In an age when all manner of banking regulations, deposit insurance,
lenders-of-last resort, and other stabilizing forces temper the worst fluctuations
of the market economy, it is hard to imagine how erratic and uncertain
the conduct of commerce was in the antebellum era. In that earlier time,
commerce required countless acts of faith: that one's debtors would pay
what they owed; that one's money wasn't counterfeit; that the paper money
in hand could, at any time, be redeemed for specie. From the mid-1830s
onward, these questions became ever more pressing, especially after the
national bank was vetoed out of existence. In its place arose hundreds
of state banks, each printing their own currency, each retaining varying
amounts of specie in reserve. The instability of the system became apparent
as devastating financial panics swept the economic landscape.
This paper examines how central "confidence" became to the day-to-day functioning of the economy during this time. In the absence of any ironclad guarantees as to the present and future value of one's assets, participants in the market economy came to treasure the asset they called "confidence." This paper uses Herman Melville's Confidence Man as a means of exploring this theme. It examines how Melville, more than most of his contemporaries, recognized how confidence -- and not precious metals, as some people believed -- was the engine behind the creation of value. Indeed, in an economy levitated upward largely on paper "promises to pay," value was largely an act of faith. As such, it was not subject to easy calculation or rational prediction.