In a previous post, I reported that I was reading a book about the rise and fall of the Whig political party in the 19th century US (The Rise and Fall of the American Whig Party – Jacksonian Politics and the Onset of the Civil War, by William F. Holt, 1999). I still have not finished the book, and I wouldn’t recommend it unless you want to end up snoring. It has some great gems in it, but it repeats so many of the same ideas over and over, page after page for 1200 pages I really wonder how it got past the editors.
I put it down and downloaded another, Expansion and Conflict, by William E. Dodd, an old college textbook book about the origins of the conflict that lead to the Civil War that was published in 1915. This book is interesting because it starts setting the stage with the Jackson administration and goes though a political survey of the different regions of the US. In addition to that, it has some interesting statistics about banking, how many banks notes were in circulation verses specie. It says that in the whole of the US in 1815, there was $17M of specie and 208 banks with capital of $82M. By the end of 1833, eighteen years later, there were 502 banks with $168M in capital, $61M of notes in circulation, and still only $17M in specie in all the banks (Kindle edition location 597-602).
The reason I brought that Whig book up again is because they were the champions of banking, and free banking at the state level once Jackson has pillaged the Second Bank of the United States. From the time Jackson had diminished the bank and moved to hard currency, our politics oscillated between free banking with bank notes and hard currency every few years. One of the reasons why is because voters generally preferred average men in politics. They wanted plain politics for plain people, which Democrats embodied. But once the Democrats got into office they would undo all of the banking things the Whigs had done, causing deflation, loans going sour, and the rest of the deflationary tale which people were not pleased with at all. Then the Whigs would come back into power because of horrible economic conditions and put things back at the state level, but they never made inroads at the federal level in order to have a more permanent influence on Federal monetary policy.
While digesting these two different sources, I was thinking about the kinds of things Austrians say about the gold standard, sound money, and the like, and it doesn’t really ring true that we ever had any real kind of gold standard, and for the very brief periods when we did, voters rejected it for the alternative of, as the Austrians say, “inflation-filled booms” only privatized. I don’t really understand their objections to the Fed and fiat money at this point, because I don’t see much difference been banks printing their own money and buying things, verses the Fed printing money and giving it to banks to buy things. Bankers still buy things with money out of thin air, which has been going on since at least the 1790s; and the miniscule amount of specie there was to back all the bank notes floating around is really just like splitting hairs between then and now. I can understand that maybe they see a conflict of interest with a select few being at the top of the food chain, but that is an entirely different thing than making up things about what hard/sound money will supposedly do for us that it has never done before.
This is why I like old history books, especially ones that predate any political spin that might be around today and the movements that spew their own twisted views of reality in voluminous propaganda.