Storming Arkansas’s “Impregnable Bastille”: Banking Failure and the Democratic Perils of Modern Finance in Arkansas, 1841–57

In 1844, the Arkansas Banner searched for a way to adequately express the unfairness the insolvency of the Real Estate Bank (REB) had presented to virtuous but unsuspecting Arkansans, and they (like many other editorials in this era) decided to mobilize French-Revolutionary metaphors to make their point.  Calling the REB a “Bastille which still towers above the power of the people” and a “separate principality,” the editors lamented the democratic powerlessness reflected in the fact that the presumptively aristocratic bank had “become independent in the shape of an assignment.”  What that meant, in short, was that Equity law court decisions had shielded the board of directors from democratic influence by making what were a rather well-to-do group of planters into legal trustees, under the fiction that they had been “assigned” a trust that must be kept sacrosanct.  This paper will chart how that assignment happened, how the REB operated under such assignment, what the state did to get that assignment transformed into state control under legal receivership and, most importantly, what the protracted battle over responsibility for the large public debt the REB brought to Arkansas did to discourage Arkansas residents from engaging in the further development of capital markets at a crucial moment of capitalist takeoff in the United States.

This paper, then, offers a legal-historical study of one influential bank as a lens through which to view a cultural reaction against modern monsters in the Southern neighborhood.  The goal of the paper is to make a contribution to our further understanding not only of banks and banking in but one region, but to reveal more about the historical problem of characterizing the culture of the Antebellum South and its relationship to that amorphous but ever-more commonly used concept, capitalism.