>>the Fed failed to act to save failing banks<<
Finally drove into DC today to start digging in the Library of Congress - absolutely gorgeous day on Capital Hill. The air was so cool and fresh it was almost like after a rain. Very sunny. Flowers in bloom. The erstwhile booming economy has been good to D.C., too. Didn't get much done - had to get a researcher's card, which is a new requirement - and then wait an hour for the books to be brought up from the stacks.
From Charles S. Tippetts' State Banks and the Federal Reserve System, 1929 (pre-crash), citing Fed. Res.Bull. June 1928 - in February, 1928, there were 26,155 banks in the US. Of those, only 7,728 were national banks, and 1269 were state bank members of the Federal Reserve system. So only 1/3 of all banks in the US were actually in the Federal Reserve system.
The rest were state chartered banks, operating under more liberal charters and more liberal laws. Less red tape, less expense.
From 1920 to 1928, 5000 banks closed their doors - 1/6th of all US banks. Of those, 700 were national banks and 200 were state bank members of the Federal Reserve system. So Federal Reserve system banks were far less likely to fail, but it did happen.
I have no idea whether the banks that failed in the 1930's were Federal Reserve system banks or not.
I still haven't tracked down a copy of Friedman and Schwartz - is this something they go into? I don't see how the Federal Reserve could have done much for non-Federal Reserve banks, but I'll have to look at the laws in effect at the time. I expect this is why FDIC was passed.
Luckily for me, the Board of Governors office is also in DC, and they should have the Federal Reserve Bulletins in the reading room, I assume.
Interestingly, Tippetts quotes one gentleman banker who objected to the Federal Reserve system being set up in 1913 because Federal Reserve notes were "fiat money." Weren't they backed by gold then? |
