ABSTRACT
The two decades preceding the American Civil War…witnessed something approaching a natural experiment. During those years the Federal government withdrew from the regulation of banking, a policy that was the final outcome of Andrew Jackson’s war with the Second Bank of the United States. A wide range of experiments concerning entry into commercial banking were tried, from ‘free’ banking to ‘socialized’ banking. Moreover, other kinds of legislation affecting banking varied from state to state as well. While the regions of the United States differed in terms of economic structure, a common language, a common legal tradition, and, to some extent, a common culture permeated all regions. Thus the period provides excellent conditions for observing the effects of financial legislation on…financial intermediation.
