Wednesday, September 3, 2008

New Work on the Panic of 1819

So I've been inspired by my brother's lit-review style blog posts to publicize some new research on a seemingly trivial topic that actually has quite a bit of importance in the field of economics: the panic of 1819.

1819 is memorialized by economic historians as the first modern boom-bust cycle experienced in America. Unlike previous depressions, which were clearly attributable to events such as wartime blockades or specific disastrous policy decisions, 1819 seemed to come out of nowhere - a confluence of causes that did not emerge from a single source. This "natural" emergence of crisis was a rude awakening for Americans (who always like to hold someone accountable for problems... we're too damn optimistic to accept the idea that life just sucks sometimes), and it marked the beginning of a new era of economic volatility and state management of the national economy.

For a long time, the panic of 1819 was realtively neglected. It was actually the Austrian School of economics that first brought substantial attention to 1819. Murray Rothbard's book "The Panic of 1819" is probably the most important book written on the crisis, and it is conveniently provided in it's entirety as a pdf by the Ludwig von Mises Institute, an excellent scholarly community based in Auburn, Alabama, and dedicated to the propogation of Austrian economics. Rothbard takes a unique, and thoroughly Austrian approach to 1819: his investigation is primarily concerned with the policy reactions to the crisis, rather than the causes of the crisis itself. From what I've read of the preface and conclusion, Rothbard is quite even handed with the monetary expansionists who clamored for the suspension of specie payment in the early 1820s. Nevertheless, it's clear that he sides with then President Monroe, who resisted the expansionist pressure and relied on tight monetary policy.

A new and long-awaited book on the panic of 1819 has been published by Dr. Clyde Haulman, professor and former chair in the economics department at the College of William and Mary. Haulman's book, "Virginia and the Panic of 1819", emphasizes the origins of the crisis, with particular emphasis on Virginia. He highlights two factors that make Virginia's experience: (1.) the agricultural boom the state experienced as a result of the strong demand for food following the Napoleonic Wars, and (2.) the pivotal role that Virginia played in early westward expansion, and the land speculation that came with it. High commodity prices and land speculation created a formidable bubble that hit the Commonwealth hard when it popped in 1819.

One last note on Virginia and westward expansion. I think this is a facet of American history that few people know about but that is very very important. Did you know, for example, that Abraham Lincoln was born in Kentucky, and not Illinois? And that Lincoln's father was not born in Kentucky - he was a Virginian in the early 1800's? Can you imagine how history would have been different if Lincoln's father had stayed in Virginia - if Lincoln was a partisan for the Old Dominion? In her book, "Dominion of Memories: Jefferson, Madison, and the Decline of Virginia", Susan Dunn emphasizes this period as a huge "brain drain" on the Commonwealth. As elder statesmen such as Monroe and Madison resisted reform into the 1820s and 1830s, Virginia's best and brightest struck out for Kentucky and the Ohio country, leaving the Commonwealth in the hands of less qualified statesmen. It took a huge toll on the Virginian polity and economy.

Vernon Parington's monumental work "Main Currents in American Thought" puts a slightly rosier spin on this development. He calls Virginia "the mother of the agrarian West" (read: "the mother of the reformers and populists of what we now call the Midwest"). He also speaks of the "Virginia Renaissance", but acknowledges the slip from what he calls "middle class ideals" to "plantation ideals" during this period. Nevertheless, Parington is far more severe with South Carolina; he contrasts "Virginia humanitarianism" in the Virginia expansion into the Ohio country with "Carolina imperialism" and South Carolinians' expansion into Mississippi, Alabama, etc.

Now that I've used two paragraphs to diverge from the panic of 1819, I think it's time to end this post. Suffice it to say that westward expansion was going on long before cowboys and gold miners - and Virginia played a huge role in this process. In doing so, it reshaped itself (probably for the worse), and reshaped the nation (probably for the better). Congratulations on your new book Clyde! I've been waiting for this since I heard you were working on it my sophomore year!


Evan said...

That's exciting that the book is finally coming out. I mentioned it and the publisher to our head of Collection Development, as I had never heard of Pickering & Chatto before. Maybe we'll get the book for the library.

dkuehn said...

It's REALLY freaking expensive though... 100 bucks for a 100 page book. I would have bought it if it wasn't so expensive - oh well. Maybe I'll check it out one day.