In the present essay we review a set of enquiries and reports that were realized and published as a result of the major financial crises of the past and of the contemporary era. Generally these documents not only address the issue of the causes of collapse of bank and capital markets but also shed light on regulations proposed at different points in time to improve financial stability. We begin with reference to extensive hearings published by the British Parliament following what may be termed the first global financial crisis in 1873 and, then, proceed to a discussion of official reports on the crises of 1907, 1929 and above all that of 2008, which has produced the greatest outpouring of these types of publications. It is our hypothesis that one important avenue for a historical understanding of the great financial debacles of the past consists in a careful evaluation of official literature and documents that can complement the theoretical approaches of economists in search of explanations for these events.
En este ensayo revisamos una serie de investigaciones y reportes que fueron impulsados y publicados como consecuencia de crisis financieras del pasado y de la época contemporánea. Estos documentos suelen analizar las causas del colapso de determinados bancos o mercados financieros, pero, además, pueden echar luz sobre los procesos de ratificación de nuevas regulaciones establecidas para mejorar la estabilidad financiera. Comenzamos el trabajo con un resumen de importantes documentos que fueron publicados por el Parlamento británico a raíz de la crisis de 1873, que podría denominarse la primera crisis financiera global. Se sigue con un repaso de informes oficiales emanados de la crisis de 1907 en los Estados Unidos, la crisis de 1929 y, sobre todo, aquellos publicados a raíz de la crisis financiera de 2008. Es nuestra hipótesis que una comprensión histórica de los grandes colapsos financieros del pasado puede beneficiarse del estudio de esta literatura oficial, la cual puede complementar los enfoques más teóricos de los economistas que buscan explicaciones de las causas de estos grandes y destructivos eventos.
Which are the best and the most important sources for understanding the outbreak as well as the immediate causes and consequences of a major financial crisis? They come in various shapes and formats, including empirical, theoretical, legal and political texts and documents. Economic historians have been studying these kinds of texts for decades because it is necessary to combine a large variety of primary and secondary sources in order to fully grasp the complexity of a great financial collapse. It is worth noting that this literature has broadened remarkably in our own day as a result of the most recent crash of 2008, which is now known both familiarly and among experts as the Global Financial Crisis.1 Indeed, the number of books, documents, articles and working papers on this recent financial cataclysm is not only expanding exponentially but also has become much more accessible worldwide due to the internet, and has even spawned a new kind of electronic publication, the “financial blog”, which also attracts great interest. Nonetheless, it should also be recognized that there are important historical antecedents dealing with prior crises that consist not only of books and articles, but also official documents and enquiries that can be identified and studied for many financial crises over the last century and a half.
Perhaps the first sources of study which historians habitually utilize to reconstruct financial crises of the past are newspapers, particularly the specialized financial press that publish articles providing a first-hand description of the daily events that occur on the outbreak of a major event of this nature. A second source are the more analytical articles that appear somewhat later in economic newsletters or journals (and today in web sites of working papers and blogs, as well), written in most cases by economists, financial experts or well informed financial journalists. A third source consists of reports circulated by banking institutions, particularly central banks and multilateral financial entities, gradually increasing in volume and regularity over the twentieth century.
But apart from the sources aforementioned, there were (and are) other complementary documents that may have more of a political origin, based on official efforts to “uncover” the causes of financial collapse of banks or stock markets and the key figures considered responsible for the debacle. Whether this objective is fulfilled or if there is actually a “cover-up” depends on a great variety of factors. In this case, historians need to focus on a fourth important repository of information which are the official enquiries realized generally by parliamentary committees or commissions soon published after the crisis that provide much information of interest, including the testimony of a large number of key financial actors. A complementary source – although generally less consulted except by legal experts – are the judicial records of court cases related to embezzlements or frauds by banks or financial agents. Finally, it may be suggested that major pieces of legislation ratified in the wake a result of a financial collapse should also be studied in the light of the important materials contained in parliamentary debates or in the laws themselves and in subsidiary documents.
Our essay covers a broad span of time in order to suggest the utility of these kinds of documents, but we focus, in particular, on the official enquiries on the causes of financial crises, the majority of them being the product of legislative commissions which operated in Great Britain and the United States at different moments during more than a century, although there have also been similar parliamentary investigations at different times of financial troubles in France, Canada and Australia, to name just a few countries. After a brief comment on mid-nineteenth century crises, we turn our attention to a most interesting official investigation in Great Britain directed at clarifying the presumed causes of the global financial crisis of 1873. We follow with a summary of enquiries carried out by the U.S. Congress in the late nineteenth century and early twentieth century. We also refer to the investigations promoted by the U.S. Senate after the financial crash of 1929 that inaugurated the Great Depression. Finally, and most important, we advance a set of comments and summaries of official documents that have been published in the last four years, as a result of extensive investigations by governments or public banks that had the aim of explaining some of the causes of the global financial crisis that exploded in 2008, the consequences of which are still with us.
A recent essay by Marc Flandreau (2012) has covered some of this ground by analyzing several documents related to the crises of 1873 and 1929 but he does not mention additional enquiries and does not deal in depth with the official investigations on the contemporary financial debacle, which are also of enormous interest.2 Flandreau suggests that, in the aftermath of the recent crisis, it appears that modern day enquiries do not include “clear requests to investigate the behavior of investment banks” as was the case in the1930s. His interpretation, however, does not appear to be justified in the light of a review of publications such as the US Senate investigation, published in 2011, which addresses in great detail the role and truly flagrant and enormously risk prone behavior of both commercial and investment banks, as well as rating agencies in the United States prior to the financial debacle of 2008. In any case, the present essay – like that of Flandreau – suggests that reviewing the official documents published as a result of past financial crises is of considerable interest to compare and/or contrast with the present.
