Financial History of the United States: Fiscal, Monetary, Banking, and Tariff, Including Financial Administration and State and Local Finance

By Paul Studenski; Herman E. Krooss | Go to book overview

CHAPTER 16:
POST-CIVIL WAR MONETARY AND BANKING READJUSTMENTS

In the decades after the Civil War, the clash over fiscal policy was mild in comparison with the bitter disputes between debtor and creditor classes over greenbacks, free silver, and national banking. These issues were intermeshed with fiscal problems, but above all, they were related to secular and cyclical changes in prices, especially farm prices.

As a result of heavy war expenditures financed by currency and credit expansion, the price level in September, 1864, was more than double the prewar average. After the war, as industrial and agricultural production increased phenomenally, prices began to decline. Debtor classes complained that they had to pay their debts in scarcer and dearer dollars. Believing in a crude quantity theory of money, farmers and impecunious seekers of capital blamed their difficulties on an insufficient supply of money and demanded that the government increase the circulation, either by printing more greenbacks or, at a later date, by remonetizing silver.

The advocates of "sound money"--the creditors and financiers-contended, more correctly, that the secular price decline was caused by increased production. The majority denied that increasing the money supply would raise prices. But some frankly favored a contraction of the money supply and a deliberate deflation of prices in order to make possible a quick return to a specie standard.

In the monetary controversy which raged for the next thirty years, the advocates of sound money prevailed just as they did in fiscal policy. The supporters of easy money pressed their claims only when prices fell. When prices rose and relative prosperity came to the farm, agitation for monetary panaceas declined. The creditor classes then breathed more easily and mistakenly thought that the so-called "monetary heresies" had passed away.

Changes in the Banking Structure, 1865 to 1890. While currency and the price level were being bitterly debated, important changes took place in American banking. Only one of these, the steadily declining importance of national-bank currency, was clearly recognized. Yet even more important, though much less discussed, were the constant growth of checkbook money, the resurgence of state banking, the secular growth in the percentage of total assets represented by loans, and the close correlation between business activity and changes in total bank loans.

Up to 1874 changes in the National Bank Act and the declining importance of state banks caused a relative as well as an absolute increase in

-176-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Financial History of the United States: Fiscal, Monetary, Banking, and Tariff, Including Financial Administration and State and Local Finance
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 530

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.