Two important new histories of nineteenth-century American finance are built around single words: one around “risk” and the other around “panic.” Jonathan Levy and Jessica M. Lepler use these words to organize their investigations into the interconnected financial, legal, and institutional transformations of the nineteenth century, and into the concurrent transformations of the human mind. In Freaks of Fortune: The Emerging World of Capitalism and Risk in America, Levy argues that the word “risk,” and with it, the idea of risk as a commodity, migrated from the world of maritime commerce into American society as a whole during the middle decades of the nineteenth century. In The Many Panics of 1837: People, Politics, and the Creation of a Transatlantic Financial Crisis, Lepler defines the heretofore poorly understood Panic of 1837 in terms of human emotional response: It was the period in which people panicked. Both books are productive, historically grounded examinations of the ways in which feelings and ideas made and were remade by the history of finance capitalism. Both reveal the possibilities, as well as the hazards, of writing histories of economic transformation centered on subjectivities rather than on social and economic conditions, and both can tell us something about the state of the periodically vexed relationship between history and economics.^{Footnote 1}

The question that drives Jonathan Levy’s sweeping investigation is how two seemingly contradictory nineteenth-century transformations took place at the same time: the rise of the idea of liberal personhood and the rise of corporate capitalism. These developments, Levy argues, actually drove each other forward. What linked them was the emergence of risk, both in the sense of a commodity that could be bought and sold, and as an important new discourse in American life.

Levy argues that in the 1830s “risk … exploded in everyday language” (p. 3). As Americans began to talk about risk more often, they also began to respond to risk in new ways. Most importantly, they “enclosed” their risks in order to buy and sell them in an expanding marketplace increasingly dominated by financial corporations. In other words, Americans began using financial instruments “born of capitalism itself” to offset the financial risks that capitalism had created. Thus, in a world in which Americans were increasingly thought (and legally held) to be responsible for themselves, they actually became more dependent on the vehicles of capitalism—“new financial institutions, markets, and forms of wealth”—for their security. By the end of the nineteenth century, for-profit corporations ruled the world of risk, and dominated what Levy understands as the modern system of American corporate finance (p. 5).

To illuminate this transformation, Levy offers a variety of fascinating episodes in American legal, political, and business history, ranging from lawsuits over the insurance of self-liberated slaves to political debates about the legality of futures trading. In Farwell v. Boston and Worcester R. R. Corp., 45 Mass. 49 (Mass. 1842), the Massachusetts Supreme Court ruled that an engine-man was the owner of his own risk, and thus that the railroad company that employed him was not obligated to compensate him for losing a hand in an on-the-job accident (p. 8). The court drew on venerable maritime law but set a peculiar precedent: It equated the injured man not to a wage-earning member of a ship’s crew but to a vessel’s owner, whose risks were his own unless he deliberately assigned them to someone else (p. 12). Following the Farwell ruling, a host of new accident insurance corporations swiftly emerged, allowing wage workers to buy security against the risks that American law had so precipitately conferred on them.

The new accident insurance corporations represented attempts to alleviate risk both inside and outside the market. However, they were cold comfort to many Americans who were carrying the responsibilities of liberal self-ownership for the first time. At the close of the Civil War, a very different kind of corporation, the Freedman’s Bank, assured freed people that it would safeguard their wages. They responded in droves. Nearly 100,000 customers had deposited a total of $50 million by 1873 (p. 107). As the bank lectured these depositors on the importance of financial responsibility, however, it took enormous risks of its own. Hungry for greater profits, the bank gambled on high-risk railroad bonds, multiplying its depositors’ risks instead of alleviating them (p. 133). Soon after the Panic of 1873, the bank was forced to shut down, having lost 41 percent of its depositors’ money (p. 146).

