California Banking in the Nineteenth Century: The Art and Method of the Bank of A. Levy

Abstract

An 1890s loan book of the Bank of A. Levy permits a detailed examination of the lending operations of a private bank in California during the National Banking Era (1864–1914). This period has been intensively analyzed at the national and state level, but there are few studies of banks at the firm level. This unregulated bank was integrated into money markets and lent to a broad cross section of the community. Although the bank appeared to adhere to the real bills doctrine, it provided businesses with medium-term, uncollateralized financing. The bank priced risk carefully, offering rates equal to the lowest in the country to its best customers while charging extraordinarily high rates to borrowers deemed risky. In the absence of modern accounting, the bank's close scrutiny of borrowers' businesses and personal lives enabled it to fulfill a special intermediary role.