Privately Issued Money in the United States

  • Matthew JaremskiEmail author
Reference work entry


In recent years, there has been a revival of privately issued money. Due to the general lack of successful or even widely circulating private currency, it can be challenging to get a clear view of its efficiency using modern data. The U.S. historical period, however, offers a unique environment to examine the topic as private bank money made up a sizable portion of the money supply. Moreover, the period presents a wide range of regulation, including spans with and without the presence of a central bank or monetary authority. This chapter begins by highlighting the general history of privately issued money in the United States from 1790 through its elimination in the 1930s. Topics include the rise of state bank notes, the switch to national bank notes, clearinghouse currency, the Aldrich-Vreeland emergency currency associations, and the decline of private currency. It then examines open topics in the literature and provides suggestions for study going forward.


Private currency Banks Bank notes Clearinghouses Financial regulation 


  1. Ales L, Carapella F, Maziero P, Weber WE (2008) A model of banknote discounts. J Econ Theory 142:5–27CrossRefGoogle Scholar
  2. Andrew AP (1908) Hoarding in the panic of 1907. Q J Econ 22:290–299CrossRefGoogle Scholar
  3. Bodenhorn H (1998) Quis Custodiet Ipsos Custodes? East Econ J 24:7–24Google Scholar
  4. Bodenhorn H (2003) State Banking in Early America: A new economic history. Oxford University Press, New YorkGoogle Scholar
  5. Bodenhorn H, Haupert M (1995) Was there a note issue conundrum in the free banking era? J Money Credit Bank 27:702–712CrossRefGoogle Scholar
  6. Bodenhorn H, Haupert M (1996) The note issue paradox in the free banking era. J Econ Hist 56:687–693CrossRefGoogle Scholar
  7. Cagan P (1963) The first fifty years of the national banking system: an historical appraisal. In: Carson D (ed) Banking and monetary studies. Richard D. Irwin, Homewood, pp 15–42Google Scholar
  8. Cagan P (1965) Determinants and effects of changes in the stock of money. Columbia University Press, New York, pp 1875–1970Google Scholar
  9. Cagan P, Schwartz AJ (1991) The national bank note puzzle reinterpreted. J Money, Credit, Bank 23:293–307CrossRefGoogle Scholar
  10. Calomiris C, Mason JR (2008) Resolving the puzzle of the underissuance of national bank notes. Explor Econ Hist 45:327–355CrossRefGoogle Scholar
  11. Calomiris C, Schweikart L (1991) The panic of 1857: origins, transmission, and containment. J Econ Hist 51:807–834CrossRefGoogle Scholar
  12. Cannon J (1900) Clearing houses–their history, methods, and administration. D. Appleton and Company, New YorkGoogle Scholar
  13. Champ B, Thomson JB (2006) National bank notes and silver certificates. Federal Reserve Bank of Cleveland Working Paper WP06–22Google Scholar
  14. Champ B, Wallace N, Weber WE (1992) Resolving the national bank note paradox. Q Rev Fed Reserve Bank Minn 16:13–21Google Scholar
  15. Dillistin WH (1949) Bank Note Reporters and Counterfeit Detectors, 1826–1866. Numismatic Notes and Monographs, no. 114. New York: American Numismatic SocGoogle Scholar
  16. Duggar JW, Rost R (1969) National bank note redemption and treasury cash. J Econ Hist 29:512–520CrossRefGoogle Scholar
  17. Friedman M, Schwartz AJ (1963) A Monetary History of the United States. Princeton University Press, PrincetonGoogle Scholar
  18. Gibbons J (1859) The banks of New York, their dealers, the clearinghouses, and the panic of 1857. D. Appleton and Company, New YorkGoogle Scholar
  19. Gorton G (1985) Clearinghouses and the origin of central banking in the United States. J Econ Hist 45:277–283CrossRefGoogle Scholar
  20. Gorton G (1989) An introduction to Van Court’s Bank note reporter and counterfeit detector. Unpublished manuscript, The Wharton School, University of PennsylvaniaGoogle Scholar
  21. Gorton G (1996) Reputation formation in early Bank note markets. J Polit Econ 104:346–397CrossRefGoogle Scholar
  22. Gorton G (1999) Pricing free Bank notes. J Monet Econ 44:33–64CrossRefGoogle Scholar
  23. Gorton G, Mullineaux D (1987) The joint production of confidence: Endogeneous regulation and nineteenth century commercial-Bank clearinghouses. J Money, Credit, Bank 19:457–468CrossRefGoogle Scholar
