Summary

Chapter Three focuses on financial crises and panics. Cohan’s essential argument is that these events occurred before Wall Street developed and would continue to occur whether or not it exists. As evidence, he cites the Panic of 1819, the country’s first nationwide financial crisis. This crisis, he notes, was primarily caused by easy access to credit, encouraged by the U.S. government as a way to fund the War of 1812. He notes, however, that after banks across the country collapsed, Wall Street endured and funded the economy’s revival. This process repeated itself multiple times throughout history: normal human behavior caused a banking crisis and Wall Street investors provided the capital to reinvest in industry, bringing the country back to prosperity. Rather than try to prevent crises, which Cohan argues are inevitable, Cohan suggests that we should examine the ways in which...