Roy Kreitner recently published an interesting article about the perceptions of banks in 19th century United States. Published in an on-line magazine titled Common Place, he sets out to explain why banks were seen as the great corrupters of society in the Antebellum United States.
Kreitner explained that banks were not used as the safe haven for individual savings in the 1800s. “Antebellum banking in America was not, in fact, based on the numerous deposits of dispersed individuals,” he wrote. In quick summary, Kreitner suggested that banks were seen as evil because they promoted a sense of instant gratification. Credit was perceived as evil, a mechanism that allowed men to avoid hard work and still obtain the luxuries in life. As one historian described it, “patient accumulation was condemned.” Bank credit allowed individuals to invest in the dreams of the future. In other words, obtain something (bank loans) for nothing that will hopefully become something in the future. Many ambitious Americans did not agree that investing in the future was truly a weak investment at best. It was speculation of the worst kind, but a speculation that was rampant throughout society.
It is no wonder banks were perceived as institutions that corrupted and destroyed the moral fabric of society. These were organizations that promised easy returns on high risk investments in a society that could not afford failure in high risk times.
Kreitner writes an interesting article that warrants close examination.