1The financial crisis of 1873 and the select committee on foreign loansSince the beginning of the nineteenth century there were various stock market and bank panics in Europe and North America, some of which had important effects internationally, particularly the collapses of 1825, 1837, 1846/47, 1857 and 1866. The bankruptcies of banks and important brokerage houses in important financial centers such as London, Paris, New York and Hamburg had the result of restricting the credit that greased the wheels of international transactions. The impact varied by country. For example, in October 1857, the downturn in agriculture in the United States led to financial troubles in New York which then rapidly spread to London and Hamburg: by November the credit crunch had begun to have an impact on the agents and correspondents of English merchant banks and German trading houses in North and Latin American ports. The impact of the crisis was so considerable that in Great Britain, the House of Commons instructed the formation of a Select Committee on Bank Acts to investigate the causes and nature of this mercantile and credit collapse. One important witness to this event and the official reports was Walter Bagehot, journalist and later editor of the Economist, who published an important essay on the subject (Bagehot, 1858). In the case of Spain, financial contraction of 1857 most deeply affected the agrarian sector leading to what was described as a subsistence crisis by Nicolás Sánchez Albornoz (1968) in a splendid essay that is considered a pioneer in the historical study of nineteenth century economic crises in the Iberian peninsula.3
In 1866 the failure of the powerful financial firm of Overend & Guerney in London caused great turbulence in the “City” among virtually all financial firms there and subsequently its effects spread abroad. The crisis was analyzed with particular incisiveness again by Walter Bagehot and underlay much of the text and the principal arguments of his classic work, Lombard Street, published in 1873. In this work, as is well known, Bagehot underlined a relatively new view concerning the role of central banks in crises – in this case of the Bank of England – which he held should liberally discount very good commercial paper, thereby increasing the availability of credit in times of economic contraction. This British banking panic had a major impact on Central European and Italian financial markets, although the consequences were also felt with particular harshness in Spain where most of the banks in Barcelona, Cadiz and Santander collapsed. Again, the pioneer in the study of this Spanish banking crisis was Sánchez Albornoz, although he was later followed by other researchers.4
It is generally acknowledged by economic historians that one of first truly global financial crises in modern capitalism was that of 1873. The news of an impending slowdown in the international economy was quickly transmitted by the underwater telegraphs cables that had recently linked Europe with North America. The news briefs from Europe spoke of the crash that had taken place on the Vienna Stock Exchange on May 8th and the subsequent spread of the financial panic to the principal money markets of Germany. Preliminary reports were disquieting, but it was reassuring to note that neither the British nor the French exchanges had been seriously disturbed. The news arrived more slowly to South America on the mail steamers which anchored in the South Atlantic ports in early June, 1873, but there also credit and trade soon began to fall. Nonetheless, it was only in September, when word arrived of a dramatic collapse of the New York stock market, that fading optimism on both sides of the Atlantic completely dissipated. It now became clear that a major international crisis had commenced.
Within a matter of months trade and finance between Europe and America began to drop precipitously and afflicted economies round the world. The export of capital from England and France ceased as stock exchanges weakened and as banking houses began calling in their domestic and foreign bills. A steep decline in commodity and stock prices in most capitalist nations was followed by a large number of bank and industrial failures which inaugurated an era of deep and widespread economic troubles. In the United States the high rates of unemployment stirred up popular discontent, including numerous strikes and mass demonstrations; at the same time, the collapse of many large enterprises led to a restructuring of the major financial and industrial groups. In Europe the crisis at first appeared to be somewhat less severe, but by the end of the decade it became clear that the recession had actually been transmuted into what some historians of previous generations called the “Great Depression of 1873–1896”.5
Although the contemporary economic upheaval had its roots in the financial and commercial fluctuations of the industrial nations of the North Atlantic, its impact soon made itself felt with particular virulence in the non-industrialized regions of the Near East and Latin America. In these regions the depression of 1870s can best be defined as a “debt crisis” since the overriding cause of the economic turmoil there stemmed from an excessive accumulation of foreign debts by governments. By 1876 the Ottoman Empire, Egypt, Greece, Tunisia and eight Latin American states had defaulted, and the prospects of repayment appeared remote, to say the least.6
The largest and most notorious of these debtors were Turkey, the seat of the Ottoman Empire and Egypt, a semi-autonomous satellite of the former. By 1875 the Turkish Sultan and the Egyptian Khedive had each managed to saddle their respective administrations with external obligations approaching 100 million pounds sterling. No other nations outside of Europe could boast an equivalent feat, a fact which merits our attention before proceeding to a mention of the financial quandary of the Latin American states. Indeed, it was the simultaneous default of Turkey and Egypt that finally forced contemporaries to recognize the weighty and unpredictable consequences of the “foreign loan collapse”. Robert Giffen, a most respected economist of the day, wrote: No doubt in 1873…the collapse of the foreign loan financing had been foreshadowed; but the anticipatory events of that year were in themselves comparatively unimportant, so that down to 1875 what chiefly happened was a succession of monetary and commercial crises in countries dependent on England, but from which England by comparison escaped. In 1875 these crises were succeeded by a crisis in England itself of very great intensity…the whole culminating in the financial disorders of the foreign loan collapses, which will probably form in after years the most conspicuous feature of the whole series of liquidations (Clark, 1878, p. 326).7
The largest debtor in Latin America was the Peruvian government which abruptly suspended the service on its foreign debt in January, 1876. It did not resume payments for more than a decade. The default was the result of two parallel developments: on the one hand, the Peruvian debt had increased astronomically in recent years; on the other, the main source of state income, guano revenues, had been subcontracted to the firm of Dreyfus Frères of Paris. Dreyfus promised to cover the debt service in exchange for the guano monopoly but warned the Lima ministers in July, 1875 that the interest on the huge external debt would no longer be paid if guano sales remained depressed. Six months later the inevitable suspension took place. The foreign bondholders were informed that due to differences among the guano contractors and the Peruvian authorities no further payments would be forthcoming.8 Consequently, the London quotations of Peruvian bonds fell precipitously. Various elaborate attempts were made to resolve the financial tangle, but none of these could revive prosperity.
The Peruvian default – coincident with those of Turkey and Egypt – marked the climax of the world debt crisis. By the year 1876 some fifteen non-European nations had suspended payments on a total of almost three hundred million pounds of foreign securities. But curious as it may seem, the British government did not decide to direct the attention of the public to the suspension of payments by the largest foreign debtors but rather those of a set of smaller Latin American countries that were the first to default.
During 1874 and most of 1875 a great deal of ink was spilt in the English financial press arguing that the growing instability on Lombard Street had been caused by excess speculation in the bonds of a number of insolvent republics in Central and South America. The value of these bonds had begun to fall as a result of defaults in 1872 and 1873. The bondholder committees demanded an official enquiry into the matter. The Select Committee on Foreign Loans (organized by the British Parliament) began hearings in early March, 1875 which continued through June.9 During this time a broad array of bankers, brokers, contractors, speculators and even clerks were questioned in depth on the mechanics of the loan business.10 By focusing on the bond issues of only four nations, Costa Rica, Honduras, Paraguay and Santo Domingo, the Committee avoided discussion of the largest financial scandals of the day, thereby eluding a confrontation with the most powerful members of the London banking community. But there is also no question that the voluminous parliamentary report shed much light on the mysterious ways in which foreign loans were managed and/or mismanaged.
The Latin American loans investigated were among the smaller financial affairs of the era. They had only a marginal impact on the world depression. But as case studies they are illustrative of the methods used by bankers, speculators and politicians to enrich themselves at the expense of the gullible if avaricious European bondholders and of the virtually defenceless peoples of the small debtor republics. A brief review of the practices disclosed provides an “inside” view of the conduct and motives of the principal actors involved in the international bond business. The degree of fraud arising from the maladministration of the loans that were issued by the smaller Latin American governments and sold by speculative banking firms reached astonishing proportions, as the parliamentary investigation conclusively demonstrated. This was attributed by premier banking houses like Barings and Rothschilds (which naturally considered themselves above such unorthodox manipulations) to the activities of second-rate and unscrupulous firms.
