ABSTRACT
California’s economy grew very rapidly over the period 1860-1910. This growth, however, was uneven with years of fast growth being typically followed by a period of slow growth or even stagnation. With the development of new industries, the introduction of new crops, and the opening up of new areas for cultivation, growth was also unevenly distributed among California’s regions and industries. In view of the freedom from restrictions of California’s banks, the important question is how much banking contributed to this pattern of economic growth. At present, this question cannot be answered directly. As Goldsmith (1969) notes, neither the theoretical nor the empirical bases exist to make such an assessment for any economy. The alternative to a direct answer is to use analysis that answers the question indirectly. In this chapter, the comparative methods employed by Goldsmith (1969) and Cameron (1967; 1972) are applied to California’s history with the objective of providing some indirect answers.
