Fighting Over Money

THE MONEY ­MEN: Capitalism, Democracy, and the Hundred Years’ War Over the American Dollar.

By H. W. ­Brands. Norton. 239 pp. $­23.95

From the late colonial era until the establishment of the Federal Reserve System in the early 20th century, conflicts over America’s money supply shaped the country’s history. Those taxes in the American colonies on stamps, tea, and the like may have tipped the scale in favor of rebellion, but the Revolutionary War’s main economic causes were volatile interest rates and Britain’s restrictions on what could be used as money in the colonies. The monetary chaos that emerged during the American Revolution and the severe deflation that followed it drove the movement for a new constitution. And contentious political battles in the 18th and 19th centuries over the Bank of the United States, championed by capitalists who desired the stability of a central bank, were obviously related to monetary ­policy.

Control of the money supply meant control of the price level and interest rates, a situation that pitted Americans against each other: Consumers and lenders benefited when the price level fell and were hurt when it rose, while, for producers and borrowers, the inverse was true. Likewise, high interest rates (adjusted for inflation) aided lenders; low rates helped borrowers. Little wonder, then, that money was a political hot potato until 1913, when the Federal Reserve Act bureaucratized and thereby largely depoliticized monetary policy, ending a roughly ­century-­long money war and shifting politicians’ attention to ­taxes.

H. W. Brands, author of some 20 books and a history professor at the University of Texas, Austin, relates the history of that war through the lives of five fairly familiar figures: Alexander Hamilton (1757?–1804), America’s first treasury secretary and founder of the country’s first central bank; Nicholas Biddle (1786–1844), the financier who served as president of the second Bank of the United States until Andrew Jackson succeeded in killing it; Jay Cooke (1821–1905), who mobilized the Northern masses to buy the bonds that partially financed the Civil War; railroad magnate and financial speculator Jay Gould (1836–92); and investment banking titan J. P. Morgan (1837–1913).

Nothing of such practical and widespread use as money is so misunderstood, and The Money Men does little to educate readers about money and finance. The discussion of restrictions on colonial bills of credit is garbled, for instance, as are explanations of early banking and securities markets. Brands’s grasp of finance improves as his narrative advances chronologically, but one might say of him what he writes of Andrew Jackson, that he “knew next to nothing about banks, a little more about money, and a great deal about democracy.”

It is in the political arena where Brands shines. His biographer’s knowledge of the policies, rhetoric, and backroom shenanigans of important players such as Benjamin Franklin, Andrew Jackson, and Theodore Roosevelt brings his account to life. He has a knack for keeping his yarn moving while generously peppering it with interesting and occasionally telling anecdotes and quotations, as when he dramatically describes William Jennings Bryan’s famous “cross of gold” speech, which cemented Bryan’s 1896 presidential nomination, writing that “the audience absorbed the rhythms of Bryan’s voice.” And he has a sharp, observant eye for the big picture, noting, for example, that “the Civil War began as a revolt by Southern democrats and ended as a revolution by Northern capitalists.” Overall, Brands’s account of American history as a series of monetary struggles is a fruitful interpretation well worth a reader’s ­dollars.

—Robert E. ­Wright