Recent research by Flandreau and Flores (2009, pp. 646–684) has conclusively demonstrated the marked differences between the operations of first tier and lower ranking merchant banking firms in the international loan business from the early to the late nineteenth century. Flandreau and Flores have studied the issue of sovereign bonds during the nineteenth century and have identified the importance not just of analyzing the relations between debtor governments and bondholders, but also of the behavior of the underwriters of the bonds who actually placed them with investors, particularly in London. Merchant banks were long active as the foremost underwriters and it was their degree of prestige which played a major role in the confidence that investors might have in the acquisition of sovereign bonds of given nations. For instance, the British branch of Rothschilds handled not only the sovereign bonds of powerful monarchies such as those of imperial Russia and of the Austrian/Hungarian Empire, but also of the imperial government of Brazil and of the Chilean government for almost a century. In fact, Baron Rothschild was one of the persons interviewed in the hearings of the Select Committee of 1875: he argued that he did not find the speculative boom of the years preceding the collapse especially surprising: his view was that it was simply the consequence of imprudent and aggressive bankers who wanted to make money quickly, and suggested that his firm was above this.
Other leading experts in the history of financial crises, Bordo and Rockoff (1996, pp. 389–428) has argued in numerous essays and books that the adoption of the gold standard in the last decades of the nineteenth century by almost fifty countries provided greater stability to financial markets.11 Nonetheless, there were a large number of financial crises after the 1870s: these included, for instance, the banking crash of 1882 in Paris, the twin financial crises of 1884 in London and New York, and the stock market panic at Paris in 1889, which was related to a major speculation in copper futures as well as the simultaneous “scandal of Panama”, when the huge Panama Canal company headed by Ferdinand de Lesseps went bankrupt. The future leader of the French socialist party, deputy Jean Jaurés was unanimously elected to head a parliamentary commission of inquiry which published its results in early 1893: the French political elite was implicated when it was found that 104 legislators were involved in bribes, slush funds and influence peddling related to the canal company. The materials and documents of this enquiry have been fundamental for a good number of studies on the history of French finance at the time, among which those of banking historian Jean Bouvier (1973) stand out as pioneer works.
Perhaps the most studied financial crisis of the end of the nineteenth century was the Baring crisis of 1890 which deeply affected the financial markets of London, Buenos Aires, Montevideo, and later Río de Janeiro, Lisbon and Madrid but it did not, however, lead to parliamentary enquiries. On the other hand, the financial collapse of 1893 – which had its principal origins and impacts in North America including Canada, the United States and Mexico, did stimulate the celebration of congressional hearings by the U.S. Congress.12
There followed a decade of relative tranquility in world finance which was broken by the banking and financial crisis of 1907 that exploded in New York and ignited a deep depression in the United States. At the time there were a great number of calls for investigation of the role of the trust companies that had caused the panic, but the most important decision taken by the U.S. Congress was to establish the National Monetary Commission which subsequently studied the history and role of banking systems around the world in order to decide which would be the most appropriate route for the establishment of a central bank in the United States.13 This task took over six years and it was not until 1913 that the creation of the Federal Reserve Bank was ratified.
Shortly before ratification of the Federal Reserve, in May, 1912, Congress also convened a special House Banking and Currency Committee headed by Arsene P. Pujo that continued its hearings until February 1913.14 It investigated Wall Street bankers that were presumed to have formed a dominant control of the New York money market and hence were factors in the speculation and financial instability leading to the crisis of 1907. The report concluded that the bankers, led by J.P. Morgan, formed dominant power elite in the money markets, most prominently 18 financial institutions with closely interlocking directorates. The report of the Pujo Committee also concluded that the bankers had abused the confidence of investors and the general public. The official hearings and investigation proved politically helpful to the ratification of the Federal Reserve in 1913. This institution proved to be of great importance for assistance with financial and monetary stability in the United States during the First World War, but it certainly did not avoid subsequent financial crises and, in particular, failed to mitigate the consequences of the great debacle of 1929.
2The crash of 1929: the U.S. Senate investigation of foreign loan defaults (1931) and the Banking and Currency Commission (1933)As in previous crises, the enormous losses suffered by investors as a result of the stock market crash of 1929 soon also generated considerable pressure to find culprits or scapegoats and to do so through official enquiries. Since it was well known that playing the stock market by investing in private companies or corporations had many risks, attention was initially channeled by the United States press and by bondholder organizations against foreign governments which had issued a large number of dollar bonds and were considered responsible for stoking speculation in New York. Hence, it was not surprising that following the first Latin American defaults in 1931 – including Bolivia, Chile and Peru – many bitter and distressed bondholders in the United States began to organize a campaign to demand a congressional investigation of banker malpractice in the issue and sale of the bonds. The bondholders believed, with some reason, that the New York investment houses engaged in the international loan business had not adequately informed them of the political and economic risks involved in acquiring Latin American government securities.
A number of powerful Washington DC. politicians agreed with them, and in December, 1931 the U.S. Senate opened hearings on the subject.15 During the space of four months an impressive roster of New York bankers was publicly cross-examined. The financiers called to Washington included the patrician Thomas Lamont of the House of Morgan, the flamboyant Charles Mitchell, president of the National City Bank, Clarence Dillon of the blue-ribbon firm of Dillon, Read, Otto Kahn of Kuhn, Loeb & Company, James Speyer of Speyer & Company, and many others. Not surprisingly, these individuals denied any wrongdoing and affirmed that by selling the bonds they had simply been pursuing the expansion of United States trade. As Charles Mitchell affirmed: “That the banking interests of this country have floated foreign loans in America is something which should have the praise rather than the criticism of any body of men”.16
Some of the senators did not appear to be convinced by this argument. Senator Tom Connally replied to Mitchell: “With reference to foreign bonds, you are like the saloon keeper who never drank. His whiskey was made to sell, not to drink”.17 Connally's intention was to suggest that the financiers enticed the investors to buy the bonds without informing them of the possible dangers which such transactions might entail. The bankers, of course, insisted that they were innocent. On the other hand, a number of lower-level employees of the banks divulged much information which revealed the degree of cupidity and amorality of both North American bankers and Latin American politicians. The arguments put forth were similar, in many respects, to those presented before the British Parliament in its investigation of Latin American loans held in 1875. The bankers were judged to be, on the whole, unscrupulous businessmen who did not have the interests of the average investor at heart. It was due largely to their duplicity that the menace of a Latin American financial crisis had not been foreseen.
Despite the withering criticisms vented in the U.S. Senate and in the North American press against the bankers and politicians who had inflated the Latin American loan bubble, the fact was that defaults were not caused so much by speculation as by the depression itself. All Latin American economies and governments depended heavily on the trade cycle and when exports and dropped dramatically in 1930 and 1931, so did imports and as result customs revenue which was the backbone of government income. There was hence no way of maintaining debt service payments. Nonetheless, the whole of issue of Latin American defaults was quite quickly forgotten amidst the calamities generated by the banking crises in the United States and Europe in 1931 and 1932.
