The role of private bankers in the US payments system, 1835-1865

This article examines the formation, function and economics of unincorporated, or private, bankers' networks in long-distance payments during the 20 years leading up to the Civil War. Using historical evidence from both the center and the periphery, I find that the private bankers' networks played an important role in the interregional circulation of currency and in the issuance and clearing of deposits and drafts. In the 1850s, as the private bankers' networks were adapted to the mobilization of long-term financial capital, their role in long-distance payments began to diminish. This pattern of specialization was reinforced by the financing of the northern government's effort in the war of the states.