But more importantly, bank-created money has to be paper (or mere numbers on paper) because only then can money be created out of nothing. And thus only paper money can lead to real economic growth. Imagine an economy that uses only gold and silver, also known as “specie.” A bank in such an economy could lend no more than it received in deposits, and that bank would simply be a glorified mattress. It would actually reduce the amount of money in circulation. If the money supply depended on the total amount of gold and silver dug out of the ground, the money supply would not increase as rapidly as the amount of goods and services being produced. The price of goods would drop, and the price of loans would rise, disincentivizing investment in new production.
When banks create credit by lending out more money than they take in, a small store of value—deposits—gets multiplied into more. Through this miracle of leverage, wrote H. B. Trist in 1825, the newly established Bank of Louisiana had “thrown a great deal of money into circulation” by issuing $4 million in notes. The bank lent these notes to borrowers, who then made new investments, buying land, supplies, and slaves. “The price of negroes has risen considerably,” Trist noted. Borrowers were making calculations much like those of planter-entrepreneur Alonzo Walsh. In 1823, a Louisiana merchant offered him a five-year loan of $48,000 at 10 percent annual interest. For collateral, he’d mortgage what he called “from 90 to a 100 [sic] head of first rate slaves,” although some of those slaves would be bought with the money he’d borrow.33
Walsh thought he was being offered a good deal. With the work of these additional hands at Bayou Sara in Louisiana’s West Feliciana Parish, he could clear more fields, plant more cotton, and make the money to repay the loan with interest. The merchant, who could borrow the money from the B.U.S. at 6 percent, would make 10 percent from Walsh, yielding a tidy net profit. For the larger balance sheet of the United States, this was also a good deal—assuming that economic growth is always good. In this exchange, the creation of credit would accelerate the pace of economic activity by convincing economic actors to take risks and employ new resources. However, left to their own devices, banks sometimes made too many loans, disrupting prices and destroying confidence in the value of money. If people became convinced that a bank’s policies were irresponsible, the result could be a “run” on the bank, in which depositors and creditors cleaned out the bank’s reserves by demanding that it “redeem” its deflated paper with specie. Enough runs at one time would produce a panic in which all lenders demanded their money back from all banks and debtors, bringing the entire economy to a halt.34
Panic is what the B.U.S. had failed to prevent in 1819. Despite that, the Supreme Court’s famous McCullogh v. Maryland decision defended the bank from angry state legislatures, meaning that, like the Federal Reserve of more recent US history, the bank had the capacity to control the supply of money in the economy. To do so, it first established its own paper notes as a reliable currency. The B.U.S. backed its $50 million (as of 1830) in circulating notes with a massive pile of gold and silver in its vaults—typically half the value of its paper money, so that everyone would know that they could take a B.U.S. bank note to one of the B.U.S.’s twenty-five branches and receive a gold dollar in exchange. Consequently, no one ever did. In fact, merchants like slave trader Isaac Franklin often charged a premium for those Mississippi customers who paid with non-B.U.S. paper money. Believable credit gave the B.U.S. great power to stimulate the economy by lending money. In an 1832 letter, for example, Franklin wrote, “The US Bank and the Planters Bank at this place has thrown a large amt of cash into circulation and the price of cotton has advanced a shade.” Cotton buyers felt more comfortable bidding higher for the bales that planters brought to market, and prosperity reigned.35
At the same time, the B.U.S. made certain that growth was steady and safe by forcing state-chartered banks to keep a “fractional reserve” of gold or B.U.S. notes in their vaults. In the course of business, the B.U.S. regularly acquired huge stacks of bank notes issued by other banks. Then officers “presented” this paper to other institutions for “redemption.” When Isaac Franklin deposited $5,025 of Planters’ Bank of Mississippi notes at the Natchez branch of the B.U.S., the bank sent the notes to the Planters’ Bank and demanded that it pay $5,025 in specie or B.U.S. This process forced smaller banks to restrain their printing and lending of money, which in turn made their bills more reliable. In 1829, for instance, bank bills from North Carolina were trading at a discount of 3.25 percent, even in far-off Baltimore. One could use a $1 bill issued by the Bank of Cape Fear, which funded Tyre Glen’s slave-trading expeditions to Alabama, to buy 96 cents’ worth of flour, cotton, or person in Baltimore—it was not a perfect “at par” currency, but far more reliable than paper money had been during the Panic of 1819. More broadly, the confidence instilled by the B.U.S. meant that European lenders were willing to inject their capital into American merchant firms, which in turn ensured that each year’s cotton harvest could move smoothly from southwestern fields to the New Orleans levee to Liverpool-bound ships and finally to Manchester mills.36
