A History of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building

Previous banking histories have focused on the money supply function of early American banks and its connection to the recurrent boom-bust cycle of the antebellum era. This history focuses on the credit generating function of American banks It demonstrates that banks aggressively promoted development rather than passively followed its course. Using previously unexploited data, Professor Bodenhorn shows that banks helped to advance the development of incipient industrialization. Additionally, he shows that banks formed long-distance relationships that promoted geographic capital mobility, thereby assuring that short-term capital was directed in socially desirable directions, that is, where it was most in demand. He then traces those institutional and legal developments that allowed for this capital mobility. The result was that America was served by an efficient system of financial intermediaries by the mid-nineteenth century.

Howard Bodenhorn is Associate Professor in the Department of Economics and Business, Lafayette College, Pennsylvania. He has also taught at St. Lawrence University, received a John E. Rovensky Dissertation Fellowship (1989-90), was the recipient of the Arthur H. Cole Award for the best article in the Journal of Economic History for 1993, and was a John M. Olin Junior Faculty Fellow (1995-96).