Designing a national currency: antebellum payment networks and the structure of the national banking system

As reflected in the April 2006 issue of the Financial History Review, monetary historians remain divided over the central features of the US monetary union and their contribution to US economic development. In that issue – which focused on the monetary union formed by the Constitution and early federal monetary legislation – Ronald Michener and Robert E. Wright focused on the creation of a uniform unit of account defined in terms of specie. The establishment of a uniform unit of account ‘simplified domestic and international transactions’ compared with the colonial period when ‘[e]conomic calculations across regions were complicated by the fact that people had to reckon with different units of account, without the aid of electronic calculators’. By contrast, Richard Sylla emphasised the role the Bank of the United States played in reducing the costs and risks of clearing and settling interregional payments. An institution, like the Bank, that operated on a national scale was particularly important in the United States because of the limited geographical scope of state bank operations. The Bank's notes and deposits became a truly national monetary standard, and the Bank helped to maintain the value of state bank notes, the principal means of cash payment in the antebellum economy, by enforcing par redemption.