On my recent trip to Philadelphia, I had a chance to walk around. The city is jam-packed with early American history. There’s Independence Hall, the Liberty Bell, and the other usual suspects. But what really got me going was when I stumbled upon the Second Bank of the United States.
Now THAT is a piece of history that’s not only interesting, but timely!
I know, I know, it’s very geekish of me to get so excited by this find, but hey, it’s who I am.
The plaque identifying the building is small, but the building itself is a large, Parthenon-type structure. I climbed the stairs, shot through the door and was immediately struck by…
It turns out the building was indeed the Second Bank of the United States, but space is now used to house a portrait gallery of famous people from the 18th century.
I wandered from room to room, looking for anything regarding the bank itself and eventually, in a small room off to the side, I found one placard noting that the bank existed and was wound down when Andrew Jackson vetoed the re-charter of the bank.
That was it.
The more I thought about it, the more I was struck by the awesomeness of the phrase “history is written by the winners.” Or, as it is applicable in this case, winners decide what to do with monuments.
What I wanted to find, and was arguably naïve in my hopes of finding, was some recounting of the story of national banks and how countries have struggled with them for ages.
The Second Bank of the United States sounds boring. It’s a bank, after all, so how interesting could it be?
Well, more interesting than you’d think.
This national bank was established when the U.S. was in its infancy. It took on the role of national creditor, putting it at odds with the banks established in all of the states. It could establish regulations for money and credit, and did so for its own purposes. This meant everyone who dealt in money and credit had to accommodate this national animal.
President Andrew Jackson hated the idea of a national bank. He saw such entities as nothing more than an easy path for governments and large institutions to manipulate currency for their own gain. He vowed to close the bank… and succeeded.
The demise of the bank set off a credit contraction that deflated a speculative bubble, resulting in a sharp economic downturn in the mid-1830s.
Many people point out that if Jackson had not closed the bank then the contraction would not have happened, but this misses the point that the expansion was based on the extension – and some would say reckless extension – of credit.
Should there be a Bank of the United States? Should the Federal Reserve exist? Should there be ONE body that can determine, free of voter approval or oversight, whether the national currency we are required to use can be devalued? Should there be an entity that can exert worldwide influence by simply deciding what short-term interest rates should be and by pursuing programs to change long-term interest rates?
These questions are hotly debated today, just as they were in the 1800s, but not by as many people as they should.
People who are knowledgeable about such things constantly question the wisdom of consolidating power, while recognizing that it can allow for swift action in times of need. Given the recent actions of central banks around the world and how they affect all of us through our pocketbooks, it would seem reasonable that such topics arise at cocktail parties, little league games, and really anywhere that people gather. But they don’t. Instead, such conversations are relegated to financial papers and gatherings of like-minded people.
Maybe that’s the way the winners of the bureaucracy – those who decide what gets displayed and what doesn’t – want it to be.
Maybe that’s why the building that housed the Second Bank of the United States holds no record of what went on there… of how a fight over money and credit was waged. But you can see a cool portrait of the Marquis de Lafayette, as well as signers of the Declaration of Independence.
Laying out the reasons for and against a national bank might actually help to spark a national conversation about where we are and how we function. Displaying portraits of people from the 1700s simply gives us something to look at before we move on to the next historic site.
P.S. History plays a critical role in our research. Harry studies it through travel and books. He sucks it in like he can’t get enough of it. I’m a voracious reader. Adam crunches numbers and back tests. No matter how we do it, we all do it because there are cycles out there that can make or break investors and businesses. Here’s just one example.
Ahead of the Curve with Adam O’Dell
If you’ve read Survive & Prosper for some time, you’ll know I harped on gold prices being stuck in “no man’s land” for much of 2012. It was up for a few weeks… then down for a few weeks… then up again… and down again.