Other People’s Money is a beautifully written book on “how banking worked in the early American Republic.” Part of Johns Hopkins University Press’s How Things Worked series, the target audience for this book is undergraduates studying U.S. history or economic history. The book condenses a large literature from American history and economic history as well as contemporary material from periodicals and novels into an interdisciplinary narrative of the political battles over money and banking from the early Republic to the Civil War. Murphy’s book shows that the politics of money shaped how money worked.

The book is organized chronologically. The first battle took place with the birth of the nation and over the transfer of monetary authority from the state governments to the federal government. The U.S. Constitution gave the federal government authority to set the value of the U.S. dollar (against gold and silver), but denied it the power to emit fiat money. The U.S. dollar would be a unified, singular unit of account across the nation, but only banks, not the government, would issue money.

The next set of battles had to do with the federal government’s power to charter a national bank. The fight to charter the First Bank of the United States (1791–1811) was won, but the fight to renew its charter was lost. The story was repeated with the Second Bank of the United States. Murphy bookends her account of the Second Bank with the panics of 1819 and 1837–1842, nicely integrating the history of the bank with an explanation of how panics worked and how panics could be managed in an era before “true” central banking.

The country’s early experiment with large, national public banks ended with Andrew Jackson’s successful political “war” on the Second Bank and its president, Nicholas Biddle. Murphy goes beyond the standard “battle of wills” interpretation of the Bank War to frame the issue in terms of a deep ambivalence in the body politic about banking. She sums up this discussion by observing that while Jackson won the Bank War, he did not resolve the underlying policy challenge of “harnessing the benefits of banks while reining in the excesses of the system” of paper money. The upshot of the fight over central banking was that money would be issued only by incorporated banks chartered by state governments, not by a large “central” bank chartered by the federal government.

The stage moves to the state governments, with two chapters summarizing the highlights of state government experimentation with banking policy. Murphy shows how the politics of banking played out at the state level, with the Whigs and “soft money” Democrats pursuing a more liberal approach against the more restrictive approach of “hard money” Democrats, for whom the best money was “hard” (metallic) money. Two maps in Chapter 4 summarize the sheer diversity of state banking systems, and the shift from legislative chartering to free banking in the decades before the Civil War. On the eve of the Civil War, the country had a decentralized banking system and a money stock consisting of bank notes and bank deposits issued by 1,600 different banks. It had also developed mechanisms for managing this kind of money, from bank note markets and bank note publications to clearinghouses. It may not have been the most efficient or stable way to organize a banking system, but it worked.

Perhaps the best chapter of a very good book is the one that contrasts the (much less successful) financing of the South with that of the North during the Civil War. Murphy shows how the South was handicapped by its “hard money” legacy, which contributed to its overreliance on fiat money that fell in value dramatically as the prices rose, on average, 10 percent per month. Ironically, although the North entered the war in a better banked position, Murphy shows that it, too, was hampered by “hard money” views, in this case of Treasury Secretary Salmon Chase. The problem was successfully solved by Jay Cooke, a private banker whose firm devised a system for the widespread sale of government bonds that conformed to Chase’s requirements. The North also resorted to fiat money (currency printed in green, or “greenbacks”), but its money held its value much better than the Confederacy’s. The greenbacks would circulate alongside a new kind of national currency, notes issued by banks organized under the National Currency Acts of 1863 and 1864. The money issued by these “national banks” was a way station to money issued by the Federal Reserve, which is where Murphy ends her story.

Faculty and students alike will like this book. Students will appreciate the personal touch that Murphy brings to her explanations of “how things worked,” such as her story about Benjamin Franklin’s early career and her account of a story that “went viral” about a farmer’s daughter who was robbed of a worthless bank note. The political debates come to life in reproductions of well-chosen and nicely annotated cartoons. Antebellum money comes to life in reproductions of different types of money from the author’s personal collection: a revolutionary-era Continental note, an early bank check, an early bank note, a Confederate currency note (Confederate fiat money), a greenback (Union fiat money), and postage currency. Students will also appreciate the light footnoting, which enhances readability and flow.

Professors will appreciate the bibliography with suggestions for future reading to get students started on their research papers. They will also appreciate the fact that if they assign this book, students will read it. The content is strong in terms of the history and the economics, but students will not have to force themselves onward: they will be drawn in, looking forward to the next cartoon, story, or anecdote. With this book under their belts, students would be ready to tackle journal articles to get a sense of major debates among monetary historians, whether on the wisdom of the monetary clauses of the Constitution, the economic impact of the Second Bank and its demise, or which state banking systems worked best and why.

Murphy’s book is dedicated to her father, “the first banker in my life,” and to Professor John A. James, “who first taught me the history of money and banking.” I am confident that both of these experts on the art and science of banking would endorse this book with enthusiasm.