Banking like it’s 1892: Our recession habits had a familiar pattern

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RBA analysis of bank ledgers from the 1890s and 1930s has shed light on banking traditions - and how they are not that different from today.

Australians have repeated some of the banking behaviours used by their grandparents and great-grandparents to survive some of the deepest economic downturns ever to hit the country.

Between 1929 and 1931 during the Great Depression, the economy shrank by 10 per cent as unemployment pushed beyond 30 per cent. They found that despite the 40-year gap between the 1890s Depression and the Great Depression there were similarities in the way bank customers acted. There was also a drop in confidence about the viability of banks. The Government Savings Bank of New South Wales was forced to merge with the Commonwealth Savings Bank in 1931.

Australians increased their collection of $50 and $100 bills through the coronavirus recession, similar to how people withdrew money during the 1890s depression and the Great Depression.In the 1890s depression, deposits from “rich” customers actually increased sharply.

 

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