In 1932 the World Economic Conference was held at Lausanne, Switzerland, with the aim of helping to save the European banks and in particular the largest German financial institutions. Among the most important measures adopted was an agreement by the major powers to forgive most of the old war debts of Germany known as reparations which had been ratified since the Versailles Treaty of 1919: these were slashed from 31,000 million dollars to less than 1 thousand million dollars. The contrast between the generosity extended to Germany and the critiques of the much smaller Latin American debt defaults was striking. Soon however, public opinion in the United States turned against the domestic bankers as a result of thousands of domestic bank failures, and in early 1933 the new administration headed by Franklin Delano Roosevelt took a set of active measures to remedy the situation, declaring a bank holiday that lasted from March to June. Subsequently there followed a variety of investigations which have been of great use for historians seeking to explain the crash of 1929 and the Great Depression.
Inside the United States popular pressure built up in 1932 to investigate the role of bankers in the manipulation of the stock exchange, which was generally considered a cause of the crash of 1929.18 The hearings organized in 1933 by the United States Senate's Banking and Currency Commission were headed by Ferdinand Pecora, who personally did much of the interrogations of leading financiers, including Richard Whitney, president of the New York Stock Exchange, George Whitney and Thomas Lamont of J.P. Morgan, Albert Wiggin, head of the Chase National Bank and Charles Mitchell of the National City Bank. The transcripts and records included 12,000 printed pages. The work of the committee uncovered the concentrated nature of the top sector of the New York financial community and brought to light unscrupulous practices. The hearings prepared the ground for the ratification of the Banking Act of 1933 (known as the Glass Steagall Act, separating commercial from investment banking), the Securities Act of 1933 and the Securities Exchange Act of 1934.
As may be observed, the Senate investigation was not particularly important as opening a way to prosecute the leading New York bankers who escaped scott free from litigation or jail. On the other hand, the hearings did generate a strong current of public opinion favorable to the ratification of major pieces of reform legislation, which in fact established the regulatory and institutional banking and financial architecture that played a most important role the United States from the mid 1930s almost to the end of the twentieth century.
In the case of Great Britain in the early 1930s, Parliament did not open public hearings on the crisis, but the government did order that an official investigation by leading politicians and economists produce an official report on the origins of the stock market crash of 1929 and on the subsequent economic depression in the United Kingdom. The body in charge of this task was that of the Macmillan Committee also known as the Committee on Finance and Industry which published a much cited study. Among the most informed members of this investigative body were Ernest Bevin, John Maynard Keynes and Reginald McKenna. The final report was mainly the work of Keynes and made important recommendations, including reforms to the Bank of England. According to an article published on July 17, 1931 in the newspaper The Spectator: Lord Macmillan’ Committee published its Report on Monday. All of the fourteen members, except Lord Bradbury, take a favourable view of Great Britain's prospects. They hold that monetary policy should seek to raise international prices, at present dangerously low, and should try to maintain the higher level, once attained. The creditor countries must be more willing to lend to, and buy from, the debtor countries—a counsel of perfection, perhaps, for our cautious Protectionist friends in France and the United .States. The Committee recommends drastic changes in the Bank of England. Its Banking and Issue Departments should no longer be distinct. It should be empowered to increase its note issue to £400,000,000 and to reduce its minimum gold reserve to £70,000,000—less than half the present amount—so that more gold might be available for the needs of poorer countries. Our banks, the Committee holds, should co-operate more fully with our industries, though the suspension of the Darmstedter Bank in Berlin, partly at least because it was heavily involved in the failure of a large woollen company, comes as a simultaneous reminder of the grave risks of the German banking policy thus commended. Lord Bradbury in a dissenting minute bluntly says that no manipulation of currency or credit would cure our diseases—excessive taxation, heavy costs and the general insistence on a higher standard of living than we can afford.19
Another important source of official reports on the financial crisis and its consequences is the collection of League of Nations publications of the 1930s, which were quite numerous and detailed. In his classic work titled Golden Fetters, Barry Eichengreen registered 12 books or reports prepared by League of Nations¿ experts dealing with the causes and impacts of the Great Depression (Eichengreen, 1995). The first and perhaps best known study was that drafted by a League of Nations bureau, the World Peace Foundation, and was titled The Course and Phases of the World Economic Depression: Report Presented to the Assembly of the League of Nations, Geneva, 1931.
In other countries there were also official investigations, though some of these took time: for example, in Australia there was a major enquiry (a Royal Commission) into banking in 1936–37, as a consequence of the Great Depression, and on the behavior of the central bank (The Commonwealth Bank) in these years.20
3Official enquiries on the world financial crisis of 2008While official enquiries have been characteristic after numerous financial crises of the past, never have there been so many as those carried out and published since the financial collapse of 2008. Their findings are significant to understand some of the roots of this global financial collapse but they also have played a role in stimulating new regulations, both national and international. It is to the subject of these, recent official investigations to which we now turn.
The impacts and consequences of the financial and economic crisis that erupted in the United States in September 2008 were so acute and widespread that immediately comparisons began to be made by analysts with the Great Depression of 1929–1933.21 The breakdown of banks, stock exchanges, and real estate markets, particularly in the United States and much of Europe, caused a severe credit crunch and affected most countries and companies worldwide. It led to a drastic drop in employment which, it is calculated, affected as many as 50 million persons who lost their jobs worldwide in 2009. The collapse also caused a catastrophic decline in stock markets as well as investment in nearly all nations as well as a sudden fall in profit rates and a drastic decline in worldwide production and trade. The magnitude of the crisis was certainly enormous although it was not as long lasting and devastating as the Great Depression, which probably explains why it has frequently been baptized the Great Recession.
The financial collapse of 2008 and 2009 came as a major surprise and raised a great number of questions about causes of the collapse, especially because it broke out in the largest and most dynamic financial markets in the world, those of New York and London. A number of economists had foreseen the possibility of new crises in the developing countries, but only few of them had anticipated breakdowns in the economically more advanced nations. The great question then is why did New York and London experience runs and losses of this magnitude? Were there common factors that caused the disarrays in these capitals of capital?22 There certainly existed particularly close financial links between them, but the size of the collapse and its rapid spill-over to other financial markets of the world indicate a broader range of causes.
It is quite evident that the financial revolution of our age is closely related both to economic globalization and to the new information technologies, which connect different markets by means of a multitude of high-speed transactions. The intensified relationships between banks and other financial service providers in different nations inevitably multiply the risks in case of a crisis in the major markets. But now we also know that the dangers had been increasing considerably since the 1990s due to the introduction of a series of financial innovations, such as the famous derivatives and diverse structured investment products, the object of which consisted in diversifying the risks of investments in bundles of mortgages, primary commodities and an endless number of additional securities. A set of major problems and risks was caused by the fact that the new securities were traded in a vast and new banking market that was barely supervised: some authors have defined it as an alternative banking system and others, more negatively, as shadow banking.23 As a result, nobody really knew the real value of these transactions or the nature of the credit chain, in spite of the huge volume. It was a gigantic black hole, but even though its dangers were signaled by a fair number of analysts, in practice, it was not regulated by the key central banks, particularly by the Federal Reserve Bank of United States or by the Bank of England, which were at the center of the deepest and most important financial markets in the world.
