J. Markham – A Financial History of United States (3 Volumes)

Автор: J. Markham
Название книги: A Financial History of United States (3 Volumes)
Формат: PDF
Жанр: История Америки, Австралии, Океании
Страницы: 1220
Качество: Изначально компьютерное, E-book

This is the first of three volumes in a history of finance in America. This
volume covers the period from the “discovery” of America to the end of the
nineteenth century. It describes the status of finance in Europe at the time of
the discovery of America. The volume then proceeds to trace its transfer and
development in America through the Revolution, into the Civil War, and beyond
to the speculative excesses occurring after that event.
The second volume begins with the investment bankers that were dominating
finance at the beginning of the twentieth century, and it describes how
their vilification led to the birth of the Federal Reserve Board. The volume
traces finance through World War I, the stock market crash of 1929, and the
Great Depression. From there, it examines the rebirth of finance after World
War II and the growth of the institutional investor.
The third volume focuses on the growth of derivatives and the financial
debacles involving those instruments, the failures of deposit institutions, and
the scandals in the stock market that seemed to signal the demise of American
financial services. That volume then reviews the market run-up and the rebirth
of finance that was being strongly pushed by the Internet economy that
was then just blooming. The market reversal at the end of the century was
suggesting that the prosperity of the prior ten years was not to be a permanent
condition.
This history will be related in broad strokes in the volumes that follow. Yet
the real story of finance often comes in small vignettes and anecdotes that
make its history intriguing, sometimes even amusing. The author has tried to
include such scenes in this work.
The United States stands supreme at the beginning of the twenty-first century.
Its power is unequaled in all history, even by the great empires of the
past such as Rome, Greece, Great Britain, or even more recently, the Soviet
Union. The transformation of America from a vast wilderness into the preeminent
world power turned in no small measure on finance. After all, Christopher
Columbus’s voyage of discovery was but a symbol of the mercantilist
policies that were controlling the European governments. The settlement of
America was itself begun as a business enterprise by the merchants of England.
Joint stock companies and the Lord Proprietors that operated under
corporate charters or “patents” founded the colonies. The motive of those
English merchants was money. They sent colonists to America for one purpose—
to increase their own wealth.
The colonists who came to what is now the United States were greeted by
no banks, stock brokers, or insurance agents. There was no money in America
on their arrival, and they brought very little with them. Financial concerns
dominated the growth of the colonies, and financial exploitation of the colonies
incited the Revolution. The financial inadequacies of the colonies nearly
led to their defeat in that conflict, but the painful lessons learned from that
war and the nation’s independence set the stage for the future growth of
America. The refunding of the Revolutionary War debt led to the creation of
our securities markets. A banking system was, by necessity, another birthright
of independence. Of course, those events were not untroubled. Insider
trading, the creation of political parties in America, and the location of our capital
were all a part of the debate over the new country’s finances. The creation and
demise of the two Banks of the United States, and the struggle between Andrew
Jackson and Henry Clay over the second of those institutions, slowed development
of our national banking system for nearly a century.
The Civil War might fairly be recognized as the seminal event that began
the transformation of America from a small country, largely dependent on
foreign investors, into a mighty engine of capitalism. That war was fought over finance. Tariff issues first divided the North and South. Slavery was
next. Abominable as it might be, that institution was a key part of the agricultural
economy in the South. Forced to abandon slavery, the South slowly
created a more balanced economy and is now vying with the North for financial
prominence. The Civil War had additional effects. It strengthened the
country, even while thousands were being slain. The sanguinary battles in
that war built a national economy that could produce massive amounts of
industrial goods and foodstuffs under the most extreme conditions. That trauma
resulted in the creation of a national currency, and it laid the cornerstone for
our national banking system. Stock and commodity futures markets were growing
as the war raged; life insurance became a common investment; and railroads
and telegraph lines (the first of our electronic communications networks)
were being integrated and expanded to bind the nation together, even while
the war was pitting North against South. Jay Cooke’s underwriting of Union
bonds created the first nationwide securities sales operation that, in large
measure, funded the war for the federal forces. The Confederacy foundered
on its lack of resources, but its innovations in finance would set a precedent
for future financiers.
The coterie of rapacious individuals that came to be called the robber barons
built on the speculation that gripped the country during and after the Civil
War. Those financial wizards—some say charlatans—drove industrial expansion
in the United States until the turn of the century. Their greed, and the
concentration of wealth achieved by their successors, the “investment bankers,”
fueled a distrust of financiers that continues even today. The fight over
silver and greenbacks, and the adoption of a gold standard, furthered suspicion
of financial markets. Led by J.P. Morgan, and symbolized by the giant
trusts such as John D. Rockefeller’s Standard Oil, the financiers began consolidating
American industry. The suspicion and envy they aroused by this
concentration of wealth would give rise to a search for a “money trust” conspiracy.
That search for evil continues even today. William Gates and his
Microsoft company have been recent targets.
The periodic panics, crashes, and depressions that occurred before the turn
of the twentieth century exposed the dark underside of economic expansion
and an unstable financial system. Those panics proved conclusively that there
is no immutable rule ordaining that American financial markets must always
course upward. To the contrary, market contractions are themselves a certainty.
They will come quickly and cut deeply, as demonstrated by the stock
market panics in 1837, 1857, 1873, 1884, and 1893. Worse would follow in
the next century.
This history now begins with an overview of the state of finance at the time
of Columbus’s voyage.