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Capital of Capital

Capital of Capital: Money, Banking, and Power in New York City, 1784-2012

Steven H. Jaffe
Jessica Lautin
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  • Book Info
    Capital of Capital
    Book Description:

    From Revolutionary Era bank notes to the 2008 financial collapse,Capital of Capitalexplores how New York City gave rise to a banking industry that in turn made the American and world economies.Capital of Capitalalso examines the frequently contentious evolution of the banking business, its role in making New York City an international economic center, and its influence on America's politics, society, and culture.

    Based on a major exhibition at the Museum of the City of New York,Capital of Capitalfeatures the key leaders of banking, including Alexander Hamilton and J. P. Morgan, as well as its critics, such as Louis Brandeis and the Occupy Wall Street protesters. The book also covers the major events and controversies that have shaped the history of banking and includes a fascinating array of primary materials ranging from antebellum bank notes and ledgers to early credit cards and advertisements. Lavishly illustrated,Capital of Capitalprovides a multifaceted, original understanding of the profound impact of banking on the life of New York City and the world's economy.

    eISBN: 978-0-231-53771-1
    Subjects: History, Finance, Sociology, Economics

Table of Contents

  1. Front Matter
    (pp. [i]-[iii])
  2. Table of Contents
    (pp. [iv]-[v])
  3. [Illustration]
    (pp. vi-vi)
  4. Director’s Foreword
    (pp. 1-1)
    Susan Henshaw Jones

    Capital of Capital: Money, Banking, and Power in New York City, 1784–2012is the first comprehensive book on more than 200 years of banking in Gotham. Given that this history is essential to understanding the rise of the city itself, it is a book that is long overdue. New York’s banks have shaped all aspects of the city’s identity. New York’s financiers further helped catapult the city to national preeminence by the mid-19th century and to global ascendancy in the late 19th and 20th centuries. Since the founding of Alexander Hamilton’s and Aaron Burr’s rival banks after the American...

  5. Introduction: New York, Banking City
    (pp. 3-5)
    James H. Cafferty

    Ever since Alexander Hamilton and his associates founded the Bank of New-York in 1784, New York City’s banks and bankers have been star actors in the city’s and the nation’s affairs. In every important chapter of the city’s growth—its early 19th-century rise to commercial primacy over its rival, Philadelphia; its promoting of canals, railroads, the Southern plantation economy, and the American industrial revolution; and the 20th-century building of the nation’s corporate headquarters that exported American economic power around the world—New York banks have been front and center. Conversely, almost every major controversy and crisis involving American banking—from...

  6. BEGINNINGS 1784–1831
    (pp. 6-33)

    a group of men gathered in the Merchant’s Coffee House on the southeast corner of Wall and Water Streets in New York City. Three weeks earlier they had assembled on the same spot and resolved to “establish a bank on liberal principles.” This morning, the new bank’s subscribers—those who had pledged to buy into the stock of 500 shares, thereby becoming the bank’s owners—came together to elect a board of 12 directors and a president. Until that moment, only one other bank, Philadelphia’s Bank of North America, had existed in the new United States.¹

    Surveying the meeting, a...

  7. THE BANK WAR 1832–1860
    (pp. 34-65)

    but I will kill it!” Thus President Andrew Jackson addressed his friend and ally, future Vice President Martin Van Buren, during a private White House meeting on the evening of July 8, 1832. The “bank” in question was the Philadelphia-based Second Bank of the United States (BUS), an institution that Jackson and many of his followers in the Democratic Party increasingly viewed as a “Monster.” Founded in 1816 by Congress and private investors (including New York’s John Jacob Astor and Jacob Barker), the BUS played an important role in the American economy. It took the place of Alexander Hamilton’s First...

