Unsettled Account (ebook)

Argumento de Unsettled Account (ebook)

"Richard Grossman has long been a well regarded figure in the field of financial history, and he has applied his knowledge and analysis to produce a comparative history of banking in Western Europe, North America, Australia, and Japan over the course of the nineteenth and twentieth centuries."--Ranald Michie, Business History Review

"Unsettled Account provides us with a new and welcome history of the last three centuries of banking. Who should read this book? A lot of people. For the legions of political, social and cultural historians, if they have to read one book on the historical evolution of banking, this is it. It will provide them with the needed theoretical background without an equation in sight, useful country studies, and the insights needed to instruct their students. For the legions of economic theorists, if they have to read one book on the historical evolution of banking, this is it. The book is a guide to every key stylized fact they might use for a model, identifying the broad parameters of institutions and history. For the legions of policy makers, if they have to read one book on the historical evolution of banking, this is it. Distanced from the crisis of the moment, Grossman nicely hits the key issues and distills some relevant lessons."--Eugene White, EH.Net

"What to do about the banks--tax them, break them up, or leave them alone--is topic number one on the financial reform agenda in the wake of the recent crisis. Understanding where to go requires first understanding how we got here. Richard Grossman's rich description of the historical life cycle of banking systems, not just in the United States but around the world, is the essential guide. If what's past is prologue, then this book should be essential reading for aspiring financial reformers."--Barry Eichengreen, University of California, Berkeley

"Unsettled Account details the history of commercial banking from ancient Greece to modern times. Blending history, economics, and politics, this book provides a remarkably thorough, engaging, and readable account of how our financial institutions have developed. Extraordinarily relevant to today's troubled financial affairs, it is essential reading for anyone who wants to understand contemporary banking."--Jeffry Frieden, Harvard University

"Richard Grossman has written an excellent treatise on the salient factors explaining the evolution of banking in advanced countries in the past two centuries. His comparative historical study of the banking systems of a number of important countries fills a gap in the literature which has been open for at least four decades. This book is a necessary addition to the libraries of serious scholars of financial history."--Michael Bordo, Rutgers University

"Richard Grossman's history of banking is a bold and hugely successful enterprise which could not have appeared at a better time. This is an elegantly written account of the origins, role, and contribution of these institutions through all manner of circumstances. An indispensable guide."--Forrest Capie, Bank of England

"This is an exciting panorama of the worldwide evolution of commercial banking during the past two hundred years. Covering a large number of countries, Grossman focuses on four major themes of banking: financial crises, resolution policies, mergers, and bank regulation. Providing a broad and pervasive view of the challenges to banking in the past and present, this is a must-read for all those interested in gaining a thorough understanding of the current problems in the financial system."--Lars Jonung, European Commission

"Until now, banking history has stubbornly clung to national boundaries, comparative inquiries being rare. In this book, the author has done an excellent job of synthesizing the large and varied literature, producing a readable and accessible book."--Joost Jonker, Utrecht University

"This excellent and well-organized book will be the standard reference on commercial banking history for years to come."--Michael Bordo, Rutgers University

"Richard Grossman has produced a valuable and accessible synthesis of research on some key aspects of banking history in this publication. . . . Students and academics with an interest in financial history, as well as practitioners and regulators, would benefit from reading Unsettled Account."--John Singleton, Australian Economic History Review

"[A] number of books stand out as works of real scholarship written by experts in their fields. Unsettled Account should be numbered among the best of those produced so far."--Ranald Michie, BHR

"Grossman weaves an enormous amount of research into an impressive history of the banking industry in many developed countries over the last 200 years. His focuses primarily on changes in the size and structure of the banking industry over time and argues that banks and bank assets rise as a share of overall economic output and then fall as a country moves from developing to developed. . . . [T]his work represents a valuable contribution to the history of banking."--Choice

"Grossman's is a good read. The book tells you as to how we got to be where we are. There are lessons to be learnt for those who want to go about reshaping reforms in global banking."--BusinessWorld

