Abstract: Sectional Loyalties and Institutional Transformation in Missouri's Banks, 1861-1870
Money and banking in the United States changed profoundly during the Civil War, giving the country the first federal currency since the Revolution as well as the modern system of national banks. A look at the banks of one state, Missouri, in this tumultuous period shows that change at the firm level was even more drastic: though Missouri's banks, along with the railroads, were the only major antebellum firms to survive the War and become part of the emerging postwar big-business complex, this transformation was accompanied by a virtually complete turnover in the banks' officers, major shareholders, and customers. These changes were exacerbated by a massive financial fraud undertaken by the state's bankers at the outset of the conflict, in an episode previously overlooked in Civil War history: in 1861 Missouri's bankers diverted large sums of money from their institutions to support the rebellion, a scheme that collapsed and took down not only the bankers but many of the wealthiest families in the state. This incident had a significant impact on the state's postwar economy and politics, and is a case study in the effects of groupthink on the decision making of a closed, tightly knit managerial group in a time of crisis.