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²⁵ The likelihood ratio index, a measure of the goodness of fit suggested by McFadden, was calculated and found to be equal to 0.305 and 0.261 for Model 1 and Model 2. While these may appear to be on the low side, McFadden found that the index tends to produce a number that is smaller than the multiple correlation coefficient. For information on probit and the test statistics, see Judge, George G., et al. , The Theory and Practice of Econometrics (New York, 1980), pp. 590–601;Google ScholarMcFadden, Daniel, “Conditional Logit Analysis of Qualitative Choice Behavior,” in Zarembka, P., ed., Frontiers of Econometrics (New York, 1974), pp. 105–42.Google Scholar

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³⁶ Friedman, Milton and Schwartz, Anna J., A Monetary History of the United States, 1867–1960 (Princeton, 1963), pp. 159–63. Interbank cooperation was not unknown in the United States. When three prominent Chicago banks were about to suspend operations in 1905, the city's leading bankers organized by James Forgan, head of the Chicago Clearing House, took over the banks' assets and paid their depositors. The Chicago bankers reasoned that it would be less costly to do this than to risk the possible danger of a panic.Google ScholarSee Redlich, Fritz, The Molding of American Banking (New York, 1968), pp. 285–86.Google Scholar

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⁴¹ These were calculated from tables in Historical Statistics, pp. 1025–30.Google Scholar

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⁴⁶ All Bank Statistics, figures are calculated from the data provided for each state.Google Scholar

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⁴⁹ Ibid., pp. 165–70.

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⁵¹ Grant and Crum, The Development of State Chartered Banking, pp. 123–84.Google Scholar

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⁵³ South Dakota Biennial Report of the Superintendent of Banks (Pierre, 1930, 1932,), pp. 306; 345.Google Scholar

⁵⁴ The data used for this analysis came from Banking and Monetary Statistics, pp. 296–300 and All Bank Statistics.Google Scholar

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⁵⁷ Calculated from the data in Beckhart, The Banking System, p. 483; All Bank Statistics, pp. 24–25; andGoogle ScholarUrquhart, M.C. and Buckley, K.A.H., Historical Statistics of Canada (Toronto, 1965), pp. 240–41.Google Scholar

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⁶² The limitations on branching probably prevented many banks from attaining their optimal size. There appear to have been substantial economies of scale in banking. See James, John A., “Cost Functions of Postbellum National Banks,” Explorations in Economic History, 15 (04 1978), 184–95, andCrossRefGoogle ScholarBenston, George, “Economics of Scale in Financial Institutions,” Journal of Money, Credit and Banking, 4 (05 1972), 312–41.CrossRefGoogle Scholar