------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (October 2007)

H.W. Brands, _The Money Men: Capitalism, Democracy, and the Hundred 
Years' War over the American Dollar_. New York: W.W. Norton, 2006. 
239 pp. $24 (hardcover), ISBN: 978-0-393-06184-0.

Reviewed for EH.NET by David J. Cowen, Quasar Capital Partners.


The previous twenty-one works of H.W. Brands, the Dickson Allen 
Anderson Centennial Professor of History at the University of Texas, 
have covered a wide range of topics and eras. His books have spanned 
the gamut of American history, from the eighteenth century and a 
biography of Benjamin Franklin to the nineteenth century and a 
history of the California Gold Rush, and then on to the twentieth 
century and a discourse on the United States in the Middle East. He 
is a comfortable storyteller and this extends to biography, with 
tomes to his credit about Andrew Jackson and Woodrow Wilson. In his 
most recent work, _The Money Men: Capitalism, Democracy, and the 
Hundred Years' War over the American Dollar_, Brands combines his 
skill sets of biography and history to render a flowing work about 
early American finance, a period covering roughly the beginning of 
the finance system under the stewardship of Alexander Hamilton to the 
1907 financial panic and its aftermath.

The opening chapter logically starts with Hamilton and is called "The 
Aristocracy of Capital." It moves quickly through his early years on 
Nevis and days as a young officer in the continental army. The theme 
that remains constant is that Hamilton "contended that economics 
ruled the world, eventually if not at once" (p. 21). The resourceful 
Hamilton is followed as he seizes the opportunity where others might 
see failure; for instance Brands describes Hamilton's leadership 
after the conclusion of the Revolutionary War at the Annapolis 
Convention, which laid the groundwork for the Constitutional 
Convention; and the subsequent creation of the National Government, 
when his appointment as Secretary of the Treasury led to his 
promotion of funding and bank legislation. Brands does not break any 
new ground on these topics and is simply retelling the story. He 
reminds us that Hamilton's funding and banking plans were an 
all-or-nothing proposition for "wound one limb and the whole tree 
shrinks and decays" (p. 46). Given Brands' writing style, which is 
telling a broader story, it is inevitable that some matters will be 
marginalized or forgotten. For instance, he has omitted any mention 
of the creation of the Mint, which defined the dollar as the measure 
of money.

In the second chapter called "The Bank War," we are introduced to the 
two warring factions: the capitalists championed by Hamilton and the 
democrats led by Thomas Jefferson. Brands opts to gloss over the 
stormy closure of the First Bank, simply rolls the discussion forward 
quickly to the Second Bank, and focuses on the autocratic President, 
Nicholas Biddle, representing capitalism, versus President Andrew 
Jackson, representative of the democrats. The fabled Bank War moves 
quickly and is an enjoyable read. In some parts of the book Brands 
leans too heavily on quotes, some of which fill over half a page, but 
here the quotes add to the action in what is history articulated in 
an enjoyable fashion. As Brands explains, it became personal between 
the two as Jackson thundered that "The Bank ... is trying to kill me, 
but I will kill it!" (p. 91). With Jackson's victory "the lesson 
seemed clear ... when democracy and capitalism collided at the ballot 
box, democracy won" (p. 85). When Jackson gave the order to withdraw 
federal deposits and redeploy them to state banks, Biddle, to his 
eternal shame, exacerbated tensions by constricting bank loans and 
curtailing money. Brands labels Biddle the bad apple, devoting much 
space pinning the blame on him, and hence championing democracy 
rather than capitalism. But here is where we need clarification, for 
there is another way to look at the aftermath of the Bank War: it was 
not democracy vs. capitalism, but rather with the reshuffling of the 
Federal deposits it was simply the State Banks winning at the expense 
of the Federal Bank, or one brand of capitalism versus another brand 
of capitalism. Furthermore, he has lumped both Bank Wars together; 
however, recall that the First Bank was a Federalist institution 
destroyed by the Jeffersonian Republicans, and yet these were the 
same Republicans who pushed for and chartered the Second Bank when in 
the wake of the War of 1812 the nation's finances were asunder.

The third chapter, entitled "The Bonds of the Union," discusses the 
strong growth and revolutions in transportation, industry and markets 
seen in the years roughly between 1825 and 1850. It was about 
connectivity, brought about by canals and then the railroads, 
bringing together distant locales to the eastern seaboard, and the 
wealth that was subsequently produced for the few. Brand next 
presents the California Gold Rush and that precious metal is 
introduced, which provides segue into our third 'money man,' 
financier Jay Cooke. He became synonymous with the selling of war 
bonds at a time when the cost of the war to the Union was $1 million 
per day. Cooke's ingenious plan to sidestep the banks and sell bonds 
directly to the public exceeded all expectations and Brands tell us 
"Cooke may have become the person most vital to the Union war effort, 
after Lincoln" (p. 121). By the final tally, Cooke & Company placed a 
staggering $1 billion plus in U.S. Government Bonds.

The fourth chapter is called "The Great Gold Conspiracy" and is the 
shortest chapter in the book. We meet again Jay Cooke, who in concert 
with Jim Fisk, Jr. and Jay Gould, attempted to corner the market in 
gold in 1869. The plan ended in disaster when the government stepped 
in to sell to the bulls, but Gould escaped ruin when he 
surreptitiously switched allegiances and himself became a seller. We 
learn more about the mechanics of the market in this chapter: and not 
just the gold market but also how the equity market functioned in 
this age of railroad wars, with various consortiums and individual 
operators looking for personal gains at the expense of any level of 
morality and legislation. But capitalism is a loser in this chapter 
for we learn about its seamier side as the standards of insider 
trading and stock manipulation are revealed.

