THREE ESSAYS ON ANTEBELLUM FINANCE AND MANUFACTURING

The United States experienced remarkable growth between victory in the Revolutionary War at the end of the Eighteenth-century and the bloody Civil War in the middle of the Nineteenth-century. Output and real incomes, landmass, and population are but some of the areas in which this new nation grew. The modern sector, manufacturing, also became ever more important as the first and second Industrial Revolutions unfolded. As manufacturing grew, it began to challenge agriculture for labor force participation; higher incomes attracted native-born citizens, and newly arrived immigrants found work in workshops and factories. Within a few decades, living standards in the newly-established United States rivaled, or exceeded, long-toothed counterparts in Western Europe. The financial sector grew alongside the real economy during this time period. The United States emerged from the Revolutionary War with a small, but established, financial sector, which grew considerably in size, importance, and geographic footprint up through the Civil War. State banks of different shapes and sizes, mysterious private bankers, and regional stock markets provided various services to this growing economy. There is a divide in the literature on a supposed finance-led growth theory or possible finance-growth nexus. Some economists argue that financial institutions follow on the coattails of economics progress, while others posit that financing is essential to enabling economic growth and modern economies. This dissertation examines the role and impact of the financial sector on the burgeoning modern sector. As a whole, this dissertation makes many contributions to the literature. However, the main takeaway from this body of work is that finance was not crucial to early American growth and industrialization. Banks did not directly finance the modern sector. Rather, expansion of the local money supply via bank notes enabled manufacturers to meet their demanding working capital needs. What is more, banks and credit markets contributed to financial panics, a persistent negative economic issue for the period. Also, Catholic investment in religious property did not result in any meaningful differences from their Protestant counterparts. Thus, while the financial sector certainly provided various necessary functions, the real economy seemed to steam ahead due to other real factors and key institutions.