The Political Distribution of Economic Privilege in Van Buren's New York

Abstract

AbstractHistorians have long recognized that one of the principal functions of early nineteenth-century American state governments was the distribution of economic privileges, including preferential grants of corporate privileges. North, Wallis, and Weingast label such regimes natural states and argue that government as privilege dispenser is a characteristic of most societies and, in some few instances, represents a transitional phase between traditional premodern societies and modern open-access democracies. This article documents the operation of the natural state in New York, focusing on how Martin Van Buren's Democratic coalition manipulated the distribution of bank and insurance company charters so as to advance the interests of their Democratic coalition. Consistent with the North, Wallis, and Weingast interpretation, the evidence shows that the transition to open access was neither smooth nor inevitable; Van Buren's Democratic coalition reversed the long-run trend toward greater access until they were unseated during the financial crisis years of the late 1830s.