ABSTRACT
Political traditions and ideologies rooted in eighteenth and nineteenth century financial conflicts provided the broad context and boundaries for Progressive Era banking reform. The debate between Thomas Jefferson and Alexander Hamilton over the establishment of a central bank revealed fundamental and enduring differences over the power of the federal government and its relation to the economy and society. Jackson's destruction of the Second Bank of the United States sent the Hamiltonian tradition into eclipse and marked the resurgence of the Jeffersonian tradition and the rise of the laissez-faire tradition. During the decades preceding the Civil War the politically dominant Democrats minimized federal involvement in money and banking and shifted power to the states. The Hamiltonian and Whig traditions of economic nationalism found expression when the Republicans established the National Banking System and enacted other legislation that grew out of the Civil War and its financial aftermath. The depression of the 1890s and the silver debate exposed the conflicts between Jeffersonian and laissez-faire Democrats and left the party divided and enfeebled at the end of the nineteenth century. Republicans emerged from the political and economic upheaval of the 1890s as the majority party and confronted the challenge of adjusting the National Banking System and post-Civil War financial policies to the needs of the twentieth century.
