Introduction

The demise of the American institution of governmental issue of paper money did not usher in a pattern of financial development on the English model. This point is significant, because the persistent notion of a general Anglo-Saxon path of liberal financial development is one of the most serious obstacles to an accurate understanding of the distinctive institutional dynamics of American finance. Although the idea that America’s economic development represents the unfolding of market principles has been widely challenged in historical literature, the notion that a laissez-faire attitude governed freely after the colonial yoke had been thrown off has remained highly influential (e.g., Lemon 1980; Bruchey 1990; Rothenberg 1992; Wright 2001, 2002; Buder 2009). The assumption in IPE scholarship that American finance is best understood as having evolved through largely unregulated markets and relatively weak regulatory institutions has similarly proved tenacious (e.g., Zysman 1983; Vitols 1997; Hall and Soskice 2001). As this chapter will demonstrate, the significance of the antebellum period for our understanding of American finance lies precisely in the fact that it did not develop according to the model of economic liberalism. It was the highly politicized configuration of financial relations in the early American republic that would later, from the midnineteenth century, generate the strategic innovations out of which a qualitatively new institutional basis for financial intermediation would arise.