We need more books like Brian Murphy's study of the politics of economic development in New York during the early republic. Most histories of the period, to the extent they examine economic topics at all, focus on the national level—on the early finances of the federal government, controversies over the First and Second Banks of the United States, national debates over internal improvements, and rising sectional tension over the tariff and the expansion of slavery. The recent surge of interest in the history of capitalism has done little to shift that focus. Yet, at the same time, it is well known that the policies that mattered most for economic development during this period were the work of the states. It was the states that provided the nation with its transportation infrastructure. It was the states that chartered the vast majority of the financial institutions in the country. It was states that determined how easy it was to form a corporation and the rules under which incorporated businesses (as well as all other businesses) would operate. If there had been an organization like the World Bank conducting "Doing Business" surveys in the early nineteenth century, questioners would have gone to Boston or Albany or Richmond, not Washington, DC.
To the extent that historians discuss the states' economic development policies, they have relied heavily on the series of studies written in the immediate post-World War II period by Oscar and Mary Handlin, Louis Hartz, and others. These are important studies whose utility has stood [End Page 357] the test of time. But the questions that structured them were rooted in contemporary debates over the New Deal. Commissioned by the Committee for Research in Economic History, these works aimed to show that government intervention in the economy was not an invention of Franklin D. Roosevelt and his advisors. Although sectional differences constrained the federal government's role in the first half of the nineteenth century, state governments actively promoted and regulated economic activity. Given this purpose, the authors devoted comparatively little attention to understanding the political dynamics that underpinned the states' activism. They were primarily concerned with documenting the extent and form of state government intervention and with understanding the movement toward privatization that they thought followed in the second half of the century.
Murphy's book is very different. To use his own words, it is a work of "applied political economy" (5)—a detailed study of how the political and economic systems of early New York evolved together on the ground, as legislators granted charters of incorporation and other privileges to the wealthy New Yorkers who built the state's economic infrastructure. There are five substantive chapters, each of which focuses on a particular economic development project. Chapters 1 and 3 deal with banking, treating, respectively, the Bank of New York and the Manhattan Company. Chapter 4 discusses the Fulton steamboat monopoly. Chapters 2 and 5 cover canals—two early failures, and the fabled Erie. Each chapter is the result of deep research in New York governmental records, collections of private papers, and contemporary newspapers and pamphlets, among other sources. Each provides rich insights into the ways the state's shifting political coalitions affected the fate of these ventures and, conversely, the ways the success or failure of these ventures shaped those coalitions.
My favorite chapter is the one on the Manhattan Company. The basic story has been told many times. Taking advantage of fears provoked by a yellow-fever epidemic, Aaron Burr secured a corporate charter for a company to supply pure water to the city of New York. As a result of Burr's scheming, the charter contained a loophole that enabled him to turn the company into a bank controlled by Republicans. Murphy goes beyond this well-known story to examine the political implications of Burr's machinations. Until this point, the Federalists who dominated New York politics ran all the economically important organizations the government created, including the Bank of New York. That...