The Independent Treasury, William M. Gouge, and Federal Currency Reform in the Antebellum US

Historians often remember antebellum political economist William Gouge for his supposedly laissez-faire ideology; his runaway best-seller, A Short History of Paper Money and Banking; and role as the architect of hard-money thought. His two-decade-long career as a Treasury official is generally overlooked, but in the 1840s and 1850s, Gouge presided over a complete reorientation of federal currency oversight. This paper explores Gouge’s Treasury career to offer a new interpretation of federal financial regulation and hard money policy from the 1830s to the 1850s. Using Gouge’s papers and drawing on new theories of money and banking born out of critical legal studies and modern monetary theory, this paper reconstructs the operations of the new Treasury department Gouge designed and ran in the 1840s, known as the Independent Treasury. It argues that the IT was an expansive but overlooked regulatory agency, through which antebellum hard money advocates radically expanded the federal government’s regulatory power over money and credit in the aftermath of the Second Bank of the United States’ destruction.