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 19th 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 , 19th-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
William Averell Harriman , founder of W . A . Harriman & Co . and son of railroad baron E . H . Harriman , 1942 .
the sharp and constant economic crises of the 19th 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 19th 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 19th 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
Library of Congress 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-19th 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 19th 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 .
Zachary Karabell is a prolific commentator and the author of more than a dozen books , including The Last Campaign , which won the Chicago Tribune ’ s Heartland Prize , and The Leading Indicators . He is also a longtime investor , former financial services executive and the founder of the Progress Network . This article has been adapted from his latest book , Inside Money : Brown Brothers Harriman and the American Way of Power ( Penguin Press , 2021 ).
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