From the end of the twentieth century the potential danger of a systemic collapse augmented, but very few could foresee the possible string of faults in the markets. It was clear, nonetheless, that in the case of an explosion, all main financial centers would be affected on account of the intense globalization process and notable concentration of capitals. One way to describe the highly complex entanglement between the contemporary financial centers is to visualize them like a small galaxy of suns and planet as was illustrated in a magnificent paper and speech of May 2009 by Andrew Haldane (2009), executive director of Financial Stability of the Bank of England: his graphs demonstrated that, in 2005, the United States and Great Britain were the two most important financial markets in the world; they were connected by means of many exchanges with all the other large and mid-sized financial markets.
The solar system metaphor helps to explain the dynamics of the contemporary world of finance. As was demonstrated in the 1990s, if a one or more secondary markets collapsed (particularly in the developing countries), a systemic crisis was not probable: the rescue mechanisms put in place after the Asian financial crises of 1997, for example, avoided a world financial panic. On the other hand, if the financial markets at center were to implode, all markets would be affected. In September 2008, the breakdown of Lehman Brothers, at the very center of the major financial center in the world, had devastating effects and caused panic waves among thousands of financial servers that were linked to this investment bank, which then led to the freeze-up of short-term credit markets. The banking collapse which ensued in New York and London riveted all other financial centers and provoked a completely unexpected series of panics on practically all stock exchanges and banks. The rumors of possible bankruptcies of a number of the largest United States investment banks and several commercial banks as well as – and equally important – of major British commercial banks were followed in September and October by news of the collapse of several important banks in Germany, Belgium, the Netherlands, France, as well as virtually the entire banking systems of Ireland and Iceland. It was not clear at the time if the meltdown of financial markets could be reversed, and it was feared that there would be very serious consequences, as this would likely lead to the paralysis of the operations in trade and production in many countries.
The crisis dramatically demonstrated that financial markets everywhere were much more fragile than it had been assumed and that there were gigantic flaws in the anticipation of risks. It is true that other organizations like the Bank for International Settlements (bis)and the national financial supervisors and regulators had been working on the introduction of new regulations so as to reduce the risks in the banking systems and other financial markets. The Basel II agreements to upgrade bank capital as well as the improvements in banking supervision policies in several EU countries indicated that some progress had been made (Tarullo, 2008). However, the magnitude of the 2008 collapse and, especially, the economic and social consequences – including the numerous bankruptcies of companies and banks, the sharp increase in worldwide unemployment, and the huge losses of wealth – suggested that the diagnostic capacity of the problems had been entirely deficient among central banks, private banks and financial experts. Nonetheless, a review of the official investigations, which have been published since the crisis, suggests that actually there was a clear awareness of the enormous changes in the financial markets but little willpower to actually confront the rapidly increasing risks of a possible explosion.
After the financial downturn of 2007 and the crash of September 2008, came the rescues put in place by treasuries and central banks around the world. Once the depth of the financial and economic losses began to be grasped, there were political pressures to put in place a variety of efforts to carry out and publish official enquiries on the causes of the collapse. The first nation to begin such studies was Great Britain, led by the Bank of England, when its director, Mervyn King – with the support of the Treasury – instructed Lord Adair Turner, head of the Financial Services Authority in late October 2008 to produce a report that was published in March 2009 (Financial Services Authority United Kingdom, 2009, pp. 16–22).24 The text identifies the primordial causes of the financial crisis as being generated by (1) severe global macroeconomic imbalances, in which countries like China and Japan had huge commercial and financial surpluses, while other countries like the United States and the United Kingdom had massive deficits; (2) the increase of risky operations by the commercial banks, which had high leverage in their activities; (3) the growth in the use and complexity of securitized credits; (4) inadequate reserve capital held by major banks; (5) excessive trust by the financial community on mathematical models and in the credit rating agencies.
The extraordinary statistical graphs that accompany the report indicate that there was detailed awareness in central banks like that of the Bank of England of the enormous changes that had been taking place in contemporary financial markets since the 1990s. But there was also a singularly clear recognition that the mathematical models had led the banking experts to believe they had most things under control. The following extracts from the report are indicative: The evolution of the securitised credit model was accompanied by a remarkable growth in the relative size of wholesale financial services within the overall economy, with activities internal to the banking system growing far more rapidly than end services to the real economy…. From about 2003 onwards, there were significant increases in the measured on-balance sheet leverage of many commercial and investment banks, driven in some cases by dramatic increases in gross assets and derivative positions… The increasing scale and complexity of the securitised credit market was obvious to individual participants, to regulators and to academic observers. But the predominant assumption was that increased complexity had been matched by the evolution of mathematically sophisticated and effective techniques for measuring and managing the resulting risks (Financial Services Authority United Kingdom, 2009, pp. 16–22).25
The Turner report, however, did not limit itself to analysis of global financial trends as well as innovations in the financial markets in the United States. It also focused on the specifics of developments in Great Britain including the growing current account deficit from 2000 onwards, the great housing mortgage boom in that country, the enormous increase in securitized loans in the mortgage lending business. Furthermore it was remarkably candid with regard to a critique of theoretical propositions and assumptions underlying the supervision and regulation of financial markets in the years preceding the collapse. The following quote is illustrative: At the core of these assumptions has been the theory of efficient and rational markets. Five propositions with implications for regulatory approach have followed: (i) Market prices are good indicators of rationally evaluated economic value. (ii) The development of securitised credit, since based on the creation of new and more liquid markets, has improved both allocative efficiency and financial stability. (iii) The risk characteristics of financial markets can be inferred from mathematical analysis, delivering robust quantitative measures of trading risk. (iv) Market discipline can be used as an effective tool in constraining harmful risk taking. (v) Financial innovation can be assumed to be beneficial since market competition would winnow out any innovations which did not deliver value added. Each of these assumptions is now subject to extensive challenge on both theoretical and empirical grounds, with potential implications for the appropriate design of regulation and for the role of regulatory authorities (Financial Services Authority United Kingdom, 2009, p. 39).26
While covering some of the macro and micro economic causes of the crisis, the Turner report actually directed most of its attention to propose solutions with regards to future financial regulation. The key recommendations in order to avoid future problems included the recommendations to implement more stringent reserve capital requirements, establishing a ceiling for the financial institutions leverage ratio, the need to set up in a counter cyclical regime, the application of financial stress tests to verify the liquidity level of the financial institutions. Other recommendations; the creation of a deposit insurance scheme that would protect all the depositors in case of bankruptcy of their financial institutions; increased supervision of credit rating agencies, in order to limit their potential conflicts of interest; and the creation of a compensation system in the derivatives trade market that could protect standardized contracts. The Turner report also focused on the need for increased regulatory powers by the Financial Services Authority, giving it the capacity to oversee the shadow and offshore banking system activities, as well as redefinition of its tasks to give priority to the overseeing of the biggest banking institutions, of systemic importance, and to put emphasis not only in the process but also on their the business models, strategies, risks and results. Lord Turner’ report also stressed the co responsibility of the Financial Services Authority and the Bank of England in the macro prudential analysis and recommended further international cooperation in order to increase the flux of information between the most important national and international agencies in charge of financial regulation or supervision. In this regard, the report suggested that it could be wise to set up an independent European institution with the capacity to supervise the financial activities in the zone.
