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Birth of a MarketThe U.S. Treasury Securities Market from the Great War to the Great Depression$
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Kenneth D. Garbade

Print publication date: 2012

Print ISBN-13: 9780262016377

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262016377.001.0001

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The Brief Revival and Subsequent Extinction of National Bank Notes

The Brief Revival and Subsequent Extinction of National Bank Notes

(p.318) (p.319) 22 The Brief Revival and Subsequent Extinction of National Bank Notes
Birth of a Market

Kenneth D. Garbade

The MIT Press

This chapter traces the national bank note program in the 1920s, describes the dramatic, but brief, expansion of the program in 1932, and its final extinction in 1935. The expiration of the Glass–Borah amendment and the redemption of the Consols and the Panama Canal bonds of 1936 and 1938 marked the end of a seventy-year national bank note program originally aimed at spurring the demand for U.S. Treasury bonds. The end of the program had little effect on the market for Treasury bonds because that market had long since grown beyond the point where it could be supported by public demand for currency. Perhaps the most instructive aspect of the last years of national bank notes is that even as they were on the verge of extinction, Congress reached out to them as an instrument of monetary policy.

Keywords:   national bank note program, Great Depression, Great Contraction, Glass–Borah amendment, Treasury bonds, monetary policy

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