Discussion

January 23 through February 1 During these weeks read William Holmes McGuffey, McGuffey's Third Eclectic Reader   Tuesday, Jan 30: Markets and Money Thursday, Feb 1: Markets and Manners first paper assignment, Some historians see a "market revolution" taking place in the Jacksonian era. Emerging capitalism transformed every aspect of American culture. We tend to think of the past as slower, more idyllic, but life in this period could be characterized by wild religious enthusiasms, extraordinary changes in the patterns of work and life, new ideas about gender roles, a confusing and chaotic system of money and exchange, and even powerful new ways of thinking about time itself. We can begin with the money issue. Jacksonian America enjoyed a dynamic economy, remarkably unregulated. There were, for example, more than 4000 different kinds of money in circulation at various times. The bill below was issued by a Nashville bank. It circulated wherever--and to whatever degree--people were willing to take it. In Nashville, it might be worth a full dollar. In Memphis, or in another State, it might be worth ninety cents, seventy cents, fifty cents or less. The farther it traveled, the less it was worth.

Local banks could issue their own paper money, with little or no restraints. Theoretically, their paper money was backed by gold, stored in a vault somewhere. Enterprising citizens, lacking a lot of gold but trying to jumpstart their local economies, could issue paper money in large quantities in hopes of stimulating construction, exchange, and the formation of wealth--if they could convince people to take it. Or, looked at another way, unscrupulous con men could print paper money to buy things they couldn't really afford. Highly democratic, the system was also plagued by massive counterfeiting, as in the example below.

This note originated in a Tennessee bank. As it traveled farther and farther from Tennessee, it became worth less and less. In this case someone in New York, finding himself with a nearly worthless Tennessee note, simply erased parts of the bill and added in a fake New York bank name. At times, according to the secretary of the Treasury, as much as 40 percent of the money in circulation before the Civil War was counterfeit--depending on how you defined counterfeit. "It was a popular remark among men of business," wrote the detective Alan Pinkerton, "that they preferred a good counterfeit on a solid bank to any genuine bill upon the shyster institution." The system was democratic in a way, and surprisingly, it didn't lead to inflation, because economic growth kept pace with increases in the money supply. But it was prone to cycles of boom and bust as faith in the chaotic money supply periodically collapsed. To make sense of the jumble, Americans resorted to "counterfeit detectors." These weekly or monthly publications (there were hundreds of them) offered lists of bank notes, descriptions of their appearance, and ratings of the banks that had issued them. An example appears below, from an 1855 "Bank Note Delineator." Click on the image to see a close up.

Counterfeit detectors promised to help merchants sort through the jumble of currencies that passed through their hands. But they competed with each other, and one counterfeit detector would frequently denounce another as a fraud--a tool of unscrupulous bankers who paid the editors to list their banks as sound. Each transaction was fraught with suspicion, and with complicated questions--not just "can I afford this," but "how much is this money worth?" and "is this man or woman trustworthy?" In modern exchange (at least cash exchange), these questions don't come up, because all our money is more or less the same. For more on the history of money, try this link American business was also transforming life in less obvious ways. For example, Americans' sense of time changed remarkably during this period, as this link suggests. It was also a period of remarkable standardization