Almost simultaneously, the British Parliament initiated a series of investigations, among which several should be cited, such as that carried out by the Committee of Public Accounts of the House of Commons regarding the trajectory and dynamics of the banking system of Great Britain before and during the crisis (House of Common, Committee of Public Accounts, 2010).27 The interviews with bankers in the hearings are of enormous interest for historians interested in understanding the views of key actors in the financial world during the boom and bust. Similarly, other important documents which included research on the crisis were prepared by a variety of government offices, including for example the document by H.M Treasury titled Reforming Financial Markets and presented to Parliament in July 2009 which explains the views of officials regarding the crisis and outlining a large number of new financial regulations considered appropriate for discussion and subsequent legislative reform. A subsequent report with more emphasis on the need to discuss future reforms to the banking system was promoted by the Chancellor of the Exchequer in June 2010 on announcing the creation of the Independent Commission on Banking, chaired by Sir John Vickers, which produced its report on November, 2011.
In the United States, government officials as well as members of Congress also moved from late 2008 onwards to investigate and explain the crisis by promoting a large variety of research and legislative reports. For instance, the Department of the Treasury conducted studies into the financial collapse, including the important White Paper, titled Financial Regulatory Reform, which was published on June 17, 2009.28 Many other major pieces of documentation can be found in the website and publication list of the Department of Treasury as well as of other federal government offices. Equally notable was the enormous increase in number and transparency of publications by the Federal Reserve Bank: all speeches by the Chairman, Ben Bernanke, have been published on the internet quickly, as well as speeches and reports by other top level functionaries of the same institution. And the number of working papers on the financial crash has literally exploded, providing a huge amount of published analysis of great interest for researchers.
Perhaps the most extensive research on the origins of the world financial crisis, however, can be found in two major, official enquiries, one conducted under the auspices of the Congress and the second more specifically by the United States Senate. In the first place, it is worthwhile commenting The Financial Crisis Inquiry Report which is one of the most significant official documents on the financial crisis that exploded in the United States in September, 2008 and quickly muted into a global financial and economic crash. It is important not only because of what it may tells us about the causes of the crisis, but also because it speaks to the political response to this type of financial catastrophe. The United States Congress set up the Financial Crisis Inquiry Commission as a result of ratification of the Fraud Enforcement and Recovery Act on May 20, 2009, a bare six months after the fall of the house of Lehman Brothers and its worldwide ramifications. During the year 2010 the commission reviewed millions of pages of documents collected as a result of 18 public hearings held all over the United States, during which over 700 witnesses were interviewed and questioned, including bankers, investment managers, businessmen, government officials, financial regulators and academic figures. The final report was presented on January 27, 2011 as the “The Financial Crisis Inquiry Commission Report” and later published a few months later as a book which can also be consulted as an ebook on line.29
The report focuses on the huge mortgage bubble in the United States and its gradual collapse in 2007 and early 2008 which eventually led to a huge short-circuit in financial markets. The commission was formed by ten members, six Democrats and four Republicans, reflecting the relative strength of these political parties at that time. The report reflected to a considerable degree the economic point of view of each group of constituent members on the causes of the crisis. The final report aimed its artillery against investment banks, private financial mortgage firms and rating agencies. The Democrats on the Commission including its president, Phill Angelides, and commission members, Brooksley Born, Byron Georgiou, Bob Graham, Heather Murren and John W. Thompson, voted in favor of the general conclusions. On the other hand, the four Republicans, vicepresident Bill Thomas and his fellow commissioners, Keith Hennessey, Douglas Holtz-Eakin and Peter J. Wallison were not in agreement and did not recommend publication.
The Democrats and their research assistants argued basically that the crisis was largely the result of the widespread belief among financiers and investors as well as central bankers, regulators, that markets could self regulate, a view that led many private actors to take very risky positions in financial markets, including extraordinarily high levels of leverage and lack of transparency, at the same time as official regulators displayed a notable lack of vision and of supervisory vigor. The dangers of a debacle were muted by the extensive use of risk coverage in the form of derivatives and of an incredible number of complex financial instruments created to assure firms and individual investors that they would not lose their shirts. The banks selling the mortgages and derivatives, as well as their clients, apparently believed the tale of inevitable and guaranteed gain. In addition, credit agencies played a major part in impelling the huge wave of financial speculation by providing top ratings for the majority of the risky financial instruments sold. The report also emphasized the excess liquidity provided by the Federal Reserve, the official policies in favor of home construction, including the role of government mortgage agencies. But it also argued that the latter policies were not the real cause of the crisis, which was basically caused by the actions of many domestic private actors in a financial free-for-all that was fraught with enormous and risky speculation, and eventually led to the crash.
Three Republicans on the commission presented a dissenting opinion which was also published in the volume under review. They disagreed with the Democrats, arguing that the US financial markets were not to blame and that the financial actors and institutions which promoted the mortgage boom were also not responsible. Rather-they argued – the huge credit bubble had been generated largely through the international transfer of excess capital to the United States by China as well as the recycling of petrodollars by the Arab states, which caused a lowering of interest rates, and virtually pushed the money into the mortgage business, including subprime mortgages. The subsequent explosion of the housing bubble destabilized banks and other financial institutions and eventually set off the crisis.
Finally, one fourth and more radically conservative Republican, Peter Wallison, who also was on the Commission and clearly appears as a partisan of the Tea Party, also presented his conclusions. He argued that he also did not favor publishing the report because the entire fault of the crisis lay at the feet of the government and more particularly of the federal agencies, Fannie Mae and Fannie Mac, which had led private actors astray, by pushing them to take excess risk in the mortgage business.
In summary the Democrats blamed financial deregulation and lack of supervision of the behavior of private financial actors and markets as the major causes of the collapse, while the Republicans held that regulation and supervision were not key causes but rather financial globalization. But perhaps it may be suggested that above and beyond the general conclusions of the report, what may of greatest interest to future historians of the financial crash are the documents of the hearings, which constitute an inestimable source, although not easy to consult.
Of similar importance is the Senate report on the crisis. This document was the result of an investigation carried out by the Permanent Subcommitee on Investigations, which from November, 2008 “initiated a wide-ranging inquiry, issuing subpoenas, conducting over 150 interviews and suppositions, and consulting with dozens of government, academic and private sector experts. “The Subcommitte affirmed that it had accumulated and reviewed “tens of millions of pages of documents”. The committee was headed senator Carl Levin, Democrat, and senator Tom Coburn, Republican, and included 23 lawyers and clerks that carried out the bulk of the research and hearings, as well as drafting the drafts of the final six hundred page report.
