A history of Banking in Antebellum America: Financial Markets and Economic Development in an Era of Nation-Building.

By Howard Bodenhorn. (New York and other cities: Cambridge University Press, 2000. Pp. xxii, 260. Paper, $22.95, ISBN 0-521-66999-5; cloth, $64.95, ISBN 0-521-66285-0.)

On the battlefields of business and economic history, combat over banking-related topics had reached its acme by the 1990s. By that time, scholars had fairly well concluded that banks mattered; that they were highly entrepreneurial enterprises that paid attention to all aspects of the market; that information transmission was vital and was greatly facilitated by branch banking systems; and that free banking (really, unchartered banking) actually performed pretty well. The South's banking structure was not backward, there were more banks than most scholars had identified previously, and banks responded to profit mechanisms, not pressures of "class."

Howard Bodenhorn's history of banking reaffirms almost every one of these points, but unlike a combatant who draws or sheds blood, his story is more like that of the division adjutant who arrives the following day to assess the victory and count the corpses. Bodenhorn's major points are straightforward. He supports the "supply-leading" interpretations that view banks as playing a leading role in economic growth (p. 217). Antebellum banking was not unstable at all but was a root cause of the expansion of the American market. Government did play a role, largely by granting privileges, monopolies, and other incentives to establish banks, but that role was minimal. He finds evidence of well-integrated regional financial markets, and argues that, overall, "American capital markets were always integrated" (p. 164). Bodenhorn supports this with usury rate statistics, money supply penetration, and other econometric analyses. Especially after 1845, he maintains, southern commercial paper rates tended to look just like northern rates.

Most of this research is of the "confirming" variety that reinforces previous work. He seems to deliberately avoid revisiting any of the particularly nasty or especially controversial issues. There is, for example, almost nothing on the sharp contrasts between those states dominated by Democrats and those whose politics were tempered by a mix of Democrats and Whigs. Bodenhorn does not examine the wisdom, or repercussions, of government monopolies (as in Arkansas and Alabama) compared to the competitive system of Virginia, where he has done much of his micro-level research. Indeed, he virtually ignores the political dimensions of banking, except for a brief discussion of lending laws.

More important, the subtitle of this book is its real topic, not the history of antebellum banking: there are virtually no bankers mentioned, except for Stephen Girard and Nicholas Biddle. Bodenhorn gives us no glimpse of what motivated either lenders or borrowers; of why the antebellum banks were such politically inflammatory businesses; or of the powerful connection between slavery, finance, cotton, and politics in the South. Instead, this is really a economic overview of the integration of financial markets in antebellum America, and Bodenhorn does that job very well. The result, though, is that he has submitted a useful tally, and even raised a grave marker or two, but brought us no closer to understanding the real issues that led to the conflict in the first place.

LARRY SCHWEIKART
University of Dayton