As World War I began in 1914 and European stock markets shuttered, foreign investors turned to removing gold from the United States, sparking fears of bank runs and suspension of convertibility. At the start of August 1914, the New York Clearing House Association (NYCH) again authorized the issuance of clearinghouse loan certificates (CLCs), which could be used by member banks as temporary interest-paying substitutes for money in the settlement of clearing balances. The membership of the NYCH jointly guaranteed CLCs and committed to accepting CLCs as payment during the Crisis of 1914. Unique to the Crisis of 1914, the US Treasury Department also played a significant role as a lender of last resort during 1914 through the utilization of the Aldrich-Vreeland Act to issue emergency currency. These two forms of liquidity provision helped to calm money markets and avoid a full-blown panic. The launch of the Federal Reserve also helped calm markets, although it was not operational during the acute phase of the crisis in August 1914. At peak issuance, NYCH banks had 109 million in outstanding CLCs, with all retired by the end of November 1914. This represented 5. 5% of net deposits held by NYCH member banks, a sizable intervention.
Sean Fulmer (Mon,) studied this question.