Yet despite all of Biddle’s success in creating an environment conducive to unprecedented steady growth, hostility to the bank was endemic. Many Americans believed that the bank’s power was fundamentally at odds with democratic rule, and not just because it allegedly interfered in elections. The B.U.S. was the banker for the federal government: holding its deposits, handling every penny of Washington’s $17.5 million budget. Yet the B.U.S. was also a private corporation whose 4,000 stockholders reaped profits from every financial exchange the bank carried out for Washington. And yet Biddle insisted that all of the bank’s operations were exempt from the scrutiny of the people’s elected representatives, writing that “no officer of the Government, from the President downwards, has the least right, the least authority,” to interfere “in the concerns of the Bank.”37
Then there was the complaint that the B.U.S., which made 20 percent of all the bank loans in the country in the 1820s, chose winners and losers in the economy. For instance, on Tuesday, March 22, 1831, Natchez planter Francis Surget borrowed $9,000 in short-term credit from the local branch of the national bank, which he used to pay creditors, such as cotton broker Alvarez Fisk. What distinguished Surget from aspiring planters out in the Mississippi hinterland was his established wealth and his connections. In 1830, he owned ninety-five slaves, placing him in the top 1 percent of wealth in the United States. Surget was also atypical because he was related by marriage to Stephen Duncan, the power broker whose control over the Mississippi Planters’ Bank and its pipeline of B.U.S. credit, via the national bank’s Natchez branch, made Duncan the center of that state’s most powerful financial and political circle. A state bank could be an ATM machine for those connected to its directors, and by 1850, Surget had borrowed and bought enough to increase his slaveholdings to over 2,200.
Yet the Duncan clique of insiders shut out other entrepreneurs. The Planters’ Bank did not open branches outside the state’s original settlement nucleus near Natchez, leaving planters settling in newly opened areas without access to bank capital. True, during Jackson’s first term, Biddle amplified the national bank’s lending dramatically, especially via the New Orleans and Natchez branches. By the time 1832 began, at least a third of all B.U.S. capital had been allocated to merchants, planters, and local banks in the southwestern states. If the bank wanted to increase its value to the major actors in the American economy, the new cotton empire where much of its dynamic activity was located was the place to concentrate B.U.S. efforts. But of all the 70,000 white people in Mississippi, only a few dozen received large B.U.S. loans. Therefore, despite the flood of credit poured into the cotton frontier, many of its aspiring entrepreneurs still disliked the B.U.S.—not because it made paper money, but because it did not make even more, and give it to them.38
The B.U.S. and its unelected cliques blocked the desires of less well-connected southwestern planters and merchants, leaving would-b
e speculators feeling as if they were treated as inferiors. And other simmering energies also led entrepreneurs to dislike the B.U.S. precisely because it prevented runaway speculation. The desire for risk, speculation, and boom drips from letters like this one to Tennessee Congressman James K. Polk: “A. C. Hays, H. M. Walker, Duncan & Dr. McGimsey have all returned from a visit to Miss. and all have cotton making fever the most imaginable. . . . Tis rumored that L. H. Duncan & Dr. McGimsey have made stipulations for Cotton farms. Our friend Hays is in perfect ecstasy.” Hays told another friend that “hands can make $500 each”—per year, which was ecstatic, fevered thinking indeed. Cotton would have to rise to 20 cents a pound and stay there, and the “hands” would have to make more of it than ever before. Enslavers wanted to experience again the surge that had reshaped the southwestern cotton market during the 1815–1819 expansion, but this time they wanted it more so. They desired risk more than ever. And to take the full measure of the volatility that characterized the slave frontier in the early 1830s, one must examine another layer of impulses and desires.39
JUMP FORWARD A FEW years. Pick through what sprouted from the fields cleared and seeds planted in the 1830s to find one obscure exchange that took place a few years after Andrew Jackson took on the Bank. Begin with a picture: Here’s a man, a white man. He’s sitting in his office in Louisville, Kentucky, close by the Ohio River. A folded letter has just been thrust into his hands. Looking up, William Cotton’s eyes run over the white man who has just handed him the square of paper. Then they fall—and stick—on the woman next to the man. She is not hard on the eyes. Fine dress can’t hide her figure, or the bonnet, the spill of tight brown curls over pillow-soft tan skin. Her child faces away as Cotton peers over the edge of the desk and down at the rich man’s doings. A toddler, gender indeterminate from here. Cotton sees silky hair, black like that of the child’s white father.
