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Published online by Cambridge University Press: 03 March 2009
Langdon Cheves's role as president of the Second Bank of the United States (1819–1822) warrants reassessment. First, he did not save the bank from threatened failure, since it was, in truth, already sound. Second, he was irresponsible in accumulating huge excess reserves during the depression year of 1820; reserves estimated here as sufficient to support an increase of up to 17 percent in the volume of notes and deposits in the U.S. money supply.
1 Catterall, Ralph, The Second Bank of the United States (Chicago, 1903),Google Scholar and Hammond, Bray, Banks and Politics in America: From the Revolution to the Civil War (Princeton, 1957). Most textbooks currently give a favorable view of Cheves.Google Scholar
2 House of Representatives, “Report on the Bank of the United States,” 15 Cong., 2 Ses. (January 16, 1819), in American State Papers: Finance (Washington, D.C., 1834), III, pp. 306–15.Google Scholar
3 Gouge, William, A Short History of Paper Money and Banking in the United States (Philadelphia, 1833), II, p. 110.Google Scholar
4 Catterall, Second Bank, p. 82.Google Scholar
5 Hammond, Banks and Politics, pp. 239, 276.Google Scholar
6 Timberlake, Richard Jr, The Origins of Central Banking in the United States (Cambridge, Massachusetts, 1978), pp. 12–26.Google Scholar
7 North, Douglass, The Economic Growth of the United States, 1790–1860 (New York, 1961), pp. 182–88,Google Scholar and Rothbard, Murray, The Panic of 1819: Reactions and Politics (New York, 1962), pp.1–23. Rothbard does not focus extensively on the origins of the panic, but rather on its consequences.Google Scholar
8 Cheves, Langdon, “Exposition of the President of the Bank to Stockholders,” published in Niles Weekly Register, 23 (10 12, 1822), 89–96.Google Scholar
9 The story is repeated in a recent biography; see Huff, Archie Jr, Langdon Cheves of South Carolina (Columbia, South Carolina, 1977), pp. 96–127.Google Scholar
10 Catterall, Second Bank, p. 503.Google Scholar
11 Ibid.
12 Cheves, “Exposition.”Google Scholar
13 Ibid.
14 Ibid.
15 For monthly reports on the bank's financial condition, see U. S. Senate, Document 17, 23 Cong., 1 Ses. (Washington, D.C., 1835), pp. 206–09.Google Scholar
16 Friedman, Milton and Schwartz, Anna J., A Monetary History of the United States, 1867–1960 (Princeton, 1963), pp. 299–419.Google Scholar
17 Fritz Redlich was probably the first historian to attempt to expose the myth of Cheves's heroics; see his Molding of American Banking (Rev. ed., New York, 1968), I, pp. 106–10. Unfortunately, this volume has not been widely circulated among historians, and his revisionist assessment has not worked its way into standard accounts of this period.Google Scholar
