ABA Banking Journal - May/June 2015 - (Page 24)

FEATURE > The Birth of the American Bankers Association Born into the 'common sorrow' of recession, ABA laid a foundation for future growth, prosperity and financial stability. BY EVAN SPARKS A MASSIVE construction bubble, driven both by speculative investments and government subsidies. Investment houses with excessive leverage in that very same construction bubble. A stock market crash, a spike in unemployment, global panic, a wave of domestic bank failures and resounding political consequences. If this scenario recalls to you the past several years, then you'll well understand the drama into which the American Bankers Association was born in 1875. For photo captions, see Page 28. The construction bubble had been in railroads, whose growth had been jumpstarted by the completion of the first transcontinental line in 1863 and the need for rebuilding after the Civil War. From 1868 to 1873, more than 30,000 miles of new track were laid, and speculators piled into railroad stocks. 24 ABA BANKING JOURNAL | MAY/JUNE 2015 At the same time, the U.S. government-following the lead of European powers-moved the dollar to the gold standard. Dropping silver backing for the currency contributed to a tighter money supply and choked off funds for speculative investments. In September of 1873, the investment house of Jay Cooke, the heavily leveraged financier behind the Northern Pacific railway, failed to find buyers for its bonds and collapsed. The economy crashed with Cooke's firm and the railroads, triggering one of the deepest and longest recessions in American history. The New York Stock Exchange closed for two weeks. Wages fell by a quarter. Unemployment spiked to double digits. Ninety percent of railroad concerns collapsed. More than 300 banks failed in the years of the panic.

Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015

CHAIRMAN’S VIEW
UPFRONT
ECONOMIC OUTLOOK
LEGAL BRIEFS
PICTURE THIS
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
INVESTOR PERSPECTIVE
MARKETING/RETAIL
PAYMENTS
ADVOCACY
ABA COMPLIANCE CENTER INBOX
CYBERSECURITY
MORTGAGES
OPERATIONS
BOARD MATTERS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - May/June 2015

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