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A Note on Interest Paid on New York Bankers' Balances in the Postbellum Period

Published online by Cambridge University Press:  11 June 2012

John A. James
John A. James
Affiliation:
Assistant Professor of Economics, University of Virginia
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Abstract

This study reports interest rates on New York Bankers' balances and argues that their stability in periods of generally falling interest rates was a sign of a highly competitive financial system.

Type
Research Article
Information
Business History Review , Volume 50 , Issue 2 , Summer 1976 , pp. 198 - 202
Copyright
Copyright © The President and Fellows of Harvard College 1976

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References

1 Myers, Margaret G., The New York Money Market, Volume I: Origins and Development (New York, 1931), 115.Google Scholar

2 Sylla, Richard, “The United States, 1863–1913,” in Cameron, Rondo, ed., Banking and Economic Development (New York, 1972), 254.Google Scholar

3 Sprague, O. M. W., History of Crises under the National Banking System (Washington, D. C., 1910), 21.Google Scholar

4 U. S. Comptroller of the Currency, Annual Report, 1873, xxxi; Annual Report, 1890, 13; Annual Report, 1900, xxv.

5 Consider, for example, Hester, Donald, “An Empirical Examination of a Commercial Bank Loan Offer Function,” in Hester, Donald and Tobin, James, eds., Studies of Portfolio Behavior (New York, 1967), 118–170.Google Scholar See also Shull, Bernard, “Commercial Banks as Multiple-Product Price-Discriminating Firms,” in Carson, Deane, ed., Banking and Monetary Studies (Homewood, Ill., 1963).Google Scholar

6 Myers, New York Money Market, 122.

7 Annual Report, 1872, xx.

8 Sprague, History of Crises, 20.

9 “Interest on Deposits,” Bankers' Magazine, XLI (December, 1886), 454.

10 Ibid., 455.

11 Myers, New York Money Market, 249.

12 “Country Checks and Country Bank Accounts,” Bankers' Magazine, LVI (February, 1898), 227.

13 Myers, New York Money Market, 249.

14 Sprague, History of Crises, 20.

15 “Interest on Country Deposits,” Bankers' Magazine, XXXIX (December, 1884), 414.

16 Ibid.

17 U.S. House, Committee on Banking and Currency, Views Expressed Before the Committee, 43rd Cong., 2nd sess., 184, 125.

18 “Notes on Banking in New York City,” Bankers' Magazine, XLIII (April, 1889), 723.

19 Sprague, History of Crises, 21.

20 “The Money Market,” Bankers' Magazine, XLVI (June, 1892), 926.

21 Bankers' Magazine, XLVII (August, 1892), 85.

22 Bankers' Magazine, XLIX (December, 1893), 104.

23 Bankers' Magazine, XLIX (April, 1894), 788.

24 Bankers' Magazine, L (December, 1894), 194.

25 Bankers' Magazine, L (June, 1895), 970.

26 Bankers' Magazine, LVI (February, 1898), 297.

27 Ibid., 320.

28 Shreve, B. J., “Country Checks and Country Bank Accounts,” Bankers' Magazine, LVI (February, 1898), 227.Google Scholar

On average, banks in other financial centers paid higher rates on Bankers' balances, but since the markets were much thinner, the rates were more variable. For example, in the general decline in rates in 1894, the rate on Bankers' balances fell to 3 per cent in Louisville and to 1½ per cent in Chicago and Boston. Two years earlier, a number of banks in Boston reduced their rates on interbank deposits to 2 or 2½ per cent. Bankers' Magazine, XLIV (April, 1894), 788. Bankers' Magazine, XLII (July, 1892), 61–62.

29 Coffin, George M., “The New York Rate of Interest,” Bankers' Magazine, LXXII (January 1906), 46.Google Scholar See also Wade, Festus J., “What Causes Fluctuations in Money Rates?” Proceedings of the New York State Bankers' Association, 1906, 36.Google Scholar

30 For example, see White, Horace, Money and Banking, 5th ed. (Boston, 1911), 212.Google Scholar

31 U.S. Senate, Banking and Currency Committee, Hearing on HR7837 (S2634), 63rd Cong., 1st sess., 1293, 1354.

32 Bentley, C. F., “Commercial Paper as an Investment for Country Banks,” Proceedings of the Nebraska Bankers' Association, 1903, 184.Google Scholar

33 Myers, New York Money Market, 244.