Boosted twice by war, then by economic catastrophe, paper money tells the story of America

Notaphilist, historian, and my uncle, Armand Shank yesterday gave a fascinating talk on the history of banking and paper currency in Maryland for the Historical Society of Baltimore County.

From Shank's collection: Currency issued in Baltimore
by the Continental Congress, 1777

The history of money is, of course, the history of America.  The British initially held strict control over currency in the colonies, Shank explained, and, lo and behold, British banking rates and policies seemed never to inure to the benefit of colonists.  Local currency, besides federal "IOUs," sometimes appeared of necessity and represented resistance.  Benjamin Franklin Bache, grandson of Benjamin Franklin, was a publisher of money and used samples his grandfather brought back from Europe as models.  Shank showed one of Bache's products.

Late in the 18th century, the Continental government issued national currency to raise millions of dollars for the Revolution.  Acceptance of the currency was expected, Shank said, for refusing it would brand one a traitor.  After independence, the First Bank of the United States was chartered in 1791, but lasted only until 1811, a casualty of Jefferson's state-centric vision of federation prevailing over Hamilton's wish for a strong central government.  State and local money came back on the scene in a big way, notwithstanding the ultimately decisive U.S. Supreme Court approval of the Second Bank of the United States in McCulloch v. Maryland, the 1819 staple of the modern constitutional law class.  Shank shared images of money from Baltimore County in the early 19th century.  Counterfeits proliferated.

Shank's first acquisition

In the 1860s, it was the need to raise money for war that again prompted the assertion and mass issue of federal currency.  The National Banking Acts of 1863 and 1864 strengthened and standardized national currency and, by 1865, phased out currency issued by state banks.  Local banks continued to issue currency, but only with the imprimatur of a national charter system.  Financial crises early in the 20th century led to reforms such as the first Federal Reserve Act, in 1913.  Federal reserve notes as we recognize them today emerged from a more vigorous standardization policy at the start of the Great Depression in 1929.

Quonset-style home in 1948
(Ed Yourdon CC BY-NC-SA 2.0)

Shank shared images from his collection of notes issued by the National Bank of Cockeysville, the town in northern Baltimore County where Shank grew up.  A $20 note of the bank was the first in Shank's collection, coming into his possession when he was a boy.  Circa 1950, Shank's father, Armand Shank, Sr., took Armand, Jr., to see Alexander D. Brooks, a cashier whose name appeared on the currency and who lived still in Cockeysville.  Alas, Shank said, Brooks, then in his 80s, had little recollection of his work for the bank.  Brooks died in 1956.

I have fond memories of being a kid in the 1970s, playing with cousins in the backyard of Armand Shank, Sr.'s home, where Armand, Jr., grew up, in Cockeysville.  The home, built in 1950 and still standing, was of a quonset-hut style, unusual today.  Many such homes were once built in this cost-effective style to meet the demand for housing after World War II: the homestead of the Baby Boom.  I didn't know that at the time, of course; I was more interested in the vast volume of lightning bugs that populated the yard.  I remember the smell of the place, fresh cut grass with a not unpleasant hint of motor oil.  It charms me now to think of another boy in that same environment, a generation earlier, one day awakening to a passion for American history told through the lineaments of banknotes.

Armand Shank is a member of the Board of Directors of the Historical Society of Baltimore County.   He is co-author of Money and Banking in Maryland: A Brief History of Commercial Banking in the Old Line State (1996).  He has a new article forthcoming on the subject for History Trails, a publication of the society.

Zimbabweans still await their development moment

Robert Mugabe airport.
All photos RJ Peltz-Steele CC BY-SA 4.0.

In Harare, Zimbabwe, my host (whose identity I am protecting) brought me up to speed on national politics and the present fuel shortage. I had been under the impression that the exit from nearly 30-year rule of President Robert Mugabe, with subsequent electoral fanfare, marked a turning point for the southern African nation. Alas, my host reported that the new regime of President Emmerson Mnangagwa is same story, different day.

Zimbabwe imports its oil, but there is no ready explanation, such as a natural disaster or embargo, to explain the latest (nor the prior) bottleneck and long gas lines. My host blames politics as usual, which means control of the country's oil market awarded to cartels in exchange for lucrative kickbacks to politicians. A business owner dependent on vehicles to move assets, my host explained the strategies he employs to keep his fleet in service, including foreign currency purchases, which can bypass gas lines; fuel storage for a rainy day; the occasional financial inducement to a fuel seller; and, when all else fails, waiting in the interminable lines.

A gas line runs along the road.

A Total station is closed except for its 'Bonjour' shop.

The high ratio of pedestrians to vehicles on the streets of Harare is like none I've seen elsewhere in a major city, as even minibuses are in short supply for want of fuel. There are taxi stands, but the cabs are decidedly parked and not cruising for customers. My host said that the aforementioned politicians never seem to be wanting for fuel, though. Indeed, around Parliament and the executive administration building, I saw many official vehicles, and early in the morning, I saw workers filling their gas tanks from fuel cans. Entrepreneurial roving street merchants, who might be selling bananas, nuts, or newspapers in another city, hawk fuel cans and funnels in Harare.

Customers wait for the grocery store to open in the morning.

Another curiosity that struck me in Harare was crowds of people around and in the grocery stores. Outside a CBD branch of the popular market chain OK were a score of peddlers bearing cardboard signs showing numbers. My host explained that, in tandem with Zimbabwe's economic woes, and also a function of corruption, he asserted, runs the country's currency shortage. Indeed, I paid always with U.S. dollars, received change in same, and never saw other than inflationary Zim notes being sold as touristic novelties. In part because of the currency shortage, and to prevent a run on banks, people are restricted in bank withdrawals. That means one must go more often to the grocery store. But people have adapted, and they do have access to their money through electronic devices. The peddlers outside the stores are brokers, or internet-age money changers, who, for a competitive cut, convert electronic bank balance into hard currency to spend on groceries that don't directly accept debit or public assistance payments.

My host lamented: Zimbabwe is a country rich in natural resources and natural beauty to rival regional neighbors such as Tanzania and South Africa. Yet in 55 years since independence from the UK, the country inexcusably has failed to mature domestic productivity or the touristic sector. Sadly, coup d'etat and the long-anticipated exit of Mugabe seem not to have precipitated meaningful change.

Just wait, my host said: if the people don't see improvements, they'll change leadership again; and again, until someone gets it right.

Zimbabwe Parliament building sits on Africa Unity Square.