The Rabbit Hole: Your Bank or Mine?

Episode 3 in Season 3 of Mysteries to Die For is an adaptation of the Allan Pinkerton Story “The Detective and the Expressman.” This story may be the first financial mystery – don’t quote me, my research hasn’t been exhaustive. Written about a Pinkerton case from 1858, the story is the investigation into the misappropriation of $50,000 from the Adams Express Company. One of the things I enjoy about reading these original mysteries is the casual, everyday look into normal life. Sometimes, though, it is challenging to understand because our life today can be so very different, as in this case. Let’s talk about money.

Throughout the story, there are several references to various characters having to “change money.” Today, we certainly have to change money when we travel to other countries. You can’t use a ten dollar bill in London. You can’t use a 20 euro note in the states. You have to exchange one currency to another – or use a credit card in which a bank will do it for you in the background for a nice (not nice) fee.

But this story takes place in the United States, such as it was in the 1850s (31 states plus four territories). The story begins in Montgomery, Alabama and includes activities in New Orleans, Atlanta, Philadelphia, and New York. So why were these characters “changing money”?

Follow me down the rabbit hole.

In 1863, two laws were passed that created a national baking system and a single currency. Seeing as we became a country in 1776…what were we using for money for the almost 100 years in between? The US Constitution granted the federal government the sole power to coin money and regulate its value. Coin money. Not paper money. Coin money was made out of metal and held tangible value. Paper money, by contrast, was shown through the American Revolution to lack that stability.

And so, the issuance of paper money was the business of state-chartered, private banks. These bank notes could be exchanged then for silver and gold. In 1820, there were 327 of these banks located in commercial centers. By 1858, the year of the story in discussion, there were 1,422 banks (1). Think about that. Over 1,400 different printed bills. The images at the top of this post are examples from this time period. The banks took their business seriously and in doing so produced some beautiful and elaborate notes.

However, it stands to reason if you were a merchant in Montgomery, Alabama, you may not want to accept payment in bills from a bank, for example, in New Jersey. Banks were (are) businesses and some were (are) better than others. Taking a bank’s note was akin to investing in them. If they failed, you were out the money. Customers, then, would have to exchange their own bank notes for notes accepted in that region. Prior to the creation of the national banking system and a common US paper currency, an entire industry was needed to not only support local businesses but to enable commerce to happen between distance places. This was the time period that gave birth to American banking household names from Wells Fargo and American Express.

Fun fact, until 1857, Spanish dollars and other foreign coins were accepted as part of the American money system!

References:

  1. https://eh.net/encyclopedia/antebellum-banking-in-the-united-states/
  2. https://www.history.com/news/8-things-you-may-not-know-about-american-money
  3. https://www.aba.com/about-us/our-story/aba-history/1850-1899

Image Links (Some are for sale!)

Canal Bank New Orleans: https://www.moderncoinmart.com/1850s-20-note-canal-bank-new-orleans-pmg-68-superb-gem-unc.html

Citizen’s Bank of Louisiana: https://www.ebay.com/itm/313152653881

Sussex Bank of New Jersey: https://www.ebay.com/itm/222827844643

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