After the preliminary research work was concluded, the Subcommittee held four hearings to examine “four root causes of the financial crisis.” At that time it released tens of thousands of pages of evidence, and proceeded to explore in depth the operations of several of the largest banks and institutions involved in the crash. The first case study was of the huge banking firm known as Washington Mutual, which became the largest bank failure in US history, and was later absorbed by J.P. Morgan. The Senate investigation is a scathing document that reveals the extraordinary degree of impropriety and very high risks assumed by the bank directors of this enormous financial company. The report then focuses on review of the role of two of the largest credit rating agencies, Moody's and Standard & Poor in the financial markets before the crisis. Finally, extensive hearings and in-depth studies were carried out on the enormous number of irregularities in the market conduct of two powerful banks, Goldman Sachs and Deutsche Bank, in fomenting the speculation in derivatives and so-called synthetic financial instruments which increased risk in all financial markets, but particularly those in the United States in the years 2003–2008. The hearings also reveal an enormous number of irregularities in the conduct of these very powerful financial firms.
As in the case of the Congressional investigation, the Senate placed considerable emphasis on the peculiar and dangerous dynamics of the mortgage markets, in particular, the enormous increase of high-risk instruments, the so-called subprime mortgages, from 2003 onwards. But the Senate subcommittee was most interested in analyzing the microeconomics of the largest financial institutions in the process of creation and massive sale of investment packages containing a complex composition of securities and derivatives. The acronyms of these products reflect that they represented a new generation of securities: these included financial vehicles whose acronyms were varied, such as cdo, arm, abs/cdo, avm, abx cmbs, rei, cds, and siv, created in the last two decades.30 As the investigations demonstrated, understanding these instruments requires great expertise in the most sophisticated and arcane of modern banking and finance, and it certainly exceeded the knowledge of the individual investor. This created huge problems of information asymmetry between sellers and buyers. The Senate report transcribed parts of many interviews which demonstrated irregularities and risks involved in these transactions, and concluded by recommending specific regulations of the new financial instruments. It also raised major questions about the issue of banks which are “too big to fail”, and therefore involve government rescues in times of crisis. The Senate inquiry clearly demonstrated the dangers inherent to contemporary financial markets as influenced by huge and very difficult to regulate banking giants, which are also not all transparent in their transactions.
Of course, the official enquiries have no monopoly on interpretations and documentation of the crisis, as can be seen in the innumerable books and articles that have been published by journalists, economists and financial experts on the greatest financial crash since the Great Depression, a subject on which probably many more will be written in the future. Nonetheless, as economic historians it is important to underline the importance of reviewing and carefully analyzing the official documents and investigations that poured forth quite early after the outbreak of the financial debacle and have continued to do so down to the present. Also of great importance are the Valukas Report which contains the records of the court case on Lehman Brothers (some 12,000 pages, placed online in June 2010), and the two thousand pages of Dodd/Frank law Wall Street and consumer Protection Act, signed into law in July 2010, which was accompanied by a huge amount of documentation that is of historical interest.
Apart from the official enquiries carried out in Great Britain and in the United States, it is worthwhile emphasizing that a large number of institutions and countries have promoted enquiries, including, for example, the reports on the financial crisis by committees of the National Assembly of France and by the French ministry of Finance which can be found online. Similarly, it is important to analyze the documents of the Dutch Temporary (Parliamentary) Committee on the Inquiry of Financial System, also known as the ‘De Wit Committee’ after its chairman, set up by the Dutch Parliament's House of Representatives, which in June 2010 presented its report on the first part of its investigation into the crisis in the Dutch financial system.
Furthermore, as already suggested, the central banks of many countries have published many reports and studies of the crisis. So have multilateral financial organizations such as the International Monetary Fund (IMF), the World Bank, and the Bank of International Settlements, and most of these can be consulted online. On the other hand, there are as yet few critical studies of some of the most important and revealing of these documents, including perhaps most significantly the independent evaluation of the IMF, which provides a truly critical and in-depth analysis of the errors committed by this institution in the years preceding the global financial collapse. The contrast with the World Bank evaluation, which is extremely superficial, is striking.
It is also important to keep in mind the large amount of official research on the social consequences of the financial collapse, as is demonstrated, for example, by the detailed investigations of the International Labor Office on the tragic and drastic impact of the crisis on employment worldwide, which can be reviewed in its annual report of the year 2011. Similarly, the United Nations has sponsored several investigations into the crisis, the best known being the Stiglitz Commission, which in June 2009 published not only the results of its enquiry into causes of the global crisis but also a large raft of recommendations for revising financial regulation and supervision throughout the world.
In summary, although it may be argued that the Great Recession is now fast becoming history – except in Europe, where it may continue to wreak havoc for some time – its enormous and long-term consequences on a worldwide scale certainly merit the attention not only of economists and social scientists but also of historians to help explain a major turning point in modern history. And it is the argument of this essay that greater attention should be devoted in the future to studying and analyzing the key official documents collected and produced by governments, banks, courts and legislatures on this gigantic catastrophe of the contemporary age.
4In lieu of a conclusionAll major financial controversies over the last two centuries have provoked disbelief not only because of the suddenness of the catastrophe but also as a result of the enormous costs provoked by economic collapse. This is all too evident in the case of the global financial crisis of 2008/2009: the depth of the financial and economic meltdown is reflected by big numbers, the loss of almost two trillion dollars by the banking system, the loss of various trillions more in the mortgage and stock markets, and the rise in unemployment of between 50 and 70 million persons worldwide in those years. An obvious question is whether we can identify the causes of the great fall, and it is clear that there is now a much better understanding, although certainly there will long be intense debates on this question. This is not surprising but not especially encouraging, for as we know explaining the Great Depression of 1929–1933 continues to be a holy grail of economists, as one prominent central banker of our day has phrased it.
Inevitably, financial disasters lead to an outpouring of publications, but in this essay we emphasize that historians should pay special attention to the official reports which include the most detailed investigations. This is particularly pertinent to evaluate the extent to which current banking and financial reforms around the world can be considered adequate responses to this human and economic tragedy. This is so because every large financial crisis in the modern era has marked fundamental changes in the international monetary, financial, and political regimes. In this sense, in order to understand the causes and consequences of financial catastrophes, it is indispensable to take into account global history in the long run.
SourcesAldrich, N.W. and National Monetary Commission. Interviews on the banking and currency systems of England, Scotland, France, Germany, Switzerland, and Italy. Accessed from http://fraser.stlouisfed.org/docs/historical/nmc/nmc_405_1910.pdf
Bagehot, W., 1858. The Monetary Crisis of 1857. National Review. Accessed from http://oll.libertyfund.org/title/2260/212971 on 2013-08-08.
Baxter, D., 1874. The Recent Progress of National Debts. Journal of the Statistical Society (36), 1–20.
