Abstract: The First “Great Depression” in North Carolina: Banks, Bonds, and the Stubborn Myth of Southern Laissez Faire, 1819-1833

Robert S. Richard


Following the War of 1812, the United States experienced a dramatic boom-and-bust cycle centering on a financial crisis called the Panic of 1819. While some states lapsed into an economic depression until the early 1820s, the predominantly agrarian state of North Carolina suffered an unprecedented “Great Depression” that lingered for well over a decade. Contrary to the popular myth that Southern politics in this era gravitated around laissez-faire attitudes toward both state and federal government, North Carolinians responded to the worst economic environment of their lifetimes by vigorously promoting governmental intervention on behalf of their banking and transportation systems. That they made little headway in either field has misled historians ever since, who write off North Carolina as the black sheep of American economic development in the early nineteenth century.

In reality, the first Great Depression in North Carolina stimulated a new politics of public finance that helped to reshape the political culture and commercial landscape of the Old South. This examination of the longstanding campaign for a “People’s Bank” in the 1820s demonstrates the emergence of two interconnected yet conflicting trends: a growing consensus about the terms of North Carolina’s future economic development, and increasing partisanship over the ideological foundations of Southern political economy. Ultimately, the Great Depression left a divided legacy in North Carolina, as exhibited by the state’s robust party structure and impressive economic growth in the late antebellum period.