The following is an interview with Jessica Lautin, co-author of Capital of Capital: Money, Banking, and Power in New York City, 1784-2012
Question: What is Capital of Capital about?
Jessica Lautin: Capital of Capital examines how New York’s banks became central first to the city’s, then the nation’s, and ultimately the world’s economy. And it’s about the symbiotic relationship between the development of New York’s banks and the city itself.
Q: Why is it important?
JL: You can’t understand the growth of New York City without understanding the growth of its banks. There are excellent books and articles out there on specific periods in this great narrative—on Alexander Hamilton, the Gilded Age, the Depression, the fiscal crisis, and of course the Great Recession. But this book is the first to cover the full sweep. By looking at this long history you can see certain themes, trends and topics emerge: the cycles of booms and busts; the denial of and access to credit; the relationship between New York’s banks and government; the creation by New York’s banks of new financial instruments and strategies; and banks’ investment in the infrastructure of the city.
Q: The exhibition that preceded the book was on view at the Museum of the City of New York in 2012. Why did the City Museum decide to cover this topic at this time?
JL: Citigroup was interested in sponsoring an exhibition about the history of banking in Gotham to honor the 200th anniversary of the founding of the City Bank of New York in 1812. This idea dovetailed perfectly with the Museum’s mission to connect New York City’s past, present, and future. We began planning this exhibition when the city and nation were still reeling from the financial crisis and the Occupy Wall Street movement had just made the news. Everything was still so fresh that we wondered if the opening of the exhibition might even draw protestors. (It didn’t). All of the headlines echoed those that appeared in the 18th, 19th and 20th centuries: outrage at the city’s banks and attacks on its wealthiest citizens; calls for tighter regulation; announcements of new forms of currency; concerns about banks leaving town. We covered this history in the exhibition while also leaving visitors with a question about the future: Would New York City continue to be the capital of global finance? Newly generated and designed infographics in the last section (that also appear in the book) helped visitors to come up with an answer—graphics on such topics as: banks and the labor force; assets of commercial banks; and loans by foreign bank branches. Then there was an opportunity to register an answer in a survey programmed on old ATMs.
Q: Banks today and throughout NYC’s history have been the frequent targets of criticism. How fair is this?
JL: It’s true that banks have been the target of vitriol since their founding. Like the Occupy Wall Street protestors, John Adams attacked them as corrupt and elitist, calling bankers “swindlers and thieves.” It makes sense, and yes, it’s fair, that Americans have always been suspicious of the institutions that pool, grow and distribute money and credit. There are many instances throughout the nearly 230 years when banks have willfully ignored excessive risk to themselves and their customers in the interest of profit. If in 2008 it was the packaging and selling of subprime mortgages, in 1857 it was speculation in railroad securities. Also, before legislation forced banks to change their lending and hiring policies in the 1960s, ‘70s and ‘80s, many banks systematically denied employment and credit to African Americans, women, gays and lesbians. And this denial of credit had profound and lasting effects, for example, on the segregation of neighborhoods. By subsidizing the building of single-family homes for whites in the suburbs while refusing home loans to blacks and Hispanics in poorer neighborhoods, banks perpetuated poverty and racism.
At the same time, banks have enabled the working class and poor to save and grow their money. New York pioneered the savings bank when a group of businessmen-reformers opened the Bank for Savings in the City of New York in 1819 aimed at inducing habits of thrift and savings among working-class laborers and servants. Banks also grew the capital necessary to expand the city and country both economically and physically. New York bankers were behind the building of the Transatlantic Cable in 1866, which enabled a surge in foreign investments and promoted speculation in American stocks and bonds. They raised the capital for the railroads that crossed the United States and the buildings of cultural institutions—like the Metropolitan Museum of Art and the Metropolitan Opera—that rivaled those in Europe. And they helped to start philanthropic organizations, like the Henry Street Settlement House, that are still around today.
Hopefully readers of this book will realize that banks are not a monolith and that their functions have been extraordinarily diverse—worthy of both ire and praise.
Q: What are some of your favorite objects in the book?
JL: Definitely the antebellum bank notes—because they’re both familiar and strange. You know they’re money because of the shape and the dollar amount printed on the front. But otherwise they represent a form of currency most readers will never know existed. Before the National Currency Act of 1863, banks printed their own money, which meant that literally thousands of types of antebellum bank notes—all of which looked very different—could be in circulation at one time. So in the book you see four pieces of bank-produced paper money (one of them counterfeit) that have dates, signatures and intricate artistic details including eagles, a ship, dog and train.
Also wonderful are those objects that connect to a personal story. One example is a 1903 receipt for a third-class steamship ticket purchased through Banca Stabile by Caroline Coppola, Francis Ford Coppola’s great-grandmother. The immigrant banks of the 19th and early 20th centuries were much more than lenders and repositories for money. They offered many services that helped immigrants come over to the United States and then adjust to life once here. In addition to purchasing steamship tickets, they could seek assistance in finding jobs and apartments, and wire money back to their family.
And then there are the objects that are just utterly unexpected. For instance, one might wonder what a wooden water supply pipe is doing in the book. It’s there because it represents a sly move by Aaron Burr to start a bank. In 1799 a group of civic leaders that included both Burr and Alexander Hamilton sponsored a petition asking the state to charter a business called the Manhattan Company, which would send water from the Bronx River down to the city through pipes. Burr snuck a clause into the final draft of the charter stipulating that extra capital could be used in “monied transactions or operations.” And thus opened the Bank of Manhattan Company in 1799, which ultimately merged with Chase National Bank in 1955 to become Chase Manhattan. (The Manhattan Company sold off its water supply business and turned wholly to banking in 1808.)