Foreign Affairs

2020 ◽  
pp. 50-69
Author(s):  
Arthur E. Wilmarth Jr.
Keyword(s):  
Latin America ◽  
Adverse Effects ◽  
Eastern Europe ◽  
Private Investment ◽  
Foreign Affairs ◽  
Investment Banks ◽  
Stock Market Crash ◽  
Foreign Bonds ◽  
Credit Boom ◽  
The U.S

A speculative and unstable credit boom occurred in overseas markets during the 1920s, as universal banks and private investment banks competed aggressively to sell more than $12 billion of foreign bonds to U.S. investors. The resulting surge in overseas lending left many governments and private sector borrowers in Central and Eastern Europe and Latin America in a dangerously exposed position when U.S. investors lost their appetite for foreign bonds at the end of the 1920s. Universal banks and investment banks sold many unsound foreign bonds to unsophisticated and trusting American investors. The massive sales of risky domestic and foreign securities by universal banks and investment banks had highly adverse effects on the U.S. economy, foreign economies, and investors when the domestic and overseas financing booms abruptly ended following the stock market crash in late 1929.

Frenzy

2020 ◽  
pp. 31-49
Author(s):  
Arthur E. Wilmarth Jr.
Keyword(s):  
High Risk ◽  
Stock Market ◽  
Business Model ◽  
Commercial Banks ◽  
Private Investment ◽  
Department Store ◽  
Investment Banks ◽  
National Bank ◽  
Credit Boom ◽  
The U.S

Large commercial banks and their securities affiliates helped to finance an unsustainable credit boom and stock market bubble during the 1920s. Charles Mitchell of National City Bank and Albert Wiggin of Chase National Bank pioneered a new universal banking (“financial department store”) business model for large commercial banks. The rise of universal banks resulted in frenzied competition between those institutions and private investment banks. That rivalry resulted in the widespread marketing and sale of speculative, high-risk securities to unsophisticated, poorly informed investors. More than $80 billion of debt and equity securities were issued in the U.S. between 1919 and 1930. The easy availability of financing during the 1920s caused many American companies and households to overexpand and take on excessive debts. Those debt burdens left businesses and consumers in a highly vulnerable position when the credit boom suddenly ended in late 1929.

Skepticism and Stability: Reevaluating U.S. Policy during Poland's Democratic Transformation in 1989

2011 ◽  
Vol 13 (3) ◽  
pp. 52-82 ◽  
Author(s):  
Gregory F. Domber
Keyword(s):  
United States ◽  
Foreign Policy ◽  
Eastern Europe ◽  
The United States ◽  
Evolutionary Change ◽  
Foreign Affairs ◽  
Democratic Transformation ◽  
The U.S

This article evaluates the U.S. role in the revolutions of 1989, specifically the claim that the U.S. government was a catalyst, accelerating the pace of change in Eastern Europe. Drawing from memoirs, declassified U.S. cables, Polish Ministry of Foreign Affairs reports, and underground literature from the Polish opposition, the article shows that the policy of George H. W. Bush's administration was not a “catalyst” and did not even “grease the skids” to remove Communist governments from power during the first ten months of 1989. Rather, the United States pursued a much more cautious policy that actively sought to impede the pace of change. The evidence indicates that U.S. policy was much more fixated on promoting stability in Eastern Europe, preferring evolutionary change to revolutionary transformation. The article concludes by placing these findings in the context of the emerging scholarship on the revolutions of 1989 and the Bush administration's foreign policy

Reckoning

2020 ◽  
pp. 121-147
Author(s):  
Arthur E. Wilmarth Jr.
Keyword(s):  
Federal Reserve ◽  
Public Support ◽  
Banking System ◽  
Private Investment ◽  
Investment Banks ◽  
National Bank ◽  
Franklin Roosevelt ◽  
Securities Activities ◽  
Emergency Measures ◽  
The U.S

In March 1933, President Franklin Roosevelt declared a national bank holiday and persuaded Congress to approve emergency measures to revive the U.S. banking system. Those measures included capital infusions from the Reconstruction Finance Corporation and asset-backed loans from the Federal Reserve. National City Bank, Chase National Bank, and other universal banks received large bailouts, which enabled them to withstand the huge losses they suffered from their securities operations and related loans. Roosevelt also supported legislation proposed by Senator Carter Glass and Representative Henry Steagall to prohibit banks from engaging in securities activities and to bar nonbanks from accepting deposits. A Senate investigation led by Ferdinand Pecora revealed widespread abuses in securities offerings made by National City, Chase, and other universal banks and private investment banks during the 1920s. Pecora’s revelations generated widespread public support for the Glass-Steagall Act, which Roosevelt signed into law in June 1933.

The Puzzle of Populism

2017 ◽  
Author(s):  
Paul D. Kenny
Keyword(s):  
Latin America ◽  
Eastern Europe ◽  
Western Europe ◽  
Party Systems

This chapter sets out the puzzle at the center of the book: what explains the success of populist campaigners in India, Asia, and beyond? It summarizes the existing literature on populist success both in Latin America and Western Europe and argues that these explanations do a poor job of explaining Indian and Asian cases in particular. Populists win elections when the institutionalized ties between non-populist parties and voters decay. However, because different kinds of party systems experience distinct stresses and strains, we need different models of populist success based on the prevailing party­–voter linkage system in place in any given country. The chapter then sets out the rationale for concentrating on explaining populist success in patronage-based party systems, which are common not only to Asia, but also to Latin America and Eastern Europe.

scholarly journals Managing the Dollar Over Its Cycles

2021 ◽  
Author(s):  
Lawrence L. Kreicher ◽  
Robert N. McCauley
Keyword(s):  
Foreign Exchange ◽  
Foreign Exchange Market ◽  
Private Investment ◽  
The United States ◽  
Exchange Market ◽  
Foreign Exchange Intervention ◽  
Traded Goods ◽  
Service Production ◽  
Withholding Tax ◽  
The U.S

AbstractThe United States has ceded to the rest of the world managing the dollar’s value. For a generation, the U.S. authorities have all but withdrawn from the foreign exchange market. Yet the dollar does not float freely as a result of this hands-off U.S. policy. Instead, other authorities manage the dollar exchange rates, albeit separately. These authorities make heavier purchases of dollars in its downswings than in the upswings, damping its decline. Thus, the Fed finds that accommodative monetary policy transmits less to U.S. manufacturing and traded services, and relies on still lower rates to stimulate interest-sensitive housing and auto demand. The current U.S. dollar policy of naming and shaming surplus-running countries accumulating foreign exchange reserves does not seem to work. Three alternatives warrant consideration. First, the U.S. could reinstate its withholding tax on interest income received by non-residents and even add policy criteria to bilateral tax treaties. Second, the U.S. authorities could retaliate by selling dollars against the currencies of dollar-buying jurisdictions running chronic surpluses. However, either the withholding tax or such retaliatory foreign exchange intervention pose huge practical challenges. Third, the U.S. authorities could re-enter the foreign exchange market, making large-scale asset purchases in foreign currency when the dollar rises sharply against its average value. Such a policy would encourage private investment in U.S. traded goods and service production. The challenge is to set ex ante foreign exchange intervention rules to guide market participants’ expectations, even positioning them to do the authorities’ work.

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