“It’s for you,” says Douglass. Cotton exhales as he breaks the seal, realizing now that he’s been holding his breath. Unfolding, the merchant tilts the paper to catch August light spilling through the open window into the office. “This will be handed you by M. Douglass, who will deliver you Mr. Isaac Franklin’s Girl Lucindy & child, to be left with you until you hear from him.”
This letter told an old story. “Our friend”—meaning Isaac Franklin, until the mid-1830s one of the nation’s greatest slave traders—had now, in 1839, “married a very pretty & highly accomplished young Girl.” Some rich slave owner’s white daughter. So, Mr. Cotton, please “assist in making all things easy. . . . [T]he tale must not get out on the Old Man.” Douglass’s eyebrows raise as Cotton’s eyes glance up sharply at him, but Cotton silently returns to his instructions. Do what you want with her. But say nothing to Douglass, or to the boy as he grows. Keep him and Lucindy out of the way of Franklin’s new bride and her wealthy Tennessee family. And don’t send Douglass back with a bill for feeding the two. The young woman herself was “the means to pay with.”40
Cotton had been chosen because he was “a smooth hand at Cuff,” as Franklin’s business partner, Rice Ballard, put it. “Cuffy” came from a common West African name that had become a generic and derisive term for black men in eighteenth-century America. Some slave traders used it to describe slaves as a commodity. In an 1834 letter to Ballard, for example, Isaac Franklin wrote: “The price of Cuffy comes on . . . they are very high through all the country.” The “smooth hand” was the skill of wielding of power over the bodies, lives, and legal persons of enslaved people—a highly developed right-handedness that ruthlessly extracted maximum value. A smooth hand could always extort submission: fear, hope of reunion with someone stolen, hunger, promises of kindness or of a patient forced prostitution rather than a brutal rape—each body had its price.41
Slavery permitted unchecked dominance and promised unlimited fulfillment of unrestrained desire. That made the behavior of entrepreneurs particularly volatile, risky, profitable, and disastrous. Then, in the 1830s, as white people, especially men, tried to build southwestern empires out of credit and enslaved human beings, they sought out more and more risk. This behavior planted the seeds for a cycle of boom and bust that would shape the course of American history, and one cannot understand it without studying both careful calculation and passionate craving. Although modern economics often assures itself it is a science, assuming that people are perfectly rational actors who choose their actions based on a clear, even quantifiable understanding of their own economic self-interest, that assumption is false. People rarely have sufficient information to measure the consequences of one act or another. More to the point when planters talk about “fever” and “ecstasy”: pure rationality does not always drive people’s actions, even—and sometimes especially—their “economic” ones.
