Murray N. Rothbard, “Comment” (1967)

Murray N. Rothbard’s conference commentary responds to Professor Dorfman’s account of economic thought in American seaport cities by shifting attention from thinkers who reflected regional development to those who opposed prevailing policies. Its central claim is that early American hard-money doctrines deserve treatment as sophisticated economic analysis, not dismissal as agrarian hostility to commerce. Moving from Boston’s paternalist Federalists to urban critics of banking and finally to Jeffersonian accounts of privileged urban growth, Rothbard challenges the identification of commercial development with monetary expansion and government assistance.

Boston supplies his opening counterexample to a simple correspondence between economic circumstances and economic ideas. Before the city’s industrial turn in the mid-1820s, the Essex clique already advocated extensive government intervention. Drawing on David Fischer, Rothbard presents Jonathan Jackson and his associates as defenders of elite authority, economic regulation, and public education designed to teach subordination. Jackson’s proposal for a state-owned newspaper extends this paternalism to the formation of public opinion: independence from readers would enable the press to inculcate officially approved virtues. The example establishes that opposition to laissez-faire did not simply follow industrialization; it could express an older hierarchical conception of society.

The commentary’s principal concern, however, is the converse phenomenon: opposition to banks arising within cities where banking was already established. Rothbard asks how radical hard-money sentiment emerged from commercial communities that had supported Federalism and easy-money policies during constitutional ratification. He criticizes historians for neglecting economic thought and, particularly, for treating opposition to banking as evidence of intellectual backwardness.

But, on the contrary, the hard-money theorists, including Adams, whether current economic thought agrees with them or not, were knowledgeable, sophisticated, and well versed in the classical economic literature.

The distinction between historical understanding and present-day agreement is important. Rothbard seeks to recover the intellectual coherence of positions that later opinion has marginalized. Their adherents included merchants and urban political leaders as well as agrarians, and their sources included Quesnay, Hume, the Bullionists, de Tracy, and Ricardo. He credits American writers with anticipating the Currency Principle of full specie reserves before its English formulation by Thomas Joplin.

Rothbard reconstructs this tradition through four connected propositions. Bank-credit expansion raises prices, increases imports, reduces exports, and drains specie, eventually forcing contraction and depression. Currency depreciation harms fixed-income recipients and raises import costs. New bank money redistributes resources toward borrowers and early recipients rather than adding productive capital. Finally, the Bank of Amsterdam supplies the ideal of a monetary system fully backed by specie.

An increase of bank money, then, is not an increase of capital, but a coerced transfer and misallocation of existing funds.

This distinction between money and capital joins economic mechanism to political criticism. On Rothbard’s account, the hard-money writers regarded banks’ distributive privileges and destabilizing effects as aspects of the same institutional problem. Their objections cannot therefore be reduced to resentment of favored groups: they also concern prices, international payments, investment, and cyclical contraction.

The Panic of 1819 provides the commentary’s historical turning point. Rothbard attributes the depression to bank inflation followed by contraction and traces how the experience confirmed existing opponents of banking while converting others. John and John Quincy Adams supported full specie backing; Baltimore’s Daniel Raymond developed a systematic critique, while Hezekiah Niles demanded restrictions on credit and enforcement of specie payments without embracing the full program. Philadelphia merchant Condy Raguet abandoned both inflationism and protectionism, and treated bank deposits as money alongside notes. The panic also helped shape the banking views of future Jacksonian leaders, including Martin Van Buren, whose subsequent encounter with Jefferson reinforced his change of position.

It should be noted that Raymond, Raguet, Van Buren, the Adamses, and so forth were in no sense "agrarian"; neither were they in any sense proletarian or representatives of the mechanics of their respective towns.

The varied examples undermine explanations that assign monetary doctrines automatically to occupational or class identities. Rothbard then reconsiders the agrarians themselves. Jefferson and John Taylor of Caroline opposed less the existence of cities than what they understood as artificial urban expansion financed by the rest of society. James Jackson’s criticism of Hamilton’s funded debt illustrates the argument: taxes transfer resources from productive citizens to creditors without creating additional capital. Taylor generalizes the distinction between productive earnings and revenues secured through public debt, banking privileges, and tariffs.

The "natural interest," which Taylor strongly favored, consists of whatever would flourish in the absence of aid by government.

The decisive contrast is thus not simply rural against urban, but production without government assistance against legally privileged accumulation. Rothbard connects this interpretation with Jackson Turner Main’s account of constitutional conflict and with Peter T. Bauer’s criticism of interventionist development policies. Lewis Mumford’s concept of the parasitic city offers a further parallel. Yet Rothbard explicitly stops short of classifying American seaports that way. His concluding proposal is investigative: historians should examine how much urban growth depended on coercively supported advantages. The commentary’s relevance lies in this combined research agenda—recovering neglected monetary reasoning while distinguishing economic growth from redistribution through political privilege.