The work on which this paper is based is drawn from Campen's Ph.D. dissertation (“National Banking in Knoxville, Tennessee, 1864–1913,” University of Tennessee, 1981). Mayhew presented versions of this paper at the Economic History Seminar at the University of Exeter, England, and at the Economic History Workshop at the University of Tennessee. Mayhew and Campen presented a version at the Triangle Economic History Workshop in North Carolina. We are grateful to all of the participants for their help and advice and particularly grateful to Walter C. Neale, Cathy Matson, John Bohstedt and David Tandy. We also thank anonymous referees for their comments.

¹ Sylla, Richard E., “The United States, 1863–1913,” in Cameron, Rondo, ed., Banking and Economic Development: Some Lessons of Economic History (New York, 1972), p. 236.Google Scholar Sylla's argument about the national banking system is presented in summary form in this article and is drawn from Sylla, Richard E., The American Capital Market, 1846–1914 (New York, 1975).Google Scholar

² On this point see also Updike, Helen Hill, The National Banks and American Economic Development 1870–1900 (New York, 1987).Google Scholar

³ Sylla, , “The United States, 1863–1913”, p. 258.Google Scholar

⁴ Ibid, p. 247.

⁵ Cameron, Rondo, “Introduction,” in Cameron, , ed., Banking and Economic Development, p. 23.Google Scholar

⁶ James, John, “The Antebellum Money Market and the Economic Impact of the Bank War,” this Journal, 36 (12 1976), pp. 878–97.Google Scholar

⁷ Suskha, Marie Elizabeth and Barrett, W. Brain, “Banking Structure and the National Capital Market, 1869–1914,” this JOURNAL, 44 (06 1984), pp. 463–77 report that increasingly sophisticated business financing decisions rather than increased bank competition caused the early growth of a well-integrated national capital market. They do not, however, directly challenge Sylla's conclusion that national banks did enjoy monopoly power well into the 1880s.Google Scholar

⁸ A partial exception to the statement that our views have been shaped by aggregate data is provided by Keehn, Richard, “Federal Policy, Bank Market Structure, and Bank Performance: Wisconsin, 1863–1914,” Business History Review, 48 (Spring 1974), pp. 1–27.CrossRefGoogle Scholar

⁹ The less frequent Reports of Examination and the correspondence of the local banks with the Comptroller were also examined in the National Archives for the greater detail that they could provide. Because the East Tennessee National Bank still existed under the name of the Park National Bank in 1981, its Reports of Examination in the National Archives could not be made available to us by the archivist. The omission made very little difference to the outcome of the study; the Reports of Examination that were available added detail but did not alter in any important way the story that the Reports of Condition revealed.

¹⁰ Sylla, , The American Capital Market, p. 123.Google Scholar

¹¹ We discuss the importance of the political position of the bank below. Because we could not get the examiner' reports for the First National/East Tennessee National we were unable to determine precisely what interest was paid on deposits.

¹² Barnett, George E., State Banking in the United States since the Passage of the National Bank Act (Baltimore, 1902), p.20.Google Scholar

¹³ Ibid, p. 26.

¹⁴ Ibid, p. 41.

¹⁵ McDonald, Michael J. and Wheeler, William Bruce, Knoxville, Tennessee: Continuity and Change in an Appalachian City (Knoxville, 1983), p. 18.Google Scholar

¹⁶ Knoxville benefited from a boom based upon the growth of extractive industries in the region—a growth in exploitation of coal, marble, and timber. These industries were not very important in Knox County itself, but output of iron foundries that provided steel products for coal mining, marble quarrying, and textile mills grew substantially. In addition to a growth of textile mills, the major growth in Knox County occurred in manufacture of a variety of consumer goods. Campen, , “National Banking in Knoxville,” pp. 40–46, summarizes the data.Google Scholar

¹⁷ Sylla, , “The United States, 1863–1913,” p. 241.Google Scholar

¹⁸ The data did not allow any usable calculations of how local interest rates may have diverged from the changing regional and national patterns. Nor do Knoxville banks' accounting practices give confidence in estimates of the profitability of the banks. As Campen notes, calculations of profit rates from the published Reports of Condition almost certainly overstate the profitability of the banks. See Campen, , “National Banking in Knoxville,” pp.172–74, appendix C.Google Scholar

¹⁹ Some may note that farmers in the South and West did complain bitterly about the banks and the interest rates that they charged. Does this not indicate a shortage of funds to agriculture? Not necessarily. Higher interest rates paid by farmers do not prove that more borrowing would have taken place at lower interest rates. Farmers, who complained that they were being asked to pay too much, would not necessarily borrow more had interest rates fallen. Complaining is after all, a free good.