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The First Bank of the United States and the Securities Market Crash of 1792

Published online by Cambridge University Press:  26 July 2012

David J. Cowen
David J. Cowen
Affiliation:
Director at Deutsche Bank where he is employed as a foreign currency trader. Home address: Anthony Wayne Road, Morristown, NJ 07960. E-mail: [email protected].
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Abstract

In 1791 the $10 million capitalization of the First Bank of the United States was vastly greater than the combined capital of all other banks. The Bank had an enormous impact on the economy within two months of opening its doors for business by flooding the market with its discounts and banknotes and then sharply reversing course and curtailing liquidity. Although the added liquidity initially helped push a rising securities market higher, the subsequent drain caused the first U.S. securities market crash by forcing speculators to sell their stocks. Several reasons are analyzed for the Bank's credit restriction.

Type
Articles
Information
The Journal of Economic History , Volume 60 , Issue 4 , December 2000 , pp. 1041 - 1060
Copyright
Copyright © The Economic History Association 2000

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