A “Peculiar Institution”: The Second Bank of the United States and the Old South’s Modernizing Economy, 1820–40

This paper, which engages larger questions in the historiography of American slavery and the history of capitalism, analyzes the economic importance of the Second Bank of the United States (BUS) in the antebellum South. Historians have long known that the BUS was popular in the Old South’s commercial centers, but they have yet to firmly establish why. Knowledge of “bills of exchange,” highly-liquid, interest-bearing credit instruments that linked the buyers and sellers of staple crops, provides a suitable starting point. During the 1820s, Nicholas Biddle expanded the Bank’s trade in bills of exchange. Because the buying and selling of land, cotton, and slaves were intertwined, financial support for land sales and cotton exports in the South, in effect, also subsidized the proliferation of slavery. 

For evidence, this paper relies on several manuscript collections, newspapers, treasury department documents, census records, and congressional debates. Particularly relevant are the letters of exchange broker Thomas Biddle, cousin of the Bank president. Biddle’s firm, Thomas Biddle & Company, invested in AJ Alexander, a Kentucky hemp grower, and engineered the sale of territorial bonds that secured a Florida property bank whose underlying capital rested on planters’ mortgages, slave-grown crops, and slave property. Reinforcing recent works by Ed Baptist and Sven Beckert, “A Peculiar Institution” locates the BUS as a dominant financial intermediary in the antebellum South – one that equalized exchange rates, facilitated long-distance trade, extended credit to commercial actors, and supported slavery in direct and indirect ways. Beyond functioning as a perennial piñata for Jacksonian Democrats, the Second Bank should be understood as a key institution promoting modernity and capitalism in the South’s slave economy.