Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • February 2016
  • Case
  • HBS Case Collection

Banking and Politics in Antebellum New York

By: David Moss and Colin Donovan
  • Format:Print
  • | Language:English
  • | Pages:30
ShareBar

Abstract

After a long period of solid Democratic control, Whigs secured a majority of seats in the New York State Assembly in 1837, the same year that a major financial panic had crippled the banking system and shaken public confidence in the state's governance. The next year, Whigs proposed a radical new system of “free banking,” in which special charters would no longer need to be obtained from the legislature for a bank to commence operations. Critics of the old chartering system, which required legislative approval of every new bank, charged that it was an inefficient and crooked process that delivered banking monopolies to the powerful and rewarded politicians with kickbacks. This view, shared by many voters, was supported by widespread corruption allegations, the occasional fraud trials, and the connection of the chartering system with the Democratic bloc known as the Albany Regency.
Skeptics, including Governor Marcy, a member of the crumbling Albany Regency, had reservations about displacing the chartering mechanism. Marcy's Democrats had long relied on their capacity to grant special bank charters as a bulwark of party strength and discipline. From a policy standpoint, the governor had long stated his belief that all banks that created money by issuing banknotes should be required to obtain government charters, and he had expressed apprehension about chartering any new banks during the financial chaos of the late 1830s. A rush of new banks was likely to be unleashed if the free banking bill became law. Would this stabilize or further destabilize the state's banking system? The decision facing Governor Marcy was not easy: he could quell public ire by signing the Whigs' bill into law, or he could veto the legislation and seek a less extreme response to the crisis.

Keywords

Governance; Central Banking; Ethics; Laws and Statutes; Business and Government Relations; Government and Politics; History; New York (state, US)

Citation

Moss, David, and Colin Donovan. "Banking and Politics in Antebellum New York." Harvard Business School Case 716-050, February 2016.
  • Educators

About The Author

David A. Moss

Business, Government and the International Economy
→More Publications

More from the Authors

    • 2020
    • Faculty Research

    The U.S. Secession Crisis as a Breakdown of Democracy

    By: David Moss and Dean Grodzins
    • 2017
    • Faculty Research

    Democracy: A Case Study

    By: David Moss
    • February 2016 (Revised July 2017)
    • Faculty Research

    An Australian Ballot for California?

    By: David Moss, Marc Campasano and Dean Grodzins
More from the Authors
  • The U.S. Secession Crisis as a Breakdown of Democracy By: David Moss and Dean Grodzins
  • Democracy: A Case Study By: David Moss
  • An Australian Ballot for California? By: David Moss, Marc Campasano and Dean Grodzins
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College