This is what the great British economist John Maynard Keynes was trying to explain to his readers when he wrote that “animal spirits”—emotions and desires—drive the ebbing and flowing financial tides. More recently, behavioral economists who run experiments on human test subjects have demonstrated seemingly hardwired connections between sexual desire and risk-taking decisions about buying and selling. When researchers expose men to images of attractive, presumably available women, their propensity to take financial risks increases dramatically. (When women see pictures of attractive men, they tend to use strategies to present themselves as selfless caretakers.) But whether it is evolutionary biology or something else that makes males more financially aggressive when their brains are “primed” by imagery of supposedly sexually available women, financial risk-taking and the sexualized commodification of enslaved women were, by the 1830s, in the minds and in the behavior of white entrepreneurs, tangled in a mutual-amplification relationship.42
Of course, Rachel could’ve predicted, from her perspective up on the auction block at Maspero’s in 1819, that the legal right to rape one’s human property would shape not only purchases of slaves but the broader behavior of entrepreneurs in the southwestern markets. For from the beginning of slavery in the Americas, if not before, white men had believed that when it came to enslaved women, purchase promised reward. Male enslavers justified themselves by saying that African-American women were more sexual, less moral, less beautiful, less delicate. Such claims allegedly excused rape, the rejection of children, the sale of lovers, and the practice of forcing black women to labor in jobs for which white women were ostensibly too delicate.
Thomas Jefferson admitted that unchecked power twisted white men’s characters: “The man must be a prodigy who can retain his manners and morals undepraved by such circumstances.” We don’t know whether Jefferson thought his morals depraved when he fathered his first child with an enslaved teenager named Sally Hemings. And we can imagine reasons for his desire. Perhaps she looked something like his dead wife, who was, after all, Sally’s half-sister. Jefferson left no words about his transactions with Hemings. But a document from another white man raised in the slave colonies of the eighteenth-century British Empire reveals more openly the intimate connections between white men’s sexual and financial desires.43
In the 1790s, Bryan Edwards, a Jamaican planter who wrote a four-volume history of the West Indies, published something that seemingly didn’t fit with his usual fare of trade laws and sugar statistics. This was a ribald poem about the “Sable Venus,” an allegory depicting the slave trade as a nude black woman riding a shell pulled from Angola by harnessed fish. The woodcut on the facing page revealed that she wore as little clothing as Botticelli’s goddess, but the Sable Venus was dark and voluptuous instead of pale and potbellied. And when she entered Kingston harbor, “wild rapture seized the ravish’d land” of Jamaica. Planters crowded the docks in a “scramble” as they did when they tried to grab the strongest sugarcane workers, but this was a stampede to worship at the throne of a goddess of love. The white men of Jamaica, “all, adoring thee . . . one deity[,] confess” that their fetish was this goddess who traveled the Middle Passage. Her skin was not the white of E
nglish poetry, but Edwards noted with a wink that there was “no difference—not at night.” And he rhapsodized about pursuing the ideal Sable Venus through a sequence of names as stereotypically West African as “Cuffy”: “Do thou in gentle Phibba smile / In artful Benneba beguile / In wanton Mimba pout / In sprightly Cooba’s eyes look gay? / Or grave in sober Quasheba / I still shall find thee out.”44
Edwards has pulled a sneaky move. He pretends that the Sable Venus is in charge of the planters, echoing the literary lover’s plaint: I have lost control, I am exquisitely captive to the one I desire. Of course, his depiction of the Sable Venus as a goddess who lures white men into sexual bondage is nonsense. The poem is about buying slaves. Edwards was not ruled by Quasheba, Cooba, or Mimba. He could buy each of them. Or all. After purchase, taking, consuming, could replace longing.
Modern consumers who lust for Apple products or other fetishized commodities should be familiar with lies to the self. Likewise, researchers who analyze the psychologies of gambling addicts note the sense of omnipotence that a successful play generates: the universe seems to have abandoned the law of chance and submitted to the rule of the gambler. When Edwards or Jefferson chased the Sable Venus, they always played successfully. They took no risk. She couldn’t reject them. Outside of poetry, women did sometimes fight back. But in eighteenth-century slavery, the dice were loaded, and most enslaved women ultimately found it vital to go along. Look at the long record of successful rapes, intimidations, and transactions left by a contemporary of Edwards, Thomas Thistlewood. The manager of a wealthy man’s Jamaican plantation, Thistlewood recorded the names of 109 enslaved women with whom he coupled over thirteen years. He focused on teenage girls, not grown women, and on isolated, recently imported Africans, rather than the Jamaican-born. Sometimes he had sex publicly, in front of other enslaved people, demonstrating his dominance over all of them. Nor was he unusual. Sexual opportunity was one of the factors that drew white men to Jamaica.45
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