Slave Agriculture and Financial Markets: The Bank of the United States in Mississippi, 1831–1852 (review)

In Slave Agriculture and Financial Markets: The Bank of the United States in Mississippi, 1831–1852, Richard Holcombe Kilbourne, Jr., aims to rekindle interest in the "bank war" of the 1830s. Once the fodder of arguments between giants like Arthur Schlesinger, Jr., and Bray Hammond, the story of the demise of the Second Bank of the United States (BUS) starred in the narrative of antebellum America until the new social history removed the spotlight from powerful, dead, white men like President Andrew Jackson and BUS President Nicholas Biddle. Although many historians lost interest in the bank war after the 1960s, economic historians performed econometrical analyses of the available statistics to locate the financial cause of one of the worst depressions Americans had ever experienced. In 1969, Peter Temin's The Jacksonian Economy (New York, 1969) supplied quantitative evidence of macroeconomic forces stretching from England to China that replaced the contest between Whig and Democratic fiscal policy as the explanation for America's hard times. Written almost four decades later, Kilbourne's monograph is an attempt to refute Temin's theory and return to an interpretation of the bank war that relies on American domestic fiscal policy. Despite the mention of slavery in the title, Slave Agriculture and Financial Markets does not try to spark new interest in the bank war by linking recent social, political, and cultural studies of the early-nineteenth-century market revolution with quantitative economic history. Rather, this is a purely financial and legal history of an ignored sector of the 1830s economy that makes some astounding discoveries and specialized historiographical arguments.

Whereas previous economic historians have examined Jacksonian era banking from the perspective of either the federally chartered BUS or the decentralized state-chartered banks, Kilbourne scrutinizes the intersection between national and state institutions by focusing on the Natchez branch of the BUS before, during, and after the expiration of the federal charter. Employing the surprisingly complete financial records of this institution and other Mississippi banks in conjunction with familiar documents relating to the Philadelphia-based BUS, Kilbourne has crafted a case study of the rise and fall of the Natchez branch of the BUS.

Each of Kilbourne's four chapters targets a different historiographical literature on the bank war. In the first chapter, he dismisses studies that blame the financial crisis on inflated bank paper by analyzing the competition among Mississippi banks for the more lucrative trade in commercial paper. He shows that in the early 1830s, the BUS opened branches in Natchez and elsewhere to control local banks and profit from the intra-national circulation of commercial bills of exchange and other financial instruments. Kilbourne finds that during these prosperous years, the investments of the branches of the BUS supplied the central bank with the majority of its profits. After Andrew Jackson's refusal to renew the BUS's charter, the financial flow from periphery to center reversed direction. As Kilbourne argues in his next section, after 1836, the branches drained Biddle's Philadelphia institution of its liquidity and, eventually, forced banks throughout the United States to suspend specie payments. Kilbourne blames the Panic of 1837 and the subsequent depression on the events following the expiration of the BUS's federal charter and its recharter in Pennsylvania. Although Kilbourne argues for domestic causation, his sources document strong connections between financiers in Mississippi and London that reaffirm Temin's international thesis. Thus, Kilbourne's reconsideration of the financial causes of the Panic of 1837 should inspire new scholarship that synthesizes national and global perspectives.

Switching from the terms of finance to the letter of the law (subjects that explain but do not excuse jargon-laden chapters), Kilbourne next considers the BUS's attempts to recover losses in Mississippi through both state and federal court systems. Countering a historiography that posits that commercial law responded to economic development, he finds that...