She applied the “Page 99 Test” to her new book, Other People's Money: How Banking Worked in the Early American Republic, and reported the following:
Page 99 begins with an 1834 political cartoon depicting President Andrew Jackson saving the republic from the corruption of the Second Bank of the United States during the Bank War. But this cartoon by itself is misleading. A year earlier, the same artist had critiqued Jackson’s actions as being a failed experiment that was running the American ship of commerce aground. As both cartoons indicate, the Bank War was part of a much larger debate about the acceptable role of banks and banknotes in the American economy. Most people agreed that the existence of banks provided many benefits to their local communities: facilitating exchange, encouraging commerce, enabling the completion of internal improvements projects, and generally creating more opportunities for local inhabitants to increase their wealth. Yet these benefits came at a cost, and Americans were divided over whether the benefits outweighed the costs. Although banks were supposed to promote economic stability, many believed that they were responsible for introducing even more instability into the system through their use of fractional reserve banking. Others questioned the republican implications of granting special privileges to the incorporators of banking corporations and of concentrating wealth in the hands of a few individuals. These seemingly contradictory cartoons by Anthony Imbert capture the uncertainty of the average person at the time. Americans grappled with striking an acceptable balance on the banking issue, harnessing the benefits of banks while...Learn more about Other People's Money at the Johns Hopkins University Press website.reining in the excesses of the system. Yet in winning the Bank War, Jackson did neither. Up through the Civil War, the nation’s banking system would become less rather than more stable, with no national institution or government regulations to serve as a check on the state-chartered banks.Page 99 thus captures the heart of the book. For most students of American history, the Bank War is the main—if not the only—encounter with the history of money and banking from the Revolution through the Civil War. Historians often tell its story from the perspective of politics, yet this political fight had economic causes and consequences that are often lost in the telling of that tale. It is difficult to understand the true extent of the passions behind the Bank War without first understanding how the financial system worked during the first century of the nation’s existence. Money and banking played a critical role in the lives of everyday Americans, shaping the society in which they lived and worked. This book examines the economic context for the political and social events from the American Revolution through the Civil War, as well as explaining the nineteenth-century roots of America’s continued love-hate relationship with money and banking.
The Panics of 1837 and 1839
By the mid-1830s, coincident with the Bank War and the removal of the deposits, the economy entered another speculative land boom that was very similar to the boom prior to the Panic of 1819. Both international and domestic demand for cotton again skyrocketed, driving up prices for the commodity. As a result, demand for western cotton lands and the slaves to help work this land likewise increased dramatically. Between 1830 and 1835, the number of commercial banks approximately doubled to over seven hundred institutions, all issuing banknotes and providing loans for the purchase of more land and slaves. The Bank War contributed to this expansion as government depository banks, numbering around ninety by 1836, used their increased funds to justify more loans and banknotes. (99)