Although the connections among Levy’s chapters are sometimes tenuous, his stories add up to a compelling and bleak vision of American capitalism. For one vulnerable group after another—Western farmers, freedmen, members of fraternal organizations—the jaws of the corporate capitalist trap closed as the nineteenth century wore on. However, the connection Levy draws between the rise of the discourse of risk and the emergence of risk as a commodity at times feels overburdened. Does the emergence of “risk” discourse in the 1830s really signify that Americans’ lives were not defined by risk in earlier periods? Levy is evasive here. Seeking to disassociate the tremendously savvy seventeenth-century Boston merchant John Hull from capitalism, Levy identifies Hull as a “pious” individual who was “not hostile to marine insurance” but who nevertheless “ran his commercial risks in a providential horizon” (pp. 45, 73). Without a more detailed investigation of Hull’s mentality, however, this claim means little. Similarly, Levy states that in the barely capitalist 1830s, “land ownership was still the dominant foundation of security” (p. 62). As he acknowledges a few pages later, though, farmers of this period were “hardly immune from … commercial peril” (p. 68). Has Levy just contradicted himself? He insists that he has not: What is important is that “to many the land was a special form of property” (p. 65, emphasis added). There is nothing wrong with making an argument about mindset, but given the specificity of Levy’s legal and institutional narratives and the breadth of his claims about social change, the resort to mentality at times reads more like a fallback position than a deliberate intervention.

Curiously, Lepler’s Many Panics is organized around the problem Levy encounters: the problem of the relationship between language and social experience. Many Panics sets out to resolve the question of when (and, therefore, what) the Panic of 1837 really was. Lepler begins her discussion by pointing out that two recent American history textbooks identify the Panic in two wildly different ways. They describe it as “the product of two different causes,” which “start[ed] in two different places,” and “var[ied] in length by six years” (p. 5). Lepler’s explanation for this profound confusion has three layers: the financial crisis itself, attempts by contemporaries to make sense of the crisis, and later interpretations of the many panics by American political historians and within the nascent discipline of economics. Ultimately, Lepler argues, the Panic of 1837 must be understood as a cultural and disciplinary project, rather than a straightforwardly political or economic event. Many Panics thus does not engage directly with prevailing historical interpretations of the Panic of 1837 so much as it meditates on how these kinds of interpretations come to exist.

Lepler’s survey of finance in the 1830s offers an interesting counterpoint to Levy’s chronology, as well as to his domestic focus. In Levy’s America, risk is nascent in the 1830s. In Lepler’s transnational history of 1837, however, American borrowers were bound so closely to British lenders that they could literally lose the farm because of rumors in British financial markets. Borrower–lender relationships were maintained by confidence, which was both embedded in material artifacts, such as bills of exchange, and dependent on more evanescent practices, such as financial gossip.

Material artifacts and gossip crossed the Atlantic constantly, but fundamental differences between the intertwined British and American economies drive Lepler’s story. The British lending market was centralized, with the Bank of England at its heart, whereas American borrowers were dispersed, dependent on far-flung and barely regulated local banks. The differences between these systems did not make crisis inevitable, but as financial markets tightened, divergent British and American relationships to political and financial news helped produce a crisis: that is to say, the Panic of 1837 was, to a significant degree, the result of interpretation. British politicians, embroiled in domestic disputes over joint-stock banks, took overheated rhetoric from the American “Bank Wars” as serious evidence that decentralized banking systems were almost certain to fail. British investors lost confidence in their American borrowers, and the Bank of England moved to protect British specie from draining into the United States (p. 53).

Here, Lepler broadens her investigation into a wider set of writings that informed Americans’ economic thinking. Their message was unequivocal. Religious tracts urging reflection and integrity, housekeeping manuals urging wives to budget, and even the first American political economy textbook all expressed a “naïve confidence in individual economic actors.” For the most part, they celebrated individuals’ morality and good sense, but they also assigned blame to individuals when things went awry (pp. 85–87). Here, again, Lepler troubles Levy’s chronology. By 1837, she argues, works such as these had wholly established the doctrine of individual responsibility for risk. When upsetting business rumors and inept political communication transformed “pressure” into full-blown crisis, the dogma of individual responsibility failed to offer a satisfying explanation, and Americans panicked.

