Introduction
American currency today conveys imagery of strength, ingenuity and longevity to reflect the power of the American economy through depictions of the bald eagle, former American leaders and monumental structures. The symbolic values of these images have gone largely unappreciated, as the vignettes have not seen significant changes in the past 90 years;1 they have become standard, along with the American conviction of economic superiority. In the Antebellum period, however, this was not the case. Antebellum Americans were suspicious of the speculative allowance of abundant paper money. Thus, banknote engravings were designed strategically to inspire confidence in free banking institutions and later expanded to shape public opinion on political debates regarding westward expansion and slavery.
Hamiltonian banking prevailed in the Early Republic in which a central bank regulated the nation's money supply. The first Bank of the United States was granted a twenty-year charter beginning in 1791 to act as a commercial bank and the government's fiscal agent. The bank was based in Philadelphia with branches in eight other US cities. It was well run, but the Bank's association with the Federalist Party created political tension, inevitably preventing its charter from renewal in 1811.2
Without a central bank, the young nation struggled immensely to finance the War of 1812. In response, the second Bank of the United States was granted a twenty-year charter beginning in 1816.3 It was modeled after its predecessor, fulfilling the same essential functions. This time, however, the bank's leader, Nicholas Biddle, built into a powerful institution, requiring each branch to play a defined role within the national economy as determined by the central bank in Philadelphia.4 This practice roused opposition as it was viewed as overt economic intervention. Opposition grew as it became known that the control of the second BUS rested entirely with wealthy Northeastern financiers, leading poorer citizens in the South and Midwest to fear that their concerns were falling on deaf ears. Andrew Jackson used this fear to propel his reelection victory, upon which he vetoed the bank's charter renewal in 1832. He then redistributed federal deposits through state banks and lifted federal regulations on state banking, leading to an explosion of loosely regulated, state-chartered banks.5 This period became known as the free banking era.
During the free banking period, states were essentially left to their own devices to regulate banking. Initially, many state legislatures prevented the market from expanding, limiting charters to individuals with whom relationships provided a political advantage. The high barriers to entry created an environment devoid of liquidity in developing areas. In response, eighteen states passed what are now known as Free Banking Laws, which replaced the need for direct legislative approval with a set of specific capital, reserve and note issue requirements. States continued to charter banks, but they were mainly limited to urban areas. Free banks, established in less developed areas,outgrew charter banks, resulting in a tremendous growth of liquidity. Each bank, moreover, issued their own currency creating an overwhelming variety of banknotes that circulated during the free banking period.6
In the historiography section, I present analyses from a handful of historians, who shed light on the symbolic meaning behind the images presented on banknotes. Study of the field is quite limited given that most researchers who focus on the Free Banking Period are economic historians, who concentrate their efforts on data-driven economic analysis of the relatively lasseiz faire attitude towards banking. My analysis, therefore, was forced to integrate points from art historians, who briefly touch on the symbolism certain artists inlaid in banknote engravings, with ideas from historians who cited banknotes as examples of mediums expressing opinions on westward expansion and slavery.
Hamiltonian banking prevailed in the Early Republic in which a central bank regulated the nation's money supply. The first Bank of the United States was granted a twenty-year charter beginning in 1791 to act as a commercial bank and the government's fiscal agent. The bank was based in Philadelphia with branches in eight other US cities. It was well run, but the Bank's association with the Federalist Party created political tension, inevitably preventing its charter from renewal in 1811.2
Without a central bank, the young nation struggled immensely to finance the War of 1812. In response, the second Bank of the United States was granted a twenty-year charter beginning in 1816.3 It was modeled after its predecessor, fulfilling the same essential functions. This time, however, the bank's leader, Nicholas Biddle, built into a powerful institution, requiring each branch to play a defined role within the national economy as determined by the central bank in Philadelphia.4 This practice roused opposition as it was viewed as overt economic intervention. Opposition grew as it became known that the control of the second BUS rested entirely with wealthy Northeastern financiers, leading poorer citizens in the South and Midwest to fear that their concerns were falling on deaf ears. Andrew Jackson used this fear to propel his reelection victory, upon which he vetoed the bank's charter renewal in 1832. He then redistributed federal deposits through state banks and lifted federal regulations on state banking, leading to an explosion of loosely regulated, state-chartered banks.5 This period became known as the free banking era.
During the free banking period, states were essentially left to their own devices to regulate banking. Initially, many state legislatures prevented the market from expanding, limiting charters to individuals with whom relationships provided a political advantage. The high barriers to entry created an environment devoid of liquidity in developing areas. In response, eighteen states passed what are now known as Free Banking Laws, which replaced the need for direct legislative approval with a set of specific capital, reserve and note issue requirements. States continued to charter banks, but they were mainly limited to urban areas. Free banks, established in less developed areas,outgrew charter banks, resulting in a tremendous growth of liquidity. Each bank, moreover, issued their own currency creating an overwhelming variety of banknotes that circulated during the free banking period.6
In the historiography section, I present analyses from a handful of historians, who shed light on the symbolic meaning behind the images presented on banknotes. Study of the field is quite limited given that most researchers who focus on the Free Banking Period are economic historians, who concentrate their efforts on data-driven economic analysis of the relatively lasseiz faire attitude towards banking. My analysis, therefore, was forced to integrate points from art historians, who briefly touch on the symbolism certain artists inlaid in banknote engravings, with ideas from historians who cited banknotes as examples of mediums expressing opinions on westward expansion and slavery.
1 "History of Currency Designs"
2 "Banking and Finance"
3 "A Short History of America's Panic-Prone Banking System"
4 "Banking and Finance"
5 Chown, 169-170
6 Jaremski and Rousseau, 1605
Discussion of "Introduction"
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