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.

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