Excess Demand for Money, circa 1907

The first recorded currency premium — 3 percent — emerged on October 31. According to [Harvard economist A.P.] Andrew, “money brokers advertised regularly in the daily press the purchase and sale of currency.” A person wanting cash on October 31 had to present a certified check for $103 to acquire $100 in currency from a money broker. The premium reached a peak of 4 percent several times during the first half of December and then dwindled to less than 1 percent before disappearing December 31, 1907.

That is from William Silber’s When Washington Shut Down Wall Street.

One response to “Excess Demand for Money, circa 1907

  1. The currency premium was the result of the New York Clearing House imposing suspension of convertibility of deposits on Oct. 26. BTW, Silber’s book is very, very, good.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s