Economics Questions

Re: questions about info in panic of 1819?

Gero — Fri, 14 Jan 2011 03:58:00 GMT

There are two Mises Dailies about the Panic of 1819:

Re: questions about info in panic of 1819?

Peter Sidor — Fri, 14 Jan 2011 00:20:18 GMT

Hmmm... there could certainly be more, and it seems according to them most panics were caused by a lack of currency in one form or another...

Re: questions about info in panic of 1819?

Kaz — Thu, 13 Jan 2011 23:07:11 GMT

http://butnowyouknow.wordpress.com/those-who-fail-to-learn-from-history/history-of-economic-downturns-in-the-us/

I'm behind a firewall, ergo cannot access it to copy here, but there's a lot of info about economic depressions in the US, there.

Re: questions about info in panic of 1819?

Peter Sidor — Wed, 12 Jan 2011 11:28:07 GMT

As to the first, the banks officially resumed specie payments, i.e. they declared themselves ready to redeem anyone's notes in specie on demand. However, Rothbard says here, that the banks have increasingly tried to put obstacles and intimidate those who attempted to press the banks for payment in specie. Hence the 'more nominal than real'.

In the second point, Rothbard speaks of a loss of confidence. Even in regular times, some people would demand specie, and the more the banks expanded their notes, the more specie from their reserves would be requested, putting them on a shakier ground. Their unwillingness to produce the specie despite official guarantees could alone inspire a certain lack of confidence, hence the premium for specie in the market.

questions about info in panic of 1819?

sthomper — Thu, 14 Jan 2010 09:01:37 GMT

Troubles and strains, however, began to pile up as the boom continued. The

resumption of specie payments by the banks was increasingly more nominal than

real. Obstacles and intimidation were the lot of those who attempted to press the

banks for payment in specie.46

The consequent loss of confidence in the banks was demonstrated by the

emergence of a premium for specie on the market. The discount on bank notes

made it more difficult for the banks maintaining specie payment to retain specie

in their vaults, since people could redeem their notes for specie, and sell it for

bank notes at a discount..........

http://mises.org/rothbard/panic1819.pdf

the above excerpts are from the panic of 1819 pdf

the first excerpt says specie payments becam more nominal than real? can anyone describe what that even means?

secondly, if a boom was taking place as stated in the text ...why the increased demand for specie with paper providing increasing economic output?