Abstract: The National Banking Acts and the Transformation of New York Banking after the Civil War

David F. Weiman


According to Margaret Myers, the National Banking Acts (NBA) did not cause the spatial concentration of correspondent balances in New York City, but merely institutionalized its position as national money center. Her claim is consistent with the recent consensus among economic historians, which emphasizes continuity over change during the Civil War era. Our in-depth analysis of the New York banking sector tells a very different story. The NBA directly increased the concentration of correspondent relations and balances in New York, but also created market opportunities for the entry and rapid growth of new highly specialized correspondent banks. The reaction of incumbents to federal government intervention and to new rivals was played out in the New York Clearing House Association deliberations, initially over admissions decisions and later over its policy of pooling reserves during severe panics. These reactions had important implications for the financial stability of the country as a whole.