Chapter 9
Capital Markets: Financing Operations and Growth
Every high school textbook on American history proclaims the Louisiana Purchase from Napoleon as the crowning achievement of Thomas Jefferson's two terms as president of the United States, and an accomplishment almost entirely of his own doing. Reality is a bit different, however. And this difference highlights the importance of capital markets in supporting economic growth. While bankers are frequently portrayed as evil by politicians and the popular press, the Barings Bank of England came to the rescue several times as the republic came of age.
In the early nineteenth century the rapid growth of the West depended on the Mississippi River to reach global markets. Jefferson, along with Madison, was the leader of the Democratic-Republican Party. Jefferson relied on the western rural states for political support in his battles with the Federalist Party, whose strength lay in the eastern states. Therefore Jefferson sought expansion into the Mississippi River region and he was very concerned about the future of the Louisiana territory. Meanwhile, a weakened Spain ceded the Louisiana territories to France. England offered to step in to ease Jefferson's fears about the French, but Jefferson was more concerned about having the English at his back door than he was worried about the French. Jefferson, in fact, a former ambassador to France, had been the one person in Washington's cabinet who wanted to help France during its revolution. ...
