ABA Banking Journal - May/June 2015 - (Page 24)
The Birth of the
Born into the 'common sorrow' of recession,
ABA laid a foundation for future growth,
prosperity and financial stability.
BY EVAN SPARKS
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.
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
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - May/June 2015