- Other People’s Money: How Banking Works in the Early American Republic by Sharon Ann Murphy
Banking, Finance, Capital, Early republic, Currency, Bank War, Money
Teaching the history of American money and banking to students is hard. Students are more likely to use a debit card or send funds through Venmo than to handle a greenback; chances are they have never written a personal check. We take money and the form it takes for granted in the twenty-first century, so introducing students to the dizzying variety of it in the nineteenth century, and the fierce political debates it provoked, poses a challenge. Sharon Ann Murphy’s slim new volume, published in Johns Hopkins University Press “How Stuff Worked” series, makes the task easier by providing a cogent and accessible account of the history of money and banking in nineteenth-century America. The book has three stated aims. The first is to provide a deeper contextualization of Andrew Jackson’s war with the Bank of the United States, “the main—if not the only—encounter with the history of money and banking from the Revolution through the Civil War” for most students, and trace its lingering effects on the country’s economic institutions (7). Second, Murphy seeks to recover the “critical role” that money and banking played in the lives of everyday people in the United States, beyond the Bank War, to provide a more complete picture of economic life in antebellum America (7). Finally, Murphy wants to explore how the long history of Americans’ “love–hate relationship” with banking, combined with the dictates of wartime finance during the Civil War, gave birth to the Federal Reserve and the banking system that remains in place to this day (7).
Other People’s Money accomplishes these aims in five largely chronological chapters that span the American Revolution through the Civil [End Page 725] War. Murphy recounts the U.S. financial sector’s explosive growth in this period, carefully disentangling the many types of public, private, and hybrid banks that appeared to serve commercial and individual needs, and she clearly defines banking concepts and terms. Murphy pays close attention to the ways that wartime finance shaped the growth of banking institutions, and Americans’ attitudes toward them, in Chapters 1, 2, and 5. She shows how Revolutionary-era depreciation curtailed the use of state-backed paper money in the new nation; how the struggle to finance the War of 1812 led to calls for a second Bank of the United States after the first Bank’s charter expired; and how Civil War finance led to the introduction of the greenback—the United States’ first standardized, national currency. Chapters 3 and 4 deal with the causes and consequences of Jackson’s war with the Second Bank of the United States (BUS). Murphy places Andrew Jackson and Nicholas Biddle’s political battle of the wills in the larger context of antebellum financial panics. She explains why Jackson’s critique of the Second BUS resonated with many Americans who blamed that institution, and banks and paper money more generally, for the growing economy’s boom-and-bust cycles. She then shows how Jackson’s dismantling of the BUS and his subsequent hard-money policies destabilized the nation’s banking system and opened the door for experiments in banking at the state level in the 1840s and 1850s.
Murphy’s Conclusion and Epilogue connect the pre-1865 history of banking to the twentieth and twenty-first centuries. The distrust of banks and bankers that Jackson successfully mobilized in the 1820s and 1830s remained a potent political force at the dawn of the twentieth century. The 1913 creation of the Federal Reserve—a central bank unique in its form—Murphy shows, was shaped by the legacy of the Bank War and enduring concerns about the role of large banks in American society. An engaging epilogue explores how Andrew Jackson ended up on the $20 bill—a fascinating look...