This FT piece on banking is to say the very least one-sided. Considering myself an American of the Jefferson/Jackson tradition, I’ll attempt to save them from being derided as monetary bumpkins.
Jefferson/Jackson were small “d” democrats. The problem they had with centralized money was it took a lot of power out of ordinary people’s hands. They acted on their understanding that centralized money was undemocratic. By the end of 1836, that neither of them should have come up with a definitive answer to the money question, certainly shouldn’t be held against them. After all, isn’t this the very question front and center today? And if Mr. Bernanke’s great roll of the dice craps, that is the dollar collapses, won’t we have to rethink much of what we now hold certain about banking and money?
This article commits the historical heresy of looking at what came to be, that is centralized money, as inevitable or the best outcome. This is made clear in his statement, “Jackson would still disapprove of the very quality we most prize in the Fed.” Whose “we?”
The author skips over this republic’s great two decade popular debate about money — the Populist Movement. Instead focusing on the fool Bryan, who represented the Populists defeated. The Populists had a lot better ideas about money than silver, for example their sub-treasury plan still resonates with a clear logic about decentralized, thus democratic money. Again, I couldn’t more highly recommend Lawrence Goodwyn’s, “The Populist Moment.”
Finally, Mr. Schama makes his most important point. “It took Lincoln’s Banking Act of 1862, born of a desperate need for dependable credit to fight the war.” Now this is certainly true. In order to fight a war, it is imperative to centralize resources. It’s an important topic to consider, does centralized banking and centralized money make war easier? That would be a much different view of history than what Mr. Schama provides, though he is correct that the tension between democracy and banking is a long American tradition, though much nobler tradition than Mr. Schama implies. Don’t Believe the Hype.
Archein