Financial Services Authority (United Kingdom), 2009. The Turner Report, A Regulatory Response to the Global Banking Crisis, pp. 16, 19, 20, 22.
Giffen, R., 1904. The Liquidations of 1873–76. In: Giffen, R. (Ed.), Economic Inquiries and Studies. London, pp. 98–120.
House of Common, Committee of Public Accounts, 2010. Maintaining financial stability across the United Kingdom's banking system, Twelfth Report of Session 2009–10, published on 9 February 2010.
Hyde, C., 1878. On the Debts of Sovereign and Quasi-Sovereign States Owing by Foreign Countries. Journal of the Statistical Society (41), 249–347.
Parliamentary Papers, 1875. Loans to Foreign States (Reports from Committees), vol. XI, London.
Treasury, H.M., 2009. Reforming Financial Markets. London.
United States Congress House. Committee on Banking and Currency. Money Trust Investigation: Investigation of Financial and Monetary Conditions in the United States Under House Resolutions Nos. 429 and 504. Accessed from http://fraser.stlouisfed.org/publication/?pid=80
United States Congress House. Hearings before the Committee on Banking and Currency, regarding systems of banking in the States and Territories, 1893–1894. Accessed from http://fraser.stlouisfed.org/docs/historical/house/1894hr_hearingsbankingcurrency.pdf
United States, Department of the Treasury, Financial Regulatory Reform, June 17, 2009: TG-175 (US Dept of the Treasury). Accessed from http://www.financialstability.gov/docs/regs/FinalReport_web.pdf
United States. Congress. Senate. Committee on Banking and Currency, Stock Exchange Practices. Hearings before the Committee on Banking and Currency Pursuant to S.Res. 84 and S.Res. 56 and S.Res. 97. Accessed from http://fraser.stlouisfed.org/publication/?pid=87
United States. Congress. Senate. Committee on Finance, Sale of Foreign Bonds or Securities in the United States. Hearings before the Committee on Finance, United States Senate, Seventy-second Congress, first session, pursuant to S. Res. 19 a resolution authorizing the Finance committee of the Senate to investigate the sale, flotation, and allocation by banks, banking institutions, corporations, or individuals of foreign bonds or securities in the United States. Accessed from http://fraser.stlouisfed.org/publication/?pid=398
It is interesting to note that in the World Finance Conference held this year in Cyprus, the expression has become a standard reference among the leading financial experts and in paper after paper, the acronym for the Global Financial Crisis used is GFC.
The author has researched in greater detail many of the documents reviewed in Marichal (1989) in chapters 4 and 8.
For additional bibliographical referents see (Martín Aceña, 2013, pp. 65–69).
See Sánchez Albornoz (1968); the most recent research paper on this crisis is Moro et al. (2013).
The nature of the “Great Depression” of 1873–1896 was first discussed in such classic articles as Walton Newbold (January 1932, pp. 425–441); and Musson (1959, pp. 199–228). For a revisionist interpretation see Saul (1969).
For two contemporary surveys of the international debt crisis, see Baxter (1874, pp. 1–209; and Clarke (June 1878, pp. 249–347).
Also see Giffen (1904, pp. 98–120).
A detailed discussion of the Peruvian default is found in Wynne (1951, pp.121-170); a more recent and excellent analysis is that of Vizcarra, (2009, pp. 358–387).
Our discussion of the Select Committee investigations is derived from the more detailed analysis in Marichal (1989), chapter 4.
Parliamentary Papers (1875).
Also see Bordo and Schwartz (1984).
These were the United States Congress House, Hearings before the Committee on Banking and Currency, regarding systems of banking in the States and Territories, 1893–1894. Accessed Aug 1, 2013 from FRASER, http://fraser.stlouisfed.org/docs/historical/house/1894hr_hearingsbankingcurrency.pdf.
The hearings can be consulted in digital form at http://fraser.stlouisfed.org/alltitles/?&sortby=date&tags[]=&show_all=1&show=.
See digital records: for example, Aldrich, Nelson W. and National Monetary Commission, Interviews on the banking and currency systems of England, Scotland, France, Germany, Switzerland, and Italy. Accessed Aug 1, 2013 from FRASER, http://fraser.stlouisfed.org/docs/historical/nmc/nmc_405_1910.pdf.
United States. Congress. House. Committee on Banking and Currency, Money Trust Investigation: Investigation of Financial and Monetary Conditions in the United States Under House Resolutions Nos. 429 and 504. Accessed Aug 1, 2013 from FRASER, http://fraser.stlouisfed.org/publication/?pid=80.
United States. Congress. Senate. Committee on Finance, Sale of Foreign Bonds or Securities in the United States. Hearings before the Committee on Finance, United States Senate, Seventy-second Congress, first session, pursuant to S. Res. 19 a resolution authorizing the Finance committee of the Senate to investigate the sale, flotation, and allocation by banks, banking institutions, corporations, or individuals of foreign bonds or securities in the United States. Accessed Aug 1, 2013 from FRASER, http://fraser.stlouisfed.org/publication/?pid=398.
Senate Committee on Finance, p. 64. Also see Marichal (1989, p. 206), which includes the Mitchell quotation.
Senate Committee on Finance, p. 81.
Parts 1–6, April 11–May 25, 1933, were digitized by Internet Archive: United States. Congress. Senate. Committee on Banking and Currency, Stock Exchange Practices. Hearings before the Committee on Banking and Currency Pursuant to S.Res. 84 and S.Res. 56 and S.Res. 97. Accessed Aug 1, 2013 from FRASER, http://fraser.stlouisfed.org/publication/?pid=87.
The quote is taken from the following source accessed August 4, 2013 http://archive.spectator.co.uk/article/18th-july-1931/2/the-macmillan-report-lord-macmillans-committee-on-.
Economic historian Alex Millmow (2010), argues that the Royal Commission stimulated the adoption of Keynsian policies by the Australian government and by the Commonwealth Bank Board.
The most frequently quoted statistical comparisons can be seen in the graphs Eichengreen (1995) and O’Rourke (2009–2010).
We use the expression from the excellent book by Cassis (2006).
One of the best and deepest analyses on banks and the crisis as a whole is the work by Dehesa (2009-2010).
We have put the italics on the last part of the citation. This document can be consulted in paper and on the internet.
We have put the italics on the last part of the citation.
We have put the italics on the last part of the citation.
Twelfth Report of Session 2009–10, published on 9 February 2010, together with formal minutes, oral and written evidence. This document can be consulted in paper and on the internet.
United States, Department of the Treasury Financial Regulatory Reform, June 17, 2009: TG-175 (US Dept of the Treasury), which can be consulted at http://www.financialstability.gov/docs/regs/FinalReport_web.pdf.
Apart from the e-book version of The Financial Crisis Inquiry Report, which can be found on internet in the US Congress site, most documents and interviews can be researched on a site of the Faculty of Law at Stanford University: http://fcic.law.stanford.edu/.