The Call Loan Market in the U.S. Financial System Prior to the Federal Reserve System

Jon R. Moen and Ellis W. Tallman
Working Paper 2003-43
December 2003

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The call loan market in New York City played a central role in funding the expansion of economic growth and capital investment in the United States in the late 1800s and early 1900s. Changes in the identity of the intermediaries providing those funds help explain why the movement for the establishment of a central bank in the United States took hold only after the panic of 1907. The growing significance of nonclearinghouse creditors to the call money market diluted the relative financial influence of the New York City bankers and compromised the apparent “coinsurance” arrangement between brokers and New York Clearinghouse lenders that prevailed during the late nineteenth century.

JEL classification: N21, N41

Key words: financial crisis, unit banking, correspondent banking

The authors gratefully acknowledge William Roberds, Steve Smith, and Larry Wall for helpful comments and conversations. The department staff of the Rare Books and Manuscripts Library at Columbia University provided valuable help in locating information on the personal writings of Frank Vanderlip and James Stillman. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to Jon R. Moen, Department of Economics, University of Mississippi, 333 Holman Hall, University, MS 38677, 662-925-5467,, or Ellis W. Tallman, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, NE, Atlanta, GA 30309-4470, 404-498-8915,