Turning (Into) “The Great Regulating Wheel”: The Conversion of the Bank of the United States, 1791–1811

Abstract

Two volumes have recently challenged the assumption that institutional change either (1) takes the form of gradual adaptation in the service of continuity, or (2) entails the abrupt breakdown of existing arrangements. This scholarship has demonstrated that change can also be simultaneously gradual and transformative. Conversion represents one type of such change; it involves the use of institutional resources for new purposes. I chronicle the conversion of the Bank of the United States (1791–1811) from a fiscal auxiliary of the federal government to an institution with both fiscal and monetary capacities. More generally, I ask whether this change squares with existing understandings of how conversion unfolds. Conversion is thought to occur when (1) new actors assume control, or (2) new challenges prompt the redeployment of resources. I ask whether the Bank's conversion resulted from (3) efforts by institutional elites to invent a rationale for deployment. I find that the change in question resulted from genuine concerns about the supply of bank credit in the Early Republic. With the details of this historical transformation in mind, I briefly digress in order to address repeated claims that the Bank of the United States was or became a “central bank” during this period.