Was There a Note Issue Conundrum in the Free Banking Era?
Haupert, Michael J.
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The article focuses on the note issue paradox of American banking in the post-Civil War era. An overview of the conundrum is given, highlighting national bank behaviors inconsistent with profit-maximizing principles and several historiographical interpretations of the behavior, namely that they did not expand note issues in beneficial conditions to do so. Additional examination is offered to free-regime state banks, noting similarities in cost and risk environments to the following national bank-regime era. Conclusions are offered suggesting unseen risk perceptions that prevented the profitable venture.
banking, history, free banking era, national bank note paradox
Journal of Money, Credit, and Banking, Vol. 27, No. 3 (August 1995)