Revolution #10? New IOUs and Debts No Honest Man Could Pay in the Early Republic

Bruce H. Mann. Republic of Debtors: Bankruptcy in the Age of American Independence. Cambridge: Harvard University Press, 2002. viii + 344 pp. Notes and index. $29.95

Robert E. Wright. The First Wall Street: Chestnut Street, Philadelphia, and the Birth of American Finance. Chicago: University of Chicago Press, 2005. vii + 210 pp. Figures, tables, notes, and index. $25.00

For most of us in the history trade, there just can't be too many historical revolutions, and the more radical the revolution, the better. That's not a comment on historians' current political proclivities (notwithstanding some contemporary critiques of American academia), but rather an observation that, if a scholar can label the phenomenon that she or he is studying a "revolution," then it immediately becomes more important, more exciting, more sexy. In American historiography of the eighteenth and nineteenth centuries, there are, by my quick informal count, at least nine "revolutions": of course the American Revolution and the industrial revolution, but also a consumer revolution, a second American Revolution (the Civil War), a transportation revolution, a sexual revolution, a municipal revolution, a market revolution, and a corporate revolution. With all that purportedly revolutionary activity going on, one wonders whether anyone got a wink of sleep. Was there also an early national financial revolution, just as scholars argue there had been in England a century before? Neither financial historian Robert Wright in The First Wall Street nor legal historian Bruce Mann in Republic of Debtors explicitly makes that broad claim, although Wright has done so elsewhere.¹ Nonetheless, it's clear that both see the late eighteenth century as a time of great financial innovation and upheaval that permanently changed the way people did business and held broad ramifications for economic growth—though whether there was a great transformation in people's perceptions of the potentially personally devastating consequences of economic change is, as Mann points out, a different question.

Over the course of the eighteenth century in British North America, individuals and colonial and then state governments experimented with how to represent the values of the goods, services, and land that they traded among themselves and with distant clients and customers. They used book credit, bills of exchange, fiat money, promissory notes, tobacco warehouse receipts, and various other instruments (in addition to gold and silver coins) to represent not only the physical things that they bought and sold but also to symbolize more abstract transactions of promises, debts, and credits. That trend accelerated exponentially during and after the American Revolution, as national, state, and local governments issued various kinds of currencies, bonds, and land titles and new business entities proliferated, issuing literally millions of banknotes, checks, stock certificates, savings receipts, mortgages, and so on. The use of these new financial devices resulted in significant economic changes: they allowed for more efficient media of exchange and uses of capital that benefited not only investors but also, through their convenience, nearly everyone active in the economy, though inequitably. But just as they held the potential for greater profits and for broad-based economic growth, they also carried with them considerable economic risk and entailed greater economic volatility in a time when economic activity still held great moral significance.

The First Wall Street fills an important role in the scholarship on early national finance, namely, an up-to-date and accessible survey of many of the various public and private financial institutions and devices Philadelphians pioneered in the early national period. Boasting colorful and well-researched vignettes of Philadelphia's financial trailblazers along with cogent and clear explications of heretofore arcane instruments and institutions, The First Wall Street covers numerous topics that have been either poorly explained or neglected even by economic historians specializing in the period.² Wright argues essentially for synergies created through the convergence of commerce and innovation in a small geographic area...