The fifth chapter is entitled the "Transit of Jupiter" and we are 
left guessing as to why it is called that (unfortunately it is never 
answered). The chapter encompasses much ground, from the gold scandal 
introduced in Chapter Four all the way through the aftermath of the 
Panic of 1907, all covered in a fleeting forty pages. We see more 
scandal and rapidly move from financial panic in 1873 to financial 
crisis in 1893. J.P. Morgan emerges as a financier, amasser of 
capital, savior of the financial system, and enigmatic greedy 
capitalist all rolled into one. Morgan reorganizes the railroads and 
insists on seats on the boards of the companies he invests in. He 
hosts summit meetings in various industries, leading one to believe 
that he alone is pulling the purse strings on the capitalist system. 
Because this is top down history, we do not first hand see or feel 
the pain and difficulty of the man on the street or farm impacted by 
this money interest.

Brands does try to bring this struggle to the fore in the great gold 
and silver debate, whereby the capitalists and hard money men line up 
in favor of gold and the western farm interest and debtors prefer 
silver. In short, silver was perceived as the money of the people and 
gold the money of the wealthy. For Brands then "gold and silver were 
simply the latest proxies in the historic contest between capitalism 
and democracy, between wealth and commonwealth" (p. 175). There is a 
juxtaposition between Morgan on one side, stepping in to rescue the 
financial system time and again when it hiccups, and William Jennings 
Bryan on the other, champion of the people, with his famous 
indictment against the gold standard: "you shall not press down upon 
the brow of labor this crown of thorns! You shall not crucify mankind 
upon a cross of gold!" (p. 184).

The Money Trust, led by Morgan, became too pervasive and too powerful 
not to escape notice. By the early twentieth century and with 
Theodore Roosevelt in the White House, the handwriting was on the 
wall for Morgan and the Money Men. But not before one final climatic 
incident, when in 1907 a financial panic caused Morgan to ride in 
again on his proverbial white horse to stem the tide. But this play 
has been seen before, a system on the brink of financial ruin only to 
be rescued by the same Money Men some believe caused the convulsions 
in the first place. The Senate convened a committee in 1912 to look 
into the 'money trust' question, hauling Morgan and others in front 
of their committee. Morgan died in the next year, many believe from 
the stress of being embarrassed in front of the committee.

The "Epilogue" argues how the money question concluded with the 
creation of the Federal Reserve System, a central bank that could set 
the interest rate level and bear ultimate responsibility for the 
fiscal system. The Fed was in reality the Third Central Bank of the 
United States, having birthed 77 years after the Biddle/Jackson fight 
shuttered the Second Bank of the United States. Brands concludes that 
in spite of the Federal Reserve's missteps in the aftermath of the 
1929 Great Crash, the central bankers have done a credible job and 
therefore the money question, once so central to the politics of the 
United States, has been resolved and is out of the main of the 
political debate.

There are only a few illustrations in the book, but the cover is 
interesting, as the faces of the main subjects are in a similar vein 
to the portraits of the luminaries on our currency. Of course 
Hamilton is the only one of the Money Men described who is actually 
on our legal tender as he graces the $10 bill, and his picture on the 
cover is top billing along with Morgan. The faces of Biddle, Gould 
and Cooke are smaller and relegated to the lower portion of the cover.

Brands should be applauded for writing about the money question, 
which has often been overlooked in U.S. history. He tackles head-on 
the intrinsic strain between democracy and capitalism for "the 
driving force of democracy is equality, of capitalism inequality" (p. 
16). In short, we can ask the question does capitalism have a 
conscience? We are left after reading this saying that if it does, it 
certainly takes a lot of turns to achieve it.

Brands' style is to liberally intersperse quotes into the text. These 
quotes are cited in the end notes, which has the benefit of making 
the book much easier to read. Of course, the shortcoming is for the 
serious scholar who sees a quote about Hamilton such as "that power 
which holds the purse strings absolutely, must rule" (p.25) and will 
wonder exactly when he said this -- when he was a soldier pointing 
fingers at a feckless Congress, or later when he was Secretary of the 
Treasury? Turning to the end notes we see that it can come from any 
part of thirteen pages in Joanne Freeman's _Writings of Alexander 
Hamilton_ (2001), and as a secondary source that question is not 
easily answered. A second drawback to this style is that he can 
overuse quotes and therefore they lose their impact. For instance, 
Brands so liberally uses quotes from a lecturer from the University 
of Chicago under the nom de plume "Coin," that most of the pages 
167-173 feel like a string of quotes.

This is history seen through the leadership's eyes and that makes 
sense if one is writing to a general audience. This is introductory 
history that is story telling, and as a result big omissions occur, 
like the First Bank scrip bubble 1792 or the First Bank War 
conclusion of 1811, or the irony that many Republicans liked banks, 
especially if they could receive the loans of those banks for 
themselves. Brands is trying to sell the point as democracy vs. 
capitalism, as if one has to win. But isn't the winner the system 
itself? Our democratic capitalism has produced a system of government 
that has produced an amazing relative standard of living for its 
citizens, and if there is a winner that is where the gold medal lies.

But these flaws are minor for the audience that Brands is trying to 
reach. This book is an easy read and contains a lot of enjoyable 
prose. It is a likeable and painless read for just about anyone with 
an interest in American History.


David J. Cowen is an independent scholar in the New York City area. 
He is the Managing Partner of Quasar Capital Partners, a macro hedge 
fund. He is co-author (with Robert E. Wright) of _Financial Founding 
Fathers: The Men Who Made America Rich_, published by the University 
of Chicago in 2006 and of "The First Bank of the United States and 
the Securities Market Crash of 1792," _Journal of Economic History_ 
60 (December 2000).

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