Aldrich-Vreeland Emergency Currency as a Lender of Last Resort

Abstract

This paper investigates borrowing from a lender of last resort at theindividual bank level using data from a pre-Federal Reserve lender of last resort program,the Aldrich-Vreeland Emergency Currency Act of 1908. Contrary to the reluctance toborrow hypothesis, banks with lower capital/asset ratios were more likely to borrow.Banks with a higher reserve ratio borrowed less (G21, E58, N22)