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integrity of locally-issued notes, a factor which helped improve confidence in banking
services generally to the benefit of economic growth, particularly in the West. (Bodenhorn
2000) Until the development of a national market necessitated a national currency, the state
system better fit the needs of commercial exchange, permitting the development of viable,
local banking networks.
Technological Advances and the Commercial Integration of the Country
It is clear that commercial and financial integration did not broadly exist in the United
States in the 1830s. Richard Hildreth, writing in 1837, characterized the differential value of
local currencies in these terms:
In Boston, a Boston bank-note, passes in all commercial transactions the same
as coin; because every body knows, that should the holder of the note happen
to want the coin, he has only to step into State Street, present his note at the
bank, and carry the coin off at his leisure. But a Philadelphia bank-note does
not pass in Boston, in the same way. Few people in Boston want coin in
Philadelphia; and nobody wants the trouble of going to Philadelphia to get the
coin described in the note, and the additional trouble of bringing it to Boston.
(Hildreth 1837: 119-120)
Industrial growth in the United States associated with the introduction of fossil-fuel engines,
railroads, canals, telegraphy and other innovations in the 1830s, 1840s and 1850s would
dramatically increase demand for interstate exchange of banknotes. (Kim 1995; Perloff 1960)
Development of Canal, Railroad and Telegraph Networks and the Establishment of a
National Market
Convention