Editing Bank run (section)

==History==
{{further|List of bank runs|List of banking crises}}
[[File:10 livres tournois banknote issued by Banque Royale, France, 1720. On display at the British Museum.jpg|thumb|10 [[livres tournois]] banknote issued by Banque Royale, France, 1720. In 1720, shareholders demanded cash payment, leading to a run on the bank and financial chaos in France. On display at the British Museum.]]
[[Image:MontrealBankRun1872.jpg|thumb|The run on the [[Montreal City and District Savings Bank]], with the mayor addressing the crowd. Printed in 1872 in the ''[[Canadian Illustrated News]]''.]]

Bank runs first appeared as a part of [[credit cycle|cycles of credit expansion]] and its subsequent contraction. From the 16th century onwards, English [[goldsmith]]s issuing [[promissory note]]s suffered severe failures due to bad harvests, plummeting parts of the country into famine and unrest. Other examples are the Dutch [[tulip mania]]s (1634–37), the British [[South Sea Company|South Sea Bubble]] (1717–19), the French [[Mississippi Company]] (1717–20), the [[post-Napoleonic depression]] (1815–30), and the [[Great Depression]] (1929–39).

Bank runs have also been used to blackmail individuals and governments. In 1832, for example, the British government under [[Arthur Wellesley, 1st Duke of Wellington|the Duke of Wellington]] overturned a majority government on the orders of the king, [[William IV of the United Kingdom|William IV]], to prevent reform (the later [[Reform Act 1832]] ([[2 & 3 Will. 4]]. c. 45)). Wellington's actions angered reformers, and they threatened a run on the banks under the rallying cry "Stop the Duke, go for gold!".<ref>{{cite book |last=Gross|first=David M.|year=2014|title=99 Tactics of Successful Tax Resistance Campaigns|publisher=Picket Line Press|isbn=978-1490572741|page=176}}</ref>

Many of the [[List of recessions in the United States|recessions in the United States]] were caused by banking panics. The Great Depression contained several banking crises consisting of runs on multiple banks from 1929 to 1933; some of these were specific to regions of the U.S.<ref name=Wicker>{{cite book |last= Wicker |first=E. |title= The Banking Panics of the Great Depression |publisher= Cambridge University Press |year=1996 |isbn=978-0-521-66346-5}}</ref> Bank runs were most common in states whose laws allowed banks to operate only a single branch, dramatically increasing risk compared to banks with multiple branches particularly when single-branch banks were located in areas economically dependent on a single industry.<ref name=sowell>{{cite book |author-link=Thomas Sowell |first=Thomas |last=Sowell |year=2010 |title=The Housing Boom and Bust |edition=Revised |publisher=Basic Books |isbn=978-0465019861}}</ref>

Banking panics began in the [[Southern United States]] in November 1930, one year after the stock market crash, triggered by the collapse of a string of banks in [[Tennessee]] and [[Kentucky]], which brought down their correspondent networks. In December, New York City experienced massive bank runs that were contained to the many branches of a single bank. Philadelphia was hit a week later by bank runs that affected several banks, but were successfully contained by quick action by the leading city banks and the [[Federal Reserve Bank]].<ref>{{cite book |first=Robert L. |last=Fuller |title=Phantom of Fear: The Banking Panic of 1933 |year=2011 |pages=16–22 }}</ref> Withdrawals became worse after financial conglomerates in New York and Los Angeles failed in prominently-covered scandals.<ref>{{cite journal |last=Richardson |first=G. |title=The collapse of the United States banking system during the Great Depression, 1929 to 1933, new archival evidence |journal=The Australasian Accounting Business & Finance Journal |year=2007 |volume=1 |issue=1 |pages=39–50 |doi=10.14453/aabfj.v1i1.4 |doi-access=free |url=https://ro.uow.edu.au/context/aabfj/article/1003/viewcontent/richardson.pdf }}</ref> Much of the US Depression's economic damage was caused directly by bank runs,<ref name=Bernanke>{{cite journal |last= Bernanke |first=B. S. |title= Nonmonetary effects of the financial crisis in the propagation of the Great Depression |journal= American Economic Review |year=1983 |volume=73 |issue=3 |pages=257–76|author-link= Ben Bernanke }}</ref> though Canada had no bank runs during this same era due to different banking regulations.<ref name=sowell />

[[File:Money supply during the great depression era.png|thumb|upright=1.3| Money supply decreased substantially between [[Black Tuesday]] and the [[Emergency Banking Act|Bank Holiday in March 1933]] when there were massive bank runs across the United States.]]
[[Milton Friedman]] and Anna Schwartz argued that steady withdrawals from banks by nervous depositors ("hoarding") were inspired by news of the fall 1930 bank runs and forced banks to liquidate loans, which directly caused a decrease in the [[money supply]], shrinking the economy.<ref>{{cite book |first1=Milton |last1=Friedman |first2=Anna J. |last2=Schwartz |title=A Monetary History of the United States |year=1993 |pages=301–305, 342–346, 351–52}}</ref> Bank runs continued to plague the United States for the next several years. Citywide runs hit Boston (December 1931), Chicago (June 1931 and June 1932), [[Toledo, Ohio|Toledo]] (June 1931), and St. Louis (January 1933), among others.<ref>{{harvnb|Fuller|2011|pages=28–31, 66–67, 97–98}}</ref> Institutions put into place during the Depression have prevented runs on U.S. [[commercial bank]]s since the 1930s,<ref name=Diamond-Dybvig-1983/> even under conditions such as the [[Savings and Loan Crisis|U.S. savings and loan crisis of the 1980s and 1990s]].<ref>{{cite journal |journal= International Economic Review |year=2002 |volume=43 |issue=1 |pages=55–72 |title= Bank runs: deposit insurance and capital requirements |last1=Cooper |first1=R. |last2=Ross |first2=T. W. |doi=10.1111/1468-2354.t01-1-00003|s2cid=154910823 }}</ref>

The [[2008 financial crisis]] was centered around market-liquidity failures that were comparable to a bank run. The crisis contained a wave of bank nationalizations, including those associated with [[Northern Rock]] of the UK and [[IndyMac]] of the U.S. This crisis was caused by low [[real interest rate]]s stimulating an asset price bubble fuelled by new financial products that were not [[Stress test (financial)|stress tested]] and that failed in the downturn.<ref>{{cite journal |journal=National Institute Economic Review |year=2008 |volume=206 |issue=1 |pages=5–14 |doi=10.1177/0027950108099838 |last1=Barrell |first1=R. |last2=Davis |first2=E. P. |title=The evolution of the financial crisis of 2007–8 |doi-access=free }}</ref>