Lepler’s Panic of 1837 ends where most histories of the Panic begin: with the decisions of a number of New York banks and London merchant houses to suspend payments to their creditors and depositors (p. 203). Like Levy, Lepler uses language as a bridge between events and ideas. The literal suspension of payments, she argues, was justified by a concurrent suspension of the belief in individual agency. Bankers classified the throngs of panicked depositors at their doors as an unprecedented crisis that merited unprecedented forms of action. As soon as the bankers suspended payments, Wall Street calmed down. As one diarist observed, “men’s countenances wore a more cheerful aspect,” and stock prices actually rose (p. 206).

By the time that people stopped panicking, the real making of the Panic of 1837—that is, the fashioning of people’s understanding of the year’s events—was already under way. American observers of the crisis created a very different kind of narrative than did the more worldly community of economic analysts. Americans combined the many far-flung panics into a single, domestic Panic. They found it more satisfying to blame this conceptually unified Panic on their political enemies than on the international financial networks they neither controlled nor comprehended (p. 150). By contrast, economically literate observers made the many panics of 1837 the subject of “objective” analysis, seeking to develop rules and principles according to which the crisis could be classified. By 1843, Friedrich Engels had concluded that world trade could not exist without periodic financial crisis. Only revolution, he concluded, could cure the deep societal ills that episodic crises revealed (p. 237). The Panic of 1837 thus led toward the definition of capitalism as a political economy characterized by crisis—a definition so influential that Levy, nearly two centuries later, wholly subscribes to it.

Lepler’s work not only lays out the origins of Levy’s worldview but also contemplates his major challenge: the relationship between a term (in Levy’s case, “risk”; in Lepler’s case, “Panic”) and a socially manifested experience (corporate capitalism; the feeling of panic). However, Lepler’s project, like Levy’s, does not reach quite as far into society as it claims to do. Lepler’s Panic of 1837 more or less ends when the financial community recovers its equanimity. Certainly, the resilience of Wall Street is a fascinating story (and one that has a great deal to do with Wall Street’s own successful storytelling), but a monograph so insistent on the importance of human feeling could have given more attention to the wider devastation of the years that followed, during which many people surely continued to feel panic.

How ought we to classify the works of Levy and Lepler? In Levy’s case, the answer appears simple: There it is, in the subtitle: Freaks of Fortune is a history of “the emerging world of capitalism and risk in America.” Risk, in Levy’s work, is a satisfyingly specific term. But what does “history of capitalism” mean, exactly? One striking feature of the new history of capitalism is the reluctance of many of its practitioners (Levy included) to define, let alone to theorize, their subject.^{Footnote 2}

To some degree, the history of capitalism has not had to define its subject because it has been so clear about what it is not: namely, economic history. Half a century ago, Levy has recently argued, economics departments “seized” economic history, but subsequently allowed it to languish.^{Footnote 3} His arguments align with a broader set of accusations against economics that have recently been issued by high-profile historians such as Jo Guldi and David Armitage; Seth Rockman, in a recent essay, terms the “economic past” something “far too important to leave to the economists.”^{Footnote 4} Lepler barely uses the world “capitalism,” but the nineteenth-century economists of Many Panics’ epilogue commit the sin of which their successors stand accused more than a century later: They eradicate human experience from discussions of economic events (p. 243). Historians’ efforts to revive economic history, that neglected ward of the economists, thus parallel their attempts to bring human life back into the subject itself. As Levy has written, “[Historians] studying capitalism can give homo economicus a real, historically conditioned life. It’s the equivalent of turning a computer-modeled Pinocchio into a real boy.”^{Footnote 5}

Yet not all historians bringing life back into economic subjects are talking about capitalism, as Levy acknowledges. What terms should such historians use instead? A handful of ideas have emerged. Urging economists to let “full humans back in,” Deirdre McCloskey proposes “humanomics,” but this is going to be a tough sell on both sides of the aisle.^{Footnote 6} Levy (with Jeremy Adelman) calls for “the history of economic life,” a term also used by Emma Rothschild and other framers of the field. Michael Zakim proposes “history of the economy,” although he concedes it is “pedestrian.”^{Footnote 7} “Political economy,” though engaging a somewhat more specific set of concerns, maintains a healthy group of adherents within and beyond early American history.^{Footnote 8} In addition, at the Library Company of Philadelphia, where Lepler’s own work spent some time in development, a dedicated program has recently celebrated its fifteenth year supporting work on “economy and society,” a category that the program allows to be “broadly defined.”^{Footnote 9}

