Bank Chartering and Political Corruption in Antebellum New York: Free Banking as Reform

38 Pages Posted: 24 May 2004 Last revised: 21 Aug 2022

See all articles by Howard Bodenhorn

Howard Bodenhorn

National Bureau of Economic Research (NBER); John E. Walker Department of Economics, Clemson University

Date Written: May 2004

Abstract

One traditional and oft-repeated explanation of the political impetus behind free banking connects the rise of Jacksonian populism and a rejection of the privileges associated with corporate chartering. A second views free banking as an ill-informed inflationist, pro business response to the financial panic of 1837. This chapter argues that both explanations are lacking. Free banking was the progeny of the corruption associated with bank chartering and reflected social, political and economic backlashes against corruption dating to the late-1810s. Three strands of political thought -- Antimasonic egalitarianism, Jacksonian pragmatism, and pro-business American Whiggism -- converged in the 1830s and led to economic reform. Equality of treatment was the political watchword of the 1830s and free banking was but one manifestation of this broader impulse.

Suggested Citation

Bodenhorn, Howard, Bank Chartering and Political Corruption in Antebellum New York: Free Banking as Reform (May 2004). NBER Working Paper No. w10479, Available at SSRN: https://ssrn.com/abstract=541704

Howard Bodenhorn (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

John E. Walker Department of Economics, Clemson University ( email )

Clemson, SC 29631
United States

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