Originally published 03/25/2013
...If the nation has a father of bank insurance, it is Joshua Forman, one of the promoters of the Erie Canal. Early in the 19th century, New York State had a string of bank failures, and Martin Van Buren, then governor, asked him to restructure the banking industry. Forman’s insight was that banks were vulnerable to chain-reaction panics. As he put it — in a line unearthed by the Harvard Business School historian David Moss — “banks constitute a system, being peculiarly sensitive to one another’s operations, and not a mere aggregate of free agents.”In 1829, Forman proposed an insurance fund capitalized by mandatory contributions from the state’s banks. Debate in the State Assembly was heated. Critics said failures could overwhelm the fund; they also argued that its very existence would reduce the “public scrutiny and watchfulness” that restrained bankers from reckless lending. This remains the intellectual argument against insurance today. But Forman’s plan was enacted, and subsequently five other states adopted plans.All did not go smoothly. In the 1840s, during a national depression, 11 banks in New York State failed and the insurance fund — as prophesied — was threatened with insolvency. The state sold bonds to bail it out....
- The Most Controversial Psych Study Is Repeated — Same Weird Result
- A new book explores the stunning revelation that Hemingway spied for the USSR
- A President’s Restless Corpse May Be on the Move Again in Tennessee
- How China and the U.S. might collide — or not
- Major Viking Age Archaeological Find Discovered in Denmark
- The New York Times celebrates biographer Richard Holmes
- Historians are in demand! (On cruise ships)
- Douglas Brinkley says there’s a "smell of treason in the air"
- Mary Maples Dunn, Advocate of Women’s Colleges and President of Smith, Dies at 85
- Gil Troy says Jews and Israelis are the victims of a “Hate Swarm”