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April 12, 2010
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Common-place links Hard Times of today to Panics of the past

Worcester, MA— "Hard Times," a special issue of Common-place, the online history journal, finds links to the nation's current financial problems in financial panics of the past where there are antecedents for everything from credit swaps to reality television dramas.

In the introduction, "The Best of Times and the Worst of Times," Michael Zakim notes "…conflicts over the production of credit—over control of the money supply—have accompanied the whole political history of America. But the system is no less vulnerable to economic than to political complications."

"Failure to pay one's debts, for instance, or sudden shifts in the cost of credit…or the incessant movement of investment capital from one market to another in search of enhanced earnings can effectively destroy what the financial system was originally designed to create," Zakim writes. "Hard Times emerge as a form of schizophrenia, diagnostic shorthand for an economy that is always in crisis, and subsequently never in crisis, whose life-granting profits are at once a paralyzing toxin."

Against a backdrop of cascades of bank failures and the sub prime-mortgage bond tsunami, Cathy Matson's article, "Flimsy Fortunes," finds antecedents for Bernard Madoff and his massive Ponzi scheme in the exploits of William Duer, a post-Revolutionary War speculator. Duer and a circle of speculators were buoyed into a frenzy of securities and stock-buying that collapsed in the Panic of 1792; Duer went to prison.

"Like our recent hard times, the Panic of 1792 drew scornful attention to the agents of speculation and the evils of overdrawn credit; people pointed fingers and agreed that men such as Duer deserved to languish somewhere out of sight," Matson writes. "And yet, before the panic, that same bandwagon was crowded with an eager public investing its small sums in an unpredictable future built on scraps of paper.

In that respect, little seems to have changed, Matson concludes. "For every Duer historians meet in the sources for 1792 there is …a Bernard Madoff two hundred years later."

Edward E. Baptist's article, "Toxic Debt, Liar Loans and Securitized Human Beings," finds new evidence about the role of slavery and slave labor in the creation of our modern, industrialized-and post-modernly financialized-world.

Baptist examines the role slavery and the cotton that it produced-the most widely traded commodity in the world in the 1830s-played in the Panic of 1837. That Panic launched America's biggest and most consequential economic depression before the Civil War

"We live today with the results of the long days that…slaves sweated out in the field, but we also live in a world distantly shaped by the financial decisions of cotton entrepreneurs on both sides of the Atlantic-as well as by the forgetfulness of those who have not learned from their lessons of two centuries ago," Baptist writes. "Specifically: their decisions about how to obtain and use credit, as well as to manage risk."

Pierre Gervais' article, "A Game of Claims and Expectations," explains the complex interplay between cash and credit in the nineteenth century.

"Credit in all its forms-personal as well as financial-was at once the main tool and the main threat in the cash-poor commercial life of the eighteenth and early nineteenth centuries," Gervais writes. "No profits could be made without it, and yet its use could turn the biggest profits into no less significantly crippling losses."

Roy Kreitner's article, "When Banks Fail," poses provocative questions: What if bank failures were actually the least, rather than the most, problematic instances of bad credit? What if the demise of a bank were actually less troublesome to the economy than the failure of other kinds of businesses?

"The assumption that banks may drag hundreds or thousands down with them when they fail was a persistent feature of antebellum popular writing," Kreitner notes. His article offers lessons about how money was created and about the cultural resonance of credit in antebellum America.

"Hard Facts," Oz Frankel's article, discusses the relationship between crises and facts-how crises generated social knowledge and how knowledge itself instigated crises.

Social breakdowns in the new urban centers of the nineteenth century generated calls for new forms of knowledge and, more narrowly, for a greater number of facts, Frankel writes. In the nineteenth century "public rituals of social investigation and the reading materials they generated also buttressed notions of social affinity, solidarity, and collective responsibility…" Not so today when "contemporary public sphere is suffused, even saturated, with information." Frankel adds. "…while we produce and consume social knowledge in unprecedented fashion, we do not share a strong sense of the social."

Sharon Ann Murphy's article, "Doomed…to eat the bread of dependency?" examines the growth of life insurance over the course of the nineteenth century, paralleling the development of a middle-class mentality.At a time when the death of the main breadwinner quickly exposed the precariousness of middle-class status, life insurance freed the middle class to take more risks during their lifetimes since their wives and children would be protected from the risks of death in a modern economy.

"No moderate-income father wanted his family to become 'dependent upon the cold charities of the world' after his demise," Murphy writes. "Middle-class fathers increasingly sought out the protection offered by the emerging life insurance industry."

