A New History of Banking Panics in the United States, 1825–1929: Construction and Implications

Andrew J. Jalil
2015 American Economic Journal: Macroeconomics  
Section A1 of the appendix describes the methodologies behind each of the nine panic series on a case-by-case basis. Kemmerer Kemmerer (1910) identified financial panics by reading the Commercial and Financial Chronicle, the leading economic newspaper of the late 19 th and early 20 th centuries, from 1873 to 1908. He found eight major and twenty-one minor panics. However, he provided almost no explanation for his methodology. He did not provide a clearly defined criterion for selecting major
more » ... selecting major and minor panic episodes, nor did he provide a definition of panic. For the major panics, he chose periods that were "financial disturbances" 1 without explaining what that term encompassed, and for minor panics, he did not provide any rationale for his selection process. Moreover, when describing his panics, Kemmerer wrote, "the word panic has been used here to cover several financial disturbances for which many would not use so strong a word, i.e., the disturbances of 1884, 1890, 1899, and 1901." 2 In this quote, he openly acknowledged that his decision to classify several of these episodes as panics was questionable. Furthermore, in a footnote, Kemmerer provided a cautionary message regarding the methodology he used to identify his minor panics, noting that such a list was created after "a rather hasty perusal of the [Commercial and Financial] Chronicle" and that "this list is probably not complete, and there may be room for doubt as to the inclusion of some of the dates mentioned." 3 Thorp Thorp (1924), in his classic work Business Annals, one of the early pioneering studies on the history of business cycles, identified twelve panics in his yearly headings of major economic events from 1790 to 1925. He assembled his list by reading newspapers; however, he failed to explain his rationale in identifying those twelve episodes as panics. He provided no explanation of his methodology, nor did he provide a definition of panic. DeLong and Summers DeLong and Summers (1986) identified twelve panics from 1890 to 1910, with a panic being defined as a period when the average commercial paper rate increases by more than one percentage point from quarter-to-quarter or when banks stop paying deposits at par. Eight of these panics satisfy the first criterion, a quarter-to-quarter increase in the average commercial paper rate of more than one percentage point.
doi:10.1257/mac.20130265 fatcat:kbtlozp2fjefrb7fyg6xxcgeey