust Company.
(2.) Calomiris and Mason (1997) find evidence of depositors' confusion during the June 1932
bank panic, but they also find that solvent banks were able to support each other to avoid failure.
(4) Calomiris (1990, 1992c) argues that a nationwide branch banking system would not have experienced aggregate insolvency risk even during the worst episodes of bank failure and
bank panic. (5) See the related discussion of other countries' experiences in Bordo (1990) and Calomiris (1992a).
Panics and bailouts of the 19th century / The authors open the book with a deep dive into the National
Bank panics of the Gilded Age.