Fighting Financial Crises: Learning from the Past
by Gary B. Gorton (Author), Ellis W. Tallman (Author)

About the Author
Gary B. Gorton is the Frederick Frank Class of 1954 Professor of Management and professor of finance at Yale University School of Management and a research associate of the NBER. He is the author of many books, including, most recently, The Maze of Banking: History, Theory, Crisis. Ellis W. Tallman is executive vice president and director of research at the Federal Reserve Bank of Cleveland. He has published extensively on macroeconomics, economic forecasting, and historical episodes of financial crisis in several top journals.

About this book
If you’ve got some money in the bank, chances are you’ve never seriously worried about not being able to withdraw it. But there was a time in the United States, an era that ended just over a hundred years ago, in which bank customers had to pay close attention to whether the banking system would remain solvent, knowing they might have to rush to retrieve their savings before the bank collapsed. During the National Banking Era (1863–1913), before the establishment of the Federal Reserve, widespread banking panics were indeed rather common.
Yet these pre-Fed banking panics, as Gary B. Gorton and Ellis W. Tallman show, bear striking similarities to our recent financial crisis. In both cases, something happened to make depositors—whether individual customers or corporate investors—“act differently” and find reason to question the value of their bank debt.
Fighting Financial Crises thus turns to the past for a fuller understanding of our uncertain present, investigating how panics during the National Banking Era played out and how they were eventually quelled and prevented. Gorton and Tallman open with a survey of the period’s “information environment,” tracing the development of national bank notes, checks, and clearing houses to show how the key to keeping order was to disseminate information very carefully. Identifying the most effective responses based on the framework of the National Banking Era, they then consider the Fed’s and the SEC’s reactions to the recent crisis, building an informative new perspective on how the modern economy works.

Brief contents
1 Fighting Financial Crises: Learning from the Past 1
2 The New York Clearing House Association 12
3 The Start of a Panic 26
4 What the New York Clearing House Did during National Banking Era Panics 37
5 Information Production and Suppression and Emergency Liquidity 57
6 “Too Big to Fail” before the Fed 72
7 Certified Checks and the Currency Premium 87
8 The Change in Depositors’ Beliefs during Suspension 103
9 Aftermath 125
10 What Ends a Financial Crisis? Historical Reminders 130
11 Modern Crises: Perspectives from History 141
12 Guiding Principles for Fighting Crises 169
Appendixes 189
Notes 211
References 219
Index 231

Length: 256 pages
Publisher: University of Chicago Press; First edition (September 19, 2018)
Language: English
ISBN-10: 022647951X
ISBN-13: 978-0226479514