Journal of Political Economy Vol. 117 No. 6 2009
Monetary Intervention Mitigated Banking Panics during the Great Depression: Quasi‐Experimental Evidence from a Federal Reserve District Border, 1929–1933
Abstract
The Federal Reserve Act divided Mississippi between the 6th (Atlanta) and 8th (St. Louis) Districts. During the Great Depression, these districts’ policies differed. Atlanta championed monetary activism and the extension of aid to ailing banks. St. Louis eschewed expansionary initiatives. During a banking crisis in 1930, Atlanta expedited lending to banks in need. St. Louis did not. Outcomes differed across districts. In Atlanta, banks survived at higher rates, lending continued at higher levels, commerce contracted less, and recovery began earlier. These patterns indicate that central bank intervention influenced bank health, credit availability, and business activity.
- DOI
- 10.1086/649603
- Volume
- 117
- Issue
- 6
- Pages
- 1031-1073
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref