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State Banks and the National Banking Acts: Measuring the Response to Increased Financial Regulation, 1860–1870


  • I would like to thank Peter Rousseau, Jeremy Atack, Howard Bodenhorn, Richard Sylla, and Eugene White for their comments on various drafts, as well as Robert DeYoung, the two referees, and participants at the NBER-DAE summer institute for their insightful suggestions. I would also like to thank Warren Weber for giving me access to his antebellum databases and the Economic History Association for financial support.


The National Banking Acts and their supporting legislation led to 263 state bank closures and 934 charter conversions between 1863 and 1870. This paper measures and analyzes these sudden changes using the period's first complete bank-level census. The data suggest that the national capital requirements prevented many existing banks from converting to a national charter, whereas a tax on state bank notes was responsible for the large number of closures. The legislation also prevented new national banks from replacing closed state banks and, instead, encouraged note and security brokers to open new banks in developing areas along the Manufacturing Belt.