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Banking and Finance from the Revolution to the Civil War  

Sharon Ann Murphy

In creating a new nation, the United States also had to create a financial system from scratch. During the period from the Revolution to the Civil War, the country experimented with numerous options. Although the Constitution deliberately banned the issuance of paper money by either Congress or the states, states indirectly reclaimed this power by incorporating state-chartered banks with the ability to print banknotes. These provided Americans with a medium of exchange to facilitate trade and an expansionary money supply to meet the economic needs of a growing nation. The federal government likewise entered into the world of money and finance with the incorporation of the First and Second Banks of the United States. Not only did critics challenge the constitutionality of these banks, but contemporaries likewise debated whether any banking institutions promoted the economic welfare of the nation or if they instead introduced unnecessary instability into the economy. These debates became particularly heated during moments of crisis. Periods of war, including the Revolutionary War, the War of 1812, and the Civil War, highlighted the necessity of a robust financial system to support the military effort, while periods of economic panic such as the Panic of 1819, the Panics of 1837 and 1839, and the Panic of 1857 drew attention to the weaknesses inherent in this decentralized, largely unregulated system. Whereas Andrew Jackson succeeded in destroying the Second Bank of the United States during the Bank War, state-chartered commercial banks, savings banks, and investment banks still multiplied rapidly throughout the period. Numerous states introduced regulations intended to control the worst excesses of these banks, but the most comprehensive legislation occurred with the federal government’s Civil War-era Banking Acts, which created the first uniform currency for the nation.

Article

Economic Thought and Practice in America  

Christopher W. Calvo

The conspicuous timing of the publication of Adam Smith’s The Wealth of Nations and America’s Declaration of Independence, separated by only a few months in 1776, has attracted a great deal of historical attention. America’s revolution was in large part motivated by the desire to break free from British mercantilism and engage the principles, both material and ideological, found in Smith’s work. From 1776 to the present day, the preponderance of capitalism in American economic history and the influence of The Wealth of Nations in American intellectual culture have contributed to the conventional wisdom that America and Smith enjoy a special relationship. After all, no nation has consistently pursued the tenets of Smithian-inspired capitalism, mainly free and competitive markets, a commitment to private property, and the pursuit of self-interests and profits, more than the United States. The shadow of Smith’s The Wealth of Nations looms large over America. But a closer look at American economic thought and practice demonstrates that Smith’s authority was not as dominant as the popular history assumes. Although most Americans accepted Smith’s work as the foundational text in political economy and extracted from it the cardinal principles of intellectual capitalism, its core values were twisted, turned, and fused together in contorted, sometimes contradictory fashions. American economic thought also reflects the widespread belief that the nation would trace an exceptional course, distinct from the Old World, and therefore necessitating a political economy suited to American traditions and expectations. Hybrid capitalist ideologies, although rooted in Smithian-inspired liberalism, developed within a dynamic domestic discourse that embraced ideological diversity and competing paradigms, exactly the kind expected from a new nation trying to understand its economic past, establish its present, and project its future. Likewise, American policymakers crafted legislation that brought the national economy both closer to and further from the Smithian ideal. Hybrid intellectual capitalism—a compounded ideological approach that antebellum American economic thinkers deployed to help rationalize the nation’s economic development—imitated the nation’s emergent hybrid material capitalism. Labor, commodity, and capital markets assumed amalgamated forms, combining, for instance, slave and free labor, private and public enterprises, and open and protected markets. Americans constructed different types of capitalism, reflecting a preference for mixtures of practical thought and policy that rarely conformed to strict ideological models. Historians of American economic thought and practice study capitalism as an evolutionary, dynamic institution with manifestations in traditional, expected corners, but historians also find capitalism demonstrated in unorthodox ways and practiced in obscure corners of market society that blended capitalist with non-capitalist experiences. In the 21st century, the benefits of incorporating conventional economic analysis with political, social, and cultural narratives are widely recognized. This has helped broaden scholars’ understanding of what exactly constitutes capitalism. And in doing so, the malleability of American economic thought and practice is put on full display, improving scholars’ appreciation for what remains the most significant material development in world history.

Article

The Posse Comitatus Doctrine in Early America  

Gautham Rao

Courts and legislatures in colonial America and the early American republic developed and refined a power to compel civilians to assist peace and law enforcement officers in arresting wrongdoers, keeping the peace, and other matters of law enforcement. This power to command civilian cooperation was known as the posse comitatus or “power of the county.” Rooted in early modern English countryside law enforcement, the posse comitatus became an important police institution in 18th- and 19th-century America. The posse comitatus was typically composed of able-bodied white male civilians who were temporarily deputized to aid a sheriff or constable. But if this “power of the county” was insufficient, law enforcement officers were often authorized to call on the military to serve as the posse comitatus. The posse comitatus proved particularly important in buttressing slavery in the American South. Slaveholders pushed for and especially benefited from laws that required citizens to assist in the recapture of local runaway slaves and fugitive slaves who crossed into states without slavery. Though slave patrols were rooted in the posse comitatus, the posse comitatus originated as a compulsory and noncompensated institution. Slaveholders in the American South later added financial incentives for those who acted in the place of a posse to recapture slaves on the run from their owners. The widespread use of the posse comitatus in southern slave law became part of the national discussion about slavery during the early American republic as national lawmakers contemplated how to deal with the problem of fugitive slaves who fled to free states. This dialogue culminated with the Fugitive Slave Law of 1850, in which the US Congress authorized officials to “summon and call to their aid the bystanders, or posse comitatus” and declared that “all good citizens are hereby commanded to aid and assist in the prompt and efficient execution of this law, whenever their services may be required.” During Reconstruction, the Radical Republican Congress used the posse comitatus to enforce laws that targeted conquered Confederates. After the end of Reconstruction in 1877, Southern states pushed Congress to create what would come to be known as the “Posse Comitatus Act,” which prohibited the use of federal military forces for law enforcement. The history of the posse comitatus in early America is thus best understood as a story about and an example of the centralization of government authority and its ramifications.