One thing that is strikingly clear from this disciplinary brainstorming session is that in spite of their disgruntlement with economists, historians have not yet been able to find any satisfying substitute for the word “economy.” To this author, the persistence of “economy” suggests that historians ought to think carefully about their goals when they go after the economists. After all, Levy’s and Lepler’s books both demonstrate how deeply professional history’s lineage is intertwined with that of economics. The Panic of 1837, which initiated the period of capitalist tumult so vividly described by Levy, also inaugurated a certain kind of thinking about economic crises. In the Panic’s aftermath, Engels and Marx engaged with a set of problems that spoke to successive generations of economists and historians alike.^{Footnote 10} And as Lepler’s work demonstrates, the connections between the disciplines are embedded in language itself: The term “crisis,” chosen by British economic analysts of 1837 for its undertone of objectivity, did not necessarily signify “disaster.” Rather, a contemporary dictionary defined a crisis as a “decisive state of things, or the point of time when an affair is arrived to its highth [sic], and must soon terminate or suffer a material change” (p. 4). In other words, as economists began their great turn toward “objective” numbers, they were nonetheless conceptualizing the events of 1837 as the crux of a narrative. Historians can, of course, use these truths as critiques of economics, but their own struggles with objectivity are not exactly ancient history.^{Footnote 11}

Since 1837, connections between the disciplines have strengthened and dissolved by turns. In the latter half of the twentieth century, many prominent historians famously abandoned narrative for social science; not too long afterward, the pendulum swung the other way.^{Footnote 12} Post-2008, it seems that matters between the two disciplines have again—to borrow a phrase—arrived to a highth. To historians today, the hyperquantified discipline of economics seems both more relevant and more frustrating than it has seemed for a long time. However, historians, of all people, should take the long view here, both because of the ways in which economics is already changing and because of the ways in which it will not change. It is still a discipline, and no historicization, no matter how searing in its implications, will stop people with hammers from looking for nails.

Many scholars, of course, have enjoyed long and productive careers practicing genuinely interdisciplinary economic history, and there is reason to think that their numbers are growing.^{Footnote 13} Moreover, formally interdisciplinary work is not the only form of rapprochement. Historians investigating political economy and the history of institutions are moving toward common ground, as are economists studying path dependency and multiple equilibria.^{Footnote 14} Even Guldi and Armitage grant that some economists have begun to adopt “historical thinking” with very promising results.^{Footnote 15} However, the search for common ground is not mandatory, and direct engagement with the principles of economics is rarely a historian’s wisest approach. Lepler’s project is strong in many ways: as an introduction to the nuts-and-bolts of nineteenth-century finance, as a deeply humane narrative of an economic crisis, and as a history of economics itself. Lepler’s occasional decisions to take the fundamental ideas of economics head on seem harder to justify, as when she argues that “national economic development was an illusion” in the United States in 1837 (p. 9). Such a claim requires a deeper engagement with the definition of a national economy than Lepler can offer en route to the many panics of 1837.

The history of economic life coexists uneasily with economics at the moment, but Freaks of Fortune and Many Panics demonstrate that the tension between the two fields is throwing off a great deal of creative energy. In their efforts to explain the relationship between financial crisis and human experience, Levy and Lepler use every tool at their disposal. They draw on ideas, culture, politics, business, institutions, law, and economics; their works acknowledge “real” economic change, while insisting that this change is bound up with changes in subjectivity. At their best, they neither leap across the gulf between the disciplines nor throw stones across it, but create intellectual structures of their own: structures that offer new vantage points to historians, members of the public, and perhaps even the occasional economist.