During the early twentieth century, the private banking system faced significant grassroots criticism. Keen public interest in financial questions reflected the political inheritance of Greenbackism and Populism. Influenced by these traditions, and also by the rising socialist movement, many Americans looked forward to establishing government banks.
Discussion of the subject of government banking evokes an enduring line of historical inquiry: “Why is there no socialism in the United States?” Over the years, numerous explanations have been offered to this question, including racial and ethnic animosities, high levels of social mobility, an entrenched two-party system, and an intensely individualistic culture. More recently, historians writing in the latter part of the twentieth century interrogated the premise of this question itself, revealing that socialism not only existed in the United States but had roots in the American heartland. Their research situated small Midwestern cities of the Progressive Era, the countryside of Oklahoma during the same period, and the nineteenth-century Indiana milieu that produced Eugene V. Debs at the center of the nation’s socialist history. When historians recovered the socialist past of the early twentieth-century United States, they also resurrected the memory of the movement’s substantial appeal to workers and farmers. In 1920, Debs famously received close to one million votes for president while imprisoned at the Atlanta Federal Penitentiary due to his opposition to World War I.
Yet an important dimension of the question of socialism’s appeal remains comparatively neglected: the prevalence and popularity, beyond the Socialist Party of America, of economic ideas that intersect and overlap with socialism. In this article, I will explore an aspect of the American past that has been lost: a mass movement of working people who sought to socialize banking. During the first half of the twentieth century, widespread public condemnation of the private banking system and the bankers who controlled this fundamental feature of capitalism led to broad support among working people for creating government banks and nationalizing privately owned ones.