Property Banking, Free Banking, and Branch Banking

Howard Bodenhorn

in State Banking in Early America

Published in print December 2002 | ISBN: 9780195147766
Published online November 2003 | e-ISBN: 9780199832910 | DOI:
Property Banking, Free Banking, and Branch Banking

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In an effort to encourage immigration and expand commercial agriculture, several southern states created and subsidized plantation banks designed to monetize agricultural economies and provide long‐term mortgage credit. These experiments typically failed, not because of the inherent inconsistency between issuing short‐term liabilities and holding long‐term assets, but due to unfortunate timing. Most were established in the mid‐1830s and could not establish themselves prior to the panics of 1837 and 1839. Other southern and western states allowed free banking, which was neither particularly good nor bad. Still other states built branch banking networks that performed well in good times and bad, largely because their small numbers encouraged intrabank and interbank cooperation.

Keywords: agriculture; branch banking; financial panics; free banking; immigration; interbank cooperation; monetization; mortgage; plantation banks

Chapter.  17011 words.  Illustrated.

Subjects: Economic History

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