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The First Bank of the United States and the Securities Market Crash of 1792

David J. Cowen
The Journal of Economic History
Vol. 60, No. 4 (Dec., 2000), pp. 1041-1060
Stable URL: http://www.jstor.org/stable/2698086
Page Count: 20
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The First Bank of the United States and the Securities Market Crash of 1792
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Abstract

In 1791 the $10 million capitalization of the First Bank of the United States was vastly greater than the combined capital of all other banks. The Bank had an enormous impact on the economy within two months of opening its doors for business by flooding the market with its discounts and banknotes and then sharply reversing course and curtailing liquidity. Although the added liquidity initially helped push a rising securities market higher, the subsequent drain caused the first U.S. securities-market crash by forcing speculators to sell their stocks. Several reasons are analyzed for the Bank's credit restriction.

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