Capitalism, Democracy, and the Hundred Years' War over the American Dollar
August 21, 2006
Brands appraises five key players in American financial history: Alexander Hamilton, who advocated federal assumption of state Revolutionary War debt through the establishment of a national bank; Nicholas Biddle, who presided over the Bank of the United States when it failed under pressure from Andrew Jackson; Jay Cooke, who financed the Union through retail bonds during the Civil War; Jay Gould, who precipitated the Black Friday collapse of gold prices in 1869; and J.P. Morgan, who stabilized the financial panic of 1907. Each man, Brands explains, represented capitalism intertwined but in conflict with democracy. Capitalism promoted free trade and strong financial institutions, while democracy called for protectionism and financial institutions that helped customers instead of making insiders rich. This inherent tension, the author writes, was resolved by the 1913 compromise that created the Federal Reserve System. The author's generalizations, however insightful, make rigid organizing principles, given that different political and economic forces shaped each era. Focusing on one capitalist per episode also distorts the stories, as does lurching from crisis to crisis while glossing over the important consensus developments that occurred in between. Brands (Andrew Jackson
) delivers a competent but schematic general history.