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ENDNOTES

  
1 True universal banking, as typified by the German or Swiss banking systems, still does not exist in the United States because banks here cannot hold equity positions in commercial companies.

2 Increased competition does not necessarily imply lower prices, as improved or new services might be offered that customers would be willing to pay for.

3 Sen. Glass chaired the subcommittee that heard testimony about the alleged abuses of commercial banks and their securities affiliates.

4 See Friedman and Schwartz (1963), Chapter 7.

5 Pecora, quoted in White (1986).

6 See Goodhart (1995) for such an argument.

7 See Zaretsky (1996) for a description of this episode and the Fed's responsibility as the lender of last resort.

8 Deposit insurance was also created in 1933.

REFERENCES

  
Benston, George J. "Universal Banking," Journal of Economic Perspectives (Summer 1994), pp. 121-43.

Friedman, Milton, and Anna J. Schwartz. A Monetary History of the United States 1867-1960, Princeton University Press (1963).

Goodhart, C. A. E. The Central Bank and the Financial System, The MIT Press (1995).

Kroszner, Randall S., and Raghuram G. Rajan. "Is the Glass-Steagall Act Justified? A Study of the U.S. Experience with Universal Banking Before 1933," The American Economic Review (September 1994), pp. 810-32.

Wheelock, David C. "Is the Banking Industry in Decline? Recent Trends and Future Prospects from a Historical Perspective," Review, Federal Reserve Bank of St. Louis (September/October 1993), pp. 3-22.

White, Eugene Nelson. "Before the Glass-Steagall Act: An Analysis of the Investment Banking Activities
of National Banks," Explorations in Economic History (January 1986), pp. 33-55.

Yeager, Timothy J. "Down, But Not Out: The Future of Community Banks," The Regional Economist, Federal Reserve Bank of St. Louis (October 1999), pp. 5-9.

Zaretsky, Adam M. "Learning the Lessons of History: The Federal Reserve and the Payments System," The Regional Economist, Federal Reserve Bank of St. Louis (July 1996), pp. 10-11.