  8. THE CIVIL WAR 1861–1865
    (pp. 66-89)

    “First-rate man. Owns a plantation with two hundred slaves. Customer of ten years' standing.” With these words, the banker and writer James Sloan Gibbons captured the conversation between two New York City bank directors in 1858 as they considered whether to make a loan to a Georgia planter. As Gibbons and many of his readers knew, the business of New York and the business of slavery were intertwined. Cotton was king in the merchants’ counting houses of Lower Manhattan, just as surely as on Southern plantations and on the docks of Savannah, Mobile, and New Orleans. By 1822, when cotton...

    (pp. 90-123)

    the novelist Henry James noticed massive changes to the skyline since he had last seen it nearly 25 years earlier. As he entered the city’s harbor, memories and impressions of “sea-foam, of bleached sails and stretched awnings, of blanched hulls, of scoured decks, of new ropes, or polished brasses, or streamers clear in the blue air” had been replaced by “skyscrapers standing up to the view, from the water, like extravagant pins in a cushion already overplanted.” Though it would take another decade for tall buildings to supplant the port as New York’s iconic image, they represented a new economy...

  10. REFORM+REGULATION 1866–1928
    (pp. 124-157)

    a Minnesota journalist and agitator, warned his fellow Americans that the United States was becoming a plutocracy—a government by and for the wealthy who enslaved the nation’s “producing population.” The engine of this plutocracy was “a vicious monetary system of which the national banks are the source.” Donnelly preached the need to restore economic opportunity to ordinary Americans. His calls for change would become even more urgent and angry over the ensuing months, as a crippling depression, partly triggered by the collapse of the famed investment bank Jay Cooke & Company in New York City in September 1873, descended on...

  11. CRASH+DEPRESSION 1929–1945
    (pp. 158-189)

    the day after “Black Thursday,” on which the American stock market lost a crushing 11 percent of its total value, it looked like New York’s bankers had saved the stock exchange. As during the panic of 1907, 23 Wall Street—the headquarters of J. P. Morgan and Company—became home base for efforts to provide massive funds, quell widespread anxiety, and prevent further spiraling of stock prices and withdrawal of bank deposits. On Black Thursday a group of five executives had walked into the “House of Morgan” with the press hot on their tails. Thomas Lamont, senior Morgan partner, had...

    (pp. 190-217)

    a full-page advertisement, placed inLifemagazine in 1960 by “The Commercial Banks of the U.S.,” asked readers. The ad featured a photograph showing a suburban homeowner on his front lawn, enviously eyeing his neighbors as they packed their shiny new car for a family vacation. “You’re pretty sure that they don’t make any more money than you do,” the ad intoned, “yet they always seem to be the ones who take the trips … refurnish the living room … buy the new car … build the addition to the house.” The reason the neighbors had more spending money, the...

    (pp. 218-249)

    So declared the front page of the New YorkDaily Newson October 30, 1975. The headline captured President Gerald Ford’s insistence that the federal government would not provide loans to “bail out” the city and restore it to solvency. New York was in the midst of a fiscal crisis triggered by years of escalating municipal spending and borrowing that outstripped tax revenues and federal funding for social programs. By October of 1975, the city had endured a long summer of bruising battles between the city’s powerful municipal unions and state officials intent on controlling spending through harsh austerity measures....

    (pp. 250-285)

    takes a major step forward toward the 21st Century—one that will benefit American consumers, business and the national economy.”¹

    Secretary of the Treasury Lawrence H. Summers used these words on November 5, 1999, to applaud the passage of the Financial Services Modernization Act, also known as the Gramm-Leach-Bliley Act in honor of its three Republican sponsors, Senator Phil Gramm of Texas and Representatives Jim Leach of Iowa and Thomas J. Bliley Jr. of Virginia. Passed with bipartisan support and signed by Democratic President Bill Clinton, the act officially ended the 66-year reign of the Glass-Steagall Banking Act of 1933,...

  15. Acknowledgments
    (pp. 287-287)
    Steven H. Jaffe and Jessica Lautin
  16. Recommended Reading
    (pp. 288-291)
  17. Index
    (pp. 292-297)
  18. Back Matter
    (pp. 298-298)