  24. Gorton G, Weber WE (2011) Quoted discounts on state bank note discounts in Philadelphia, 1832–1858. Research Department, Federal Reserve Bank of Minneapolis.
  25. Hammond B (1957) Banks and politics in America: from the revolution to the civil war. Princeton University Press, PrincetonGoogle Scholar
  26. Hepburn A (1924) History of Coinage and Currency in the United State and the Perennial Contest for Sound Money. New York: MacmillanGoogle Scholar
  27. Hoag C (2016) Clearinghouse loan certificates as interbank loans in the United States, 1860–1913. Financial History Review 23(3):303–324CrossRefGoogle Scholar
  28. Jacobson M, Tallman E (2015) Liquidity provision during the crisis of 1914: private and public sources. J Financ Stab 17:22–34CrossRefGoogle Scholar
  29. James J (1978) The conundrum of the low issue of national bank notes. J Polit Econ 84:359–367CrossRefGoogle Scholar
  30. Jaremski M (2010) Free Bank failures: risky bonds vs. undiversified portfolios. J Money, Credit, Bank 42:1565–1587CrossRefGoogle Scholar
  31. Jaremski M (2011) Bank-specific default risk in the pricing of Bank note discounts. J Econ Hist 71:950–975CrossRefGoogle Scholar
  32. Jaremski M (2013) State banks and the National Banking Acts: measuring the response to increased financial regulation, 1860–1870. J Money, Credit, Bank 45:379–399CrossRefGoogle Scholar
  33. Jaremski M (2014) National Banking's role in U.S. industrialization, 1850–1900. J Econ Hist 74:109–140CrossRefGoogle Scholar
  34. Jaremski M (2015) Clearinghouses as credit regulators before the fed? J Financ Stab 17:10–21CrossRefGoogle Scholar
  35. Jaremski M (2016) The (dis)advantages of clearinghouses before the fed. Unpublished working paperGoogle Scholar
  36. Jaremski M, Rousseau P (2013) Banks, free banks, and economic growth. Econ Inq 51:1603–1621CrossRefGoogle Scholar
  37. King R (1983) On the economics of private money. J Monet Econ 12:127–158CrossRefGoogle Scholar
  38. Mitchener KJ, Jaremski M (2015) The Evolution of Bank Supervisory Institutions: Evidence from American States. J Econ Hist 75:819–859Google Scholar
  39. Mihm S (2007) A nation of counterfeiters: Capitalists, Con Men and the Making of The United States. Harvard University Press, CambridgeCrossRefGoogle Scholar
  40. Miron JA (1986) Financial panics, the seasonality of the nominal interest rate, and the founding of the fed. Am Econ Rev 76:125–140Google Scholar
  41. Moen J, Tallman E (2000) Clearinghouse membership and deposit contraction during the panic of 1907. J Econ Hist 60:145–163CrossRefGoogle Scholar
  42. Rockoff H (1972) The free banking era: a reexamination. Dissertations in American history (rev. Ph.D. diss., University of Chicago). New York; Arno PressGoogle Scholar
  43. Rockoff H (1974) The free banking era: a reexamination. J Money, Credit, Bank 6:141–167CrossRefGoogle Scholar
  44. Rolnick AJ, Weber W (1988) Explaining the demand for free Bank notes. J Monet Econ 21:47–71CrossRefGoogle Scholar
  45. Rousseau PL, Sylla R (2005) Emerging financial markets and early US growth. Explor Econ Hist 42:1–26CrossRefGoogle Scholar
  46. Selgin G (2000) The suppression of state banknotes: a reconsideration. Econ Inq 38:600–615CrossRefGoogle Scholar
  47. Silber WL (2007) When Washington shut down wall street: the great financial crisis of 1914 and the origins of America’s monetary supremacy. Princeton University Press, PrincetonCrossRefGoogle Scholar
  48. Sprague OMW (1910) History of crises under the National Banking System. Senate Document 538, 61st Congress, 2d Session, National Monetary Commission, Washington, DCGoogle Scholar
  49. Timberlake R (1984) The Central Banking Role of Clearinghouse Associations. J Money Credit Bank 16:1–15Google Scholar
  50. Wallace N, Zhu T (2007) Float on a note. J Monet Econ 54:229–246CrossRefGoogle Scholar
  51. Weber W (2008) Balance sheets for U.S. Antebellum State Banks. Research Department, Federal Reserve Bank of Minneapolis.
  52. Weber, Warren E (2011) Quoted discounts on state Bank notes in New York, Cincinnati, and Cleveland, selected dates, 18271858. Research Department, Federal Reserve Bank of Minneapolis.
  53. Wicker E (2000) Banking panics of the gilded age. Cambridge University Press, CambridgeCrossRefGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2020

Authors and Affiliations

  1. 1.Colgate UniversityNew YorkUSA
  2. 2.National Bureau of Economic Research (NBER)CambridgeUSA

Personalised recommendations