Today's Reading

In the United States, the pursuit of profit was woven into the founding fabric, not as explicitly as the pursuit of happiness but there all the same. The Jeffersonian ideal was a nation of yeoman farmers guarding their freedoms and independence, but it was Alexander Hamilton's financial system that ultimately defined the economy. Following the Revolutionary War and then the War of 1812, which sealed American independence, the United States began its ascent to become the world's largest economy within little more than a century. How that happened has been a source of constant debate. Perhaps it was a function of a vastly fruitful continent, the lack of regional competition, the protection afforded by two oceans, the influx of immigrants who brought their own dreams and ambitions and then inscribed those on a new nation, or none of those or all of them. But perhaps the key lies in one of Alexis de Tocqueville's many piercing observations: "I know of no other country where love of money has such a grip on men's hearts."

One of the prerequisites for rapid economic growth is capital. Land, property and labor are all vital, but none are liquid. For much of human history, wealth locked up in land and property was rarely turned into productive capital to fund businesses or ideas. That began to change in the nineteenth century, and the United States was ground zero for the shift. Money, especially in the form of paper promises, was a fuel. In the United States, making money and putting it in motion came easily, often too easily. Money flooded markets, and then receded. It unlocked potential, and then unleashed havoc. Unburdened by an entrenched aristocracy of land or church, and with the Jeffersonian ideal of yeoman farmers shunted aside in favor of a Hamiltonian economy, nineteenth-century America became a land of money.

Until the Civil War, it wasn't federal money. There were coins minted by the federal government, but those floated in a sea of paper promises issued by different banks and merchant firms such as Brown Brothers. Coins mattered, but paper was everywhere. It was a bewildering mix, kaleidoscopic and constantly changing. There is always a tension between order and chaos, and it is hard to find the right balance between just enough chaos to nurture innovation and enough order to keep everything from unwinding. Hence the sharp and constant economic crises of the nineteenth century. But that roiling, unsettling and harmful though it could be, was outweighed by the advantages. If you had a good idea in America, you had a better chance than anywhere in the world of finding money to fund it. Capital rarely flowed evenly; the 1870s and 1880s were flush with capital for the railroads but not so much for the working class or the farmers. Throughout the nineteenth century, there was paper money and credit, but there was also gold and silver, land and labor. The United States was fluid compared with the Old World, but it was easier to lose a fortune or never make one than to ascend the heights.

Brown Brothers acted as a conduit. From early in the nineteenth century, it became one of the primary channels through which money flowed. And flow it did, to merchants and their ships, to cotton plantations and to railroads and new farms and new towns and new businesses in the sprawling vastness of the continent. Brown Brothers facilitated that trade, first between Liverpool and Baltimore, and then once off-loaded by stevedores onto wagons, from Baltimore to the Ohio Valley. It funded, with offices in England and the Americas, successive generations of ocean-crossing vessels, some of which it owned outright, and for a brief moment, the house had a monopoly on the shipment of the Royal Mail from England to the United States. The Browns spurred the birth of transatlantic steamships and underwrote the Collins Line, which might have surpassed Cunard had it not been for a tragic accident. They created the first railroad, the one we all know from games of Monopoly, the Baltimore & Ohio line, the B&O. They expanded to Philadelphia and to New York, and their reach grew. They were financial innovators and one of the largest cotton merchants in the world. So influential was Brown Brothers by the mid-nineteenth century that when the thunderous celebrity preacher Henry Ward Beecher wanted to make a point from his pulpit in Brooklyn, he constructed an entire sermon lambasting his congregants for placing more faith in letters of credit issued by Brown Brothers than they did in God.

Brown Brothers was, in short, woven into the economic fabric of nineteenth-century America, its transportation network and its trade, with the cotton South and the agrarian West, with England and by extension with the rest of the world. It provided the credit that was more trusted than the notes issued by governments or the promises printed with abandon by the wildcat banks that dotted the American frontier. Paper issued by the House of Brown was essential to commerce, and without trusted paper, trade at the scale and scope required would have been impossible. The Browns determined exchange rates, and they provided travelers with letters to use abroad, which was a necessary prerequisite to a more interconnected world. Wherever American commerce flowed, Brown Brothers was there to keep it flowing. It didn't just make money for itself; it made money for America. And without money, there would be no rise of the United States as a global power.
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