In the 1930s, did 7, 10, and 13 percent rules limit country banks more?

Research question: How did the specific reserve requirement tiers (7%, 10%, 13%) impact the lending capacity of country banks versus central reserve city banks during the 1930s financial crises?

The records show that the 7, 10, and 13 percent tiers date from the reserve requirement amendments of about 1917 to 1920, not from the 1930s crises ³⁵⁷. Country banks, subject to the 7 percent tier, held 29 percent of Fed member bank total assets in June 1936, well below the larger city banks ². Between June 1936 and June 1937, country banks increased their loans by $305 million and their government securities by $350 million, while their reserve-to-asset ratios stayed essentially flat ⁶. Their reserve deposits rose 35 percent, slightly more than the 31 percent rise at New York's central reserve city banks ⁴, and simulations attribute the overall rise in reserve demand to a subset of city banks rather than to country banks ⁸. The sources do not directly measure how each tier limited lending capacity during the 1930s, so the question is only partly answered. The newest fact comes from a 2011 study, about fifteen years before October 2026 ⁸.

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