Central Monetary Services Without Centralization: Stephen Colwell and the Political Economy of Nineteenth-Century US Monetary Architecture Free

In the 1830s and 1840s, the United States repudiated its national bank and established the so-called Independent Treasury, which dissociated federal fiscal operations from state-chartered banks of issue and seemingly relinquished any federal role in managing the currency. Basic questions about the monetary system's stability, quantitative sufficiency, and geographic scope persisted for the rest of the century and into the next. This article examines the work of Stephen Colwell, an industrialist and political economist, whose Ways and Means of Payment (1859) represents one of the nineteenth century's most comprehensive and theoretically sophisticated works of monetary analysis by an American. Colwell's investigations led him to endorse a government-issued paper money and a national clearinghouse to facilitate domestic trade, with the ultimate aim of promoting national economic development. His recommendations anticipated key features of the Federal Reserve System that was created in 1913. This article reconstructs Colwell's monetary theory in its historical context as a case study of how American political economists and policymakers thought about the relationships between monetary architecture, the state, and economic development in the formative period of American economic ascent.