Thursday, October 16, 2008

Jim Grant on Old Hickory

"The bank run might just be the oldest form of aerobic exercise in America. Panicked depositors have queued up at irregular intervals outside the closed doors of wounded financial institutions since the earliest days of the Republic. ... The novelty, rather, is that the federal government proposes to paper over Wall Street's losses with so many dollar bills, including not a few printed specially for the occasion. ... President Andrew Jackson, the dominant figure of the era--specifically the years spanning 1815 to 1848--would have disapproved of the $700 billion Paulson plan. In fact, he would have disapproved of the Federal Reserve, not just its policies but its existence. ... There was, as yet, no Fed, but a forerunner of that institution, the Second Bank of the United States, did a profitable business out of its Greek Revival headquarters on Chestnut Street in Philadelphia. It was much too profitable, Jackson judged. ... This was in 1832, an election year, and the presidential contest turned into a referendum over the constitutionality, equity and efficacy of that one financial institution. ... And who could imagine, today, a president slaying the mortgage monsters on the basis of constitutional principle, letting the macroeconomic chips fall where they lay? Yet Jackson took exactly that course of action in killing the bank bill. ... Jackson was mocked by his political enemies as a frontier illiterate. But it was no illiterate who wrote in the same veto message: 'There are no necessary evils in government. Its evils exist only in its abuses. It it would confine itself to equal protection, and, as Heaven does its rains, shower its favors alike on the high and the low, the rich and the poor, it would be an unqualified blessing'," James Grant reviewing Waking Giant at the WSJ, 27 September 2008.

Old Hickory (OH) would have more than "disappoved". He would have dispatched the Wall Street-Washington DC mob with his sword. Literally! I quoted Jackson's 1832 bank veto message at: I became a Jackson fan in fifth grade. Our teacher had us select one from a list of books to write about. I chose Arthur Schlesinger's The Age of Jackson, 1945, because it won 1946's Pulitzer Prize. My teacher was not pleased with my report. Why? Because, unlike her, I did not see OH as an untutored ignoramus, but 1832's people's warrior against the "malefactors of great wealth". Wall Street and Washington would be knee deep in blood when OH was done. The Age of Jackson is a pretty good read. Another book worth reading is: R.V. Remini's Andrew Jackson and the Bank War, 1967.

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