'The money question' was hot 200 years ago

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Jeffrey Sklansky

“In no other country in the history of the world has the subject of money and banking given rise to such long-sustained, deep-rooted, widespread, acrimonious, publicly debated and eagerly reported controversy as in America.” Glyn Davies, Historian

During the past year, no subject has received more public attention than money. From farm fields to mansions, the mysteries of money and banking have preoccupied the public mind—though still not with the kind of suspicion that prevailed among the citizenry two centuries ago, says OSU historian Jeffrey Sklansky.

In his timely new book, “The Money Question: Currency in American Political Thought, 1700-1900,” Sklansky will investigate Americans’ two-hundred-year struggle over what should serve as money, who should control its creation and circulation, and according to what rules.

The fundamental question of that earlier era was whether the U.S. money system should be managed by private interests, for profit—and was such a system democratic?

For two long centuries, questions about the form and function of money and the power it conferred on governmental and financial institutions generated intense political controversy.

“The book seeks to explain why questions of currency and banking became the subject of heated and protracted conflict, how many Americans made personal and political sense of these issues, how the terms and parameters of debate changed from the late seventeenth to the early twentieth century, and why ‘the money question’—though surely not concerns about money—receded from public discussion along with the ‘labor question’ to which it was closely tied.

“To agitators and publicists across the political spectrum, the most metaphysical consequences appeared to flow from the most mundane decisions about monetary policy. The establishment or disestablishment of a bank, the suspension or resumption of specie payments in exchange for paper currency, the demonetization or remonetization of silver, signified no less than the difference between civilization and savagery, slavery and freedom, the Dark Ages and the Millennium.”

Sklansky’s first book, The Soul’s Economy: Market Society and Selfhood in American Thought, 1820-1920, won the 2004 Cheiron Book Prize, presented by the International Society for the History of Behavioral and Social Sciences. The book was supported by a previous Center Fellowship.

The new book will focus on three major historic episodes, each framed by a distinctive monetary regime and each comprising a pair of intellectual biographies of influential monetary theorists or reformers who took up opposite sides of the issue and helped define what was at stake.

The first section examines the debate over the innovation of public “bills of credit” and “land banks” in New England from the 1720s through the 40s, which launched the long epoch of paper money. The key figures are John Wise, a clergyman who opposed English mercantilism and advocated provincial paper currency, and physician William Douglass, the foremost colonial critic of the new paper money.

The second part considers the “Bank War” of the 1820s and 30s in the metropolitan Middle Atlantic over state-chartered banks and the Second Bank of the United States, which shaped the rise of modern party politics. This section will focus first on New York labor leader William Leggett, specifically the relationship between his ardent criticism of banking and paper currency and his earlier career as an actor, poet, fiction writer, and literary critic. The second figure is architect Nicholas Biddle, the pioneering president of the Second Bank of the United States and “the nation’s leading spokesperson for the rising authority of moneyed men.”

The third section concerns the battle in the southern and western farm belt in the 1880s and 90s over the new national currency and banking system established during the Civil War, leading to the creation of the Federal Reserve System and the eclipse of the money question. Key figures here are physician and Methodist preacher Charles Macune, who was the chief economic theoretician for what became the National Farmers’ Alliance and Industrial Union, and astronomer Simon Newcomb, the most prominent American scientist of his day and a leading advocate of laissez-faire and “sound money.”

“A main purpose of this book is to chart the changing landscape and borders of the money question through the whole modern epoch that historians have described as the ‘transition to capitalism,’” said Sklansky. “A growing body of historical, sociological, and economic scholarship in recent decades indicates that the monetization of public and private debt through the partnership of government and banking provided the essential financial structure for capitalist development.”