"Professor Grossman has assembled an impressive collection of historical, statistical, and bibliographic data, one that would be extremely difficult to reproduce using other sources. This information will prove invaluable for those conducting intensive research on commercial or international banking, and Unsettled Account will make an excellent addition for libraries that commonly serve such patrons. Academic law libraries at institutions offering specific courses in commercial banking may also want to consider a copy."--Shannon L. Kemen, Law Library Journal

"What Grossman has done, in drawing our attention to the way in which past banking crises have been dealt with, is a significant contribution to the literature on the problems and difficulties involved in dealing with banks."--Jonathan Warner, European Legacy0List of Illustrations xiii
List of Tables xv
Preface xvii

CHAPTER 1: Introduction 1
The Challenge of Intermediation 1
Banking and Economic Growth 5
Securities Markets, Banks, and Other Intermediators 10
The Scope of This Book 13
The Argument 16

CHAPTER Outline 27

CHAPTER 2: The Origins of Banking 28
Early Banking Functions 30
Credit Creation 32
Medieval Beginnings, Modern Prerequisites 35
Government Debt and the Beginnings of Government Banks 38
Government Banks 41
Private Banks 45
Commercial Banks 48

CHAPTER 3: Banking Crises 53
Financial Crises and Banking Crises 54
The Consequences of Banking Crises 59
The Causes of Banking Crises: Hypotheses 61
Evidence from before 1870 64
Evidence from 1870 to World War I 66
Evidence from the Interwar Period 74
A Durable Pattern 81

CHAPTER 4: Rescuing the Banking System: Bailouts, Lenders of Last Resort, and More Extreme Measures 83
Bailouts 86
Lenders of Last Resort 98
More Extreme Measures 104
Making the Cure Less Costly than the Disease 107

CHAPTER 5: Merger Movements 110
Consequences of Mergers 111
The Urge to Merge 112
Evidence 115
Matching Evidence with Explanations 120

CHAPTER 6: Regulation 128
Motives for Regulation 129
Entry Regulation 134
The Emergence of Charters 134
Banking Codes versus Corporation Law 141
Capital Requirements 145
The Role of Capital 145
Market Capital Requirements 147
Explaining Government Capital Requirements 150
The Impact of Government Capital Requirements 155
Other Regulations 157
Universal Banking 157
Identity of the Banking Supervisor 162
Summary 167

CHAPTER 7: Banking Evolution in England 169
The Bank of England and British Government Finance 170
Private Banking in London and the Provinces 173
Joint Stock Banking Regulation, 1826-57 175
Mergers 183
Crises and Responses 189
Fiscally Driven Evolution 195

CHAPTER 8: Banking Evolution in Sweden 197
The Riksbank and the Beginnings of Swedish Banking 198
Bank Politics and Legislation: Enskilda Banks 202
The Emergence of Modern Banking 207
Mergers, Crises, and Government Intervention, 1903-39 209
Universal Banking 215
Sweden in a Nordic Context 217

CHAPTER 9: Banking Evolution in the United States 221
The First and Second Banks of the United States, 1791-1836 222
From Chartered to Free Banking, 1837-62 229
The National Banking Era, 1863-1913 230
The Crisis of 1907 and the Founding of the Federal Reserve 243
The Great Depression 245
Summary 249

CHAPTER 10: Constrained and Deregulated Banking in the Twentieth Century and Beyond 251
Constrained Banking 251
The Era of Deregulation Begins 260
Crises and Rescues 266
Herstatt and Franklin National 267
The U.S. Savings and Loan Crisis 269
The Nordic Crises 272
Japan's "Lost Decade" 276
Crises and Rescues: Summary 281
Mergers 282
Regulation 284

APPENDIXES
Appendix to Chapter 2 291
Appendix to Chapter 3 297
Appendix to Chapter 5 317
Bibliography 321
Index 375