Abstract: Banking on the Public's Trust: The Image of Commercial Banks in Kentucky, 1816-1820

Sharon Ann Murphy


In the aftermath of the War of 1812, commercial bank charters proliferated throughout the country. As the story is often told, these banks performed poorly, particularly during and after the Panic of 1819, fueling the anti-banking backlash that culminated in the rise of Andrew Jackson. Yet to date, no one has attempted to study directly the attitude of different groups of people toward early American banks. Rather than treating commercial banks as interchangeable parts in a monolithic system, this project is examining the popular reaction to specific banking actions and functions within their communities. This paper examines the swiftly shifting banking environment in Kentucky from 1816 to 1820—particularly the state-run Bank of Kentucky and their short-lived experiment with independent banking—to understand why this system was created, who initially supported it, why it failed so quickly, and what were the longer-term consequences for the public opinion of banks. These banking debates in Kentucky dovetailed with larger conversations about the place of corporations more generally in American life, including debates about what types of corporations actually served the public interest, and what type of regulatory oversight was permissible by state legislatures over their chartered progeny.