Antebellum U.S. banking

Chapter 1: National trends in antebellum banking. The geographic and intertemporal distribution and determinants of the number of banks, the amount of real assets held by banks, the size of banks, and the concentration of the banking industry are delineated and related to changes in GNP, regional variations in per capita income, changes in population, and political events.;Chapter 2: Regional trends in antebellum banking. Regional trends in the level of deposits and circulation, the importance of interbank deposits, and monopoly power in the banking industry are examined. These trends are used to examine the relative importance of banknote issue and circulation as a source of bank funds, the response of banks to panics which occurred during the period, and the level of inter-regional interdependence in the financial industry.;Chapter 3: Free banking laws and barriers to entry. The evidence supporting the widely held view that free banking laws in the United States lowered barriers to entry in the banking industry is examined and shown to be unconvincing. The thesis that free banking lowered barriers to entry is tested by examining the entry of firms and the output of banking services before and after the institution of free banking. The output of banking services and the number of banks after the institution of free banking, in all states with viable free banking laws except New York, remained the same or declined. In light of this evidence, the belief that free banking in the antebellum United States increased the competition and efficiency of the banking industry by lowering barriers to entry must be considered.;Chapter 4: Reexamining the cause of the 1837 panic. The cause of the 1837 panic has been crucial to understanding the role of Andrew Jackson's economic policy in the depression of the late 1830s and early 1840s. The two currently contending causes of the panic argue that the Distribution of the Surplus, rising interest rates, and mortgage defaults precipitated the panic. This paper provides estimates of the effect of these events on bank's asset portfolios and the money supply. It is shown that neither the Distribution of the Surplus, rising interest rates, or mortgage defaults created significant losses for banks or large unanticipated changes in the money supply, and, therefore, could not have been the primary cause of the 1837 panic.