Banks and Civic Life in the Early Republic

In the aftermath of the War of 1812, commercial bank charters proliferated throughout the country in response to the credit demands of everyone from merchants to farmers.  As the story is often told, these banks performed poorly, particularly during and after the Panic of 1819, fueling the anti-banking backlash that contributed to the rise of Andrew Jackson.  Thus for generations of historians from Marvin Meyers to Charles Sellers to Sean Wilentz, the story of early American banks is a political one, with the emergence of the Democratic party conclusively “proving” the anti-banking mentality of the populous.  In contrast, several economic historians have complicated this political story by demonstrating that many – if not most – commercial banks operated more responsibly than once thought.  Many of these latter historians believe that the continued chartering of new banks “proves” that most people were not anti-bank.  Yet to date, no one has attempted to study directly the attitude of different groups of people towards early American banks.

During the post-Revolutionary period, states restricted charters of incorporation to institutions that served a clear public function and thus deserved the support and imprimatur of the state.  In addition to municipalities, hospitals, and transportation companies, banks were also considered a positive public good to be promoted by the state through corporate charter.  This paper examines why banks were viewed in this light, investigating what banks and banking actually meant to various segments of the public in the early republic.   What function did individuals or groups expect banks to perform – either legally through their formal charter requirements or informally due to public expectations?  How did these formal and informal expectations change as banks proliferated and Americans became increasingly familiarized with their operations?