Thomas Augst's article, "A Drunkard's Story," tells of John Gough's life as a temperance lecturer in the mid to late nineteenth century. Gough's story of hard times within the context of the early 1840s, teaches valuable lessons about the historical origins and cultural functions of this kind of narrative in American life.

"The story that Gough told about the suffering caused by his alcoholism and his eventual recovery would become a staple of American culture, both high and low," Aug writes. "A distinctively modern genre of confession, it anticipates the late 20th century interest in pathographies, a genre of biographical writing focused on personal disaster and dysfunction, ranging from James Frey's fictionalized memoir A Million Little Pieces to "reality television" dramas such as Intervention."

Common-place also offers pictorial interpretations of historic panics and their repercussions. Noam Maggor's article, "Hard Times," describes the exhibition "Bubbles, Panics, & Crashes," currently at Harvard Business School's Baker Library. The exhibition covers a century of economic trauma as it focuses four historical panics (1837, 1873, 1907, and 1929). "It providesfascinating glimpses into the workings of American business and identifies a

confluence of factors that caused each recurring collapse, among them asset overvaluation, negligent banking practices, erratic government policy, and

the ebbs and flows of global capital and trade," Maggor writes.

"The exhibition both resonates with today's headlines while reminding us, as well, of oft-ignored experiences from the past. The involvement of Wall Street's most respected firms in the events of the past few years-and in every historical crisis included in this exhibition-shows that ostensibly conservative private actors can hardly claim to have had a stabilizing role in the marketplace" Maggor notes.

Jonathan Prude's article, "Images of Want," demonstrates how the poor and hard times were, and were not, pictured in America from the Revolution to the Civil War. He presents a selection of drawings, paintings and lithographs that focus on antebellum poverty.

"The particular ambivalence toward want apparent in the nation's pictorial record between the 1776 and 1861 was clearly an important expression of what the Republic of these years did and did not choose to face," Prude writes. The tendency was to find "poverty and sudden collapses increasingly difficult to ignore and yet continuously important to muffle…"

Jessica Lepler's article, "Pictures of Panic," focuses on caricaturist Edward Williams Clay, whose hand painted lithograph, "The Times," has become the iconic image of the Panic of 1837.

"The vague, quasi-realism of "The Times" suggests that hard times have a recognizably timeless quality," Lepler writes. "Such a perspective was anathema to prevailing economic thought in the 1830s. At the same time, it allowed Clay to achieve immortality, for its generic imagery transcended time and place and so appealed to future generations using a vastly different lexicon to think about the economy."

"Publick Occurrences," Common-place's blog edited by Jeff Pasley comments on the decision of the Texas Board of Education to remove references to Thomas Jefferson from the state's social studies curriculum.

The current issue of Common-place also contains the following book reviews: Dave Beyreis' review of The Invisible Hook: The Hidden Economics of Pirates by Peter Leeson; Catherine S. Cangany's review of Conflict on the Michigan Frontier: Yankee and Borderland Cultures, 1815-1840 byJames Z. Schwartz; R.S. Taylor Stoermer's review of A "Topping People": The Rise and Decline of Virginia's Old Political Elite, 1680-1790 byEmory G. Evans and Lynda Yankaskas' review of Scraping By: Wage Labor, Slavery, and Survival in Early Baltimore by Seth Rockman.

About Common-place

Common-place is a common place for exploring and exchanging ideas about early American history and culture. A bit friendlier than a scholarly journal, a bit more scholarly than a popular magazine, Common-place speaks—and listens—to scholars, museum curators, teachers, hobbyists, and just about anyone interested in American history before 1900. Common-place readers can join in the discussion of any of the journal's features by visiting the "Common-place Coffeeshop," a message board on the website. Common-place is sponsored by the American Antiquarian Society and the University of Oklahoma Department of History.

About the American Antiquarian Society

The American Antiquarian Society (AAS) is a learned society and independent research library, specializing in all aspects of American history and culture through 1876. Founded in 1812 by the patriot printer and publisher Isaiah Thomas, AAS is the third oldest historical organization in the United States and the first to take the whole nation as its scope. The AAS library is the preeminent repository of pre-twentieth-century American printed materials and related manuscript and graphic arts materials in the world. The Society also sponsors an array of programs to encourage the use of its collections and to foster a greater understanding of American history. The main office for Common-place is at AAS, 185 Salisbury St., Worcester, MA 01609-1634; telephone (508) 755-5221.

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