Published by EH.Net (January 2018)

Sharon Ann Murphy, Other People’s Money: How Banking Worked in the Early American Republic. Baltimore: Johns Hopkins University Press, 2017. xii + 192 pp. $20 (paperback), ISBN: 978-1-421-42175-9.

Reviewed for EH.Net by Tyler Beck Goodspeed, Council of Economic Advisers.


Covering, when all is said and done, over half a millennium of American monetary history in a readable, introductory text of under two hundred pages is no mean feat. Doing so while also satisfying specialists in a relatively niche field and period of financial history is an especially daunting task. In Other People’s Money: How Banking Worked in the Early American Republic, Sharon Ann Murphy (Department of History, Providence College) has managed to achieve both.

The Bank War between Jackson and Biddle — perhaps, as Murphy notes, many students’ only encounter with antebellum American banking — provides an appropriate opening to Murphy’s account, introducing the principal cast of characters and illustrating the extent to which issues of money and banking permeated early American society, as well as the gravity with which ordinary Americans accordingly considered monetary matters.

Having thus set the stage, Murphy then proceeds through a packed “how it worked” series. Starting with the arrival of Columbus, in chapter 1, “How Money Worked,” she races through commodity money, fiat money, inflation, debt, and financing the American Revolution, contextualizing the economic concepts within the specific historical setting. In chapter 2, “How Banks Worked,” Murphy similarly catalogs the various sources of credit in colonial America, the assets and liabilities — particularly private bank notes — of colonial and antebellum banks, the incentives to incorporate, and the (First) Bank of the United States.

In chapter 3, “How Panics Worked,” we are then provided an account of the causes and dynamics of banking panics of the antebellum period that is both concise and consistent with the latest academic research. We here learn also of bimetallism, the Second Bank of the United States, and both public and private responses to panics, including public liability insurance, free banking, and clearinghouses. Chapter 4, “Experiments in Money and Banking,” expands on some of these topics, describing in greater depth the motivations and public discourse behind the movement toward both free banking and regulation, acute anxieties about fractional reserve banking generally, as well as the growing diversity of formal banking institutions. The chapter culminates with a succinct but accurate discussion of the Panic of 1857, including mention of the role of bank branching in mitigating the severity of the crisis.

Finally, and, for this reader, most interestingly, chapter 5 offers a brief but again academically sound overview of the fiscal challenges faced by the Union and Confederate governments in financing the Civil War, and how responses to those challenges intertwined with money and banking. This is perhaps the most data-intensive of the chapters, though quantitative evidence is seamlessly woven into a predominantly qualitative account. The chapter concludes with a short summary of the contours of American banking in the wake of the Civil War and, in particular, the National Bank Act.

It is important to be clear what this book is, and what it is not. It is an excellent introduction to how money and banking worked, not only in the early American republic, but in the post-Civil War national banking era as well. As such, it will likely offer a valuable companion for students of American economic and financial history, and even of early American political history, as well as informed lay-readers. It is not, and does not purport to be, an academic monograph intended for research historians or economic historians. Accordingly, footnotes are kept to a minimum, which makes for a smoother read, though at the cost of ability to investigate further. Murphy does, however, provide an extensive summary of suggested further reading, which will again be helpful for undergraduate and graduate students just beginning to explore the subject.

On the whole, Murphy has written what this financial historian considers a sound and reliable introductory or companion text to early American banking that is both engaging and easy-to-read, and at the same time broadly consistent with recent economic research on the topics covered. While students of economic and financial history generally would likely find it a useful text, my sense is that it might be of particular use to those more on the history side of economic history, than on the economic side of economic history.

My one idiosyncratic lament, which in any event may lie outside the scope of the book, is that I felt myself yearning for a more provocative embedded theme. As Murphy correctly notes throughout, many of the issues of, for example, note issuance and deposit insurance and branching and regulation may seem banal to the contemporary reader, but were intensely debated at the time. While the author addresses the political nature of these issues and responses to them, a stronger sense of the political contingency of the development of American banking would, I think, plant important questions in students’ minds. The path to 1913, or 1933, or, for that matter, 2008, was not at all linear, and a better sense of the alternative possible histories of American banking, and what may or may not have amplified the relative fragility of American banking system, would have been welcome.

Regardless, it is a fine text, made all the better by a fitting nod to Supreme Court Justice Louis Brandeis’ 1914 book by the same title, and a fascinating epilogue on the changing faces of the $20 bill.

Tyler Beck Goodspeed is a Senior Economist at the Council of Economic Advisers. He recently published Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772, and Famine and Finance: Credit and the Great Famine of Ireland.

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