Case | HBS Case Collection | December 2007

The Campaign for Bank Insurance in Antebellum New York

by David A. Moss and Cole Bolton


The New York State Legislature had come to a standstill in 1829 as lawmakers refused to charter any new banks or recharter any existing banks. Four of New York's forty banks had failed since 1825, and many legislatures believed that a significant change in the banking regime was needed to shore up the state's financial systems. Others, however, feared that a major change in the law was too risky, especially since over three-quarters of the state's banks held charters that were slated to expire over the next four years. On the table was a completely untested proposal to create a mandatory public insurance fund that would back the banknotes and deposits of every state bank. As bank charters throughout New York State rapidly approached expiration, lawmakers faced a tough decision: should they pass the bill and gamble with the untried insurance fund, or should they go seek a more traditional solution to the state's banking woes?

Keywords: History; Risk Management; Government Legislation; Insurance; Decision Choices and Conditions; Banks and Banking; Banking Industry;


Moss, David A., and Cole Bolton. "The Campaign for Bank Insurance in Antebellum New York." Harvard Business School Case 708-037, December 2007.