Capital of Capital: Money, Banking, and Power in New York City, 1784–2012 by Steven H. Jaffe, Jessica Lautin

Abstract

Book Reviews 403 Capital of Capital: Money, Banking, and Power in New York City, 1784–2012. By Steven H. Jaffe and Jessica Lautin, New York, NY: Columbia University Press, 2014, 304 pages, $50.00. Reviewed by Jonathan D. Cohen, University of Virginia In 2012, in honor of the 200th anniversary of its founding, Citibank sponsored an exhibition at the Museum of the City of New York on “New York’s Banks and the Creation of a Global Economy.” Based on that exhibition, and with further backing from Citibank, Steven H. Jaffe and Jessica Lautin provide Capital of Capital: Money, Banking, and Power in New York City, 1784–2012, the latest work in Columbia University Press’s series on “Studies in the History of U.S. Capitalism.” In Capital of Capital, Jaffe and Lautin—as assistant curator at the Museum who worked on the original exhibition—present a synthesis of the rise of the financial industry in Gotham. Through “a narrative of the intertwined histories of New York City and its banks” the authors demonstrate the primacy of Wall Street to the city’s “development and to its national and global influence and stature” (3). The story Jaffe and Lautin tell should be recognizable to those familiar with scholarship on the history of banking in the United States and the history of the financial industry in New York City, especially the writings of Sven Beckert, Thomas Kessner, Julia Ott, and Karen Ho, as well as Jaffe’s previous work on war in New York. Yet what makes Capital of Capital successful is not its depth but its breadth, its effective narration of the history of New York City’s banks over almost two and a half centuries. While their project received funding from a company at the center of their analysis, Jaffe and Lautin have constructed a fair and balanced account that capably describes the evolution of the financial industry and New York City’s leading role in its development. Jaffe and Lautin roughly ascribe to a “rise and fall” narrative concerning New York City’s status as preeminent national and international financial center. They begin by explaining the ascendancy of the city’s banks in the late eighteenth and early nineteenth centuries. New York beat out Philadelphia as the American banking capital thanks to a booming trade market as well as Andrew Jackson’s war against the Second Bank of the 404 ■ NEW YORK HISTORY United States which inadvertently “confirmed and expanded the dominant role of Gotham’s banks in the nation’s growing economy” (38). The city’s bankers further entrenched New York’s importance during the Civil War by providing crucial assistance to the federal government’s creation of greenbacks. Thereafter, Jaffe and Lautin illustrate the declining significance of trade and the rising importance of finance to the city’s economy. However, the centralization of banking and corporations in New York City in the late nineteenth century provoked both public opposition and government regulation in the Progressive Era, especially following panics in 1893 and 1907. The Great Depression deepened public antagonism to Wall Street and inspired a new wave of regulation—most prominently the Glass-Steagall Bill and the creation of the Securities and Exchange Commission—as part of the New Deal. Wall Street rebounded during World War II, and Jaffe and Lautin argue that in the postwar period New York banks secured the city’s status as the premier hub for international finance. Domestically, the city’s banks helped fund the booming consumerism of postwar prosperity though they contributed to persisting racial inequality by discriminating in both hiring and lending decisions. Banks also continuously strove to circumvent the restrictions of Glass-Steagall, evasions which helped bring on the “GaGa Years” (226) of the 1980s, a time when banking stood at the center of the city’s economy and culture. The late twentieth century also witnessed technological innovation in banking for the average citizen as well as new financial practices for bankers themselves, for instance, investment in mortgage -backed securities. Thus, Jaffe and Lautin draw continuities between the financial innovations of the 1980s, the democratization of credit in the early 2000s, and the financial crisis that began in...