Three Ages and Stages of American Money

This Chapter sets the stage of Part I and the rest of the Book by recounting America’s troubled history with money and central banking from the Founding Era to 1913. In particular, it shows how our historical oscillations between favoring centralized banking and disfavoring it parallel the American polity’s broader oscillations between favoring federal and public sector capacity on the one hand, state and private sector prerogatives on the other. It is no accident, we find, that Alexander Hamilton’s First Bank of the U.S., which functioned as a combined money-allocating central and industry-promoting national development bank, coincided with the ascendancy of the Federalists and the new centralizing Constitution they promulgated. Nor is it an accident that our first experiment with such banking ended with the ascendancy to the White House of our most militantly anti-Federalist President, Andrew Jackson. It is also no accident, this Chapter indicates, that the first still-enduring establishment of federal supremacy over matters monetary comes with the Civil War, which both settled the question of federal supremacy in our constitutional order once and for all, and bequeathed us the national banking system, the national bank chartering authority and activity regulator (the Office of the Comptroller of the Currency (‘OCC’) still within Treasury), and the currency (the ‘greenback’ dollar bill) that we use to this day even after transfer of issuance from Treasury to the Fed. Our monetary and central banking dialectic, the Chapter concludes, just is our federal versus state and our public versus private dialectics as refracted in the realm of finance.