Revolving door governance: bank supervisors in the United States, 1863–1933

Abstract

From the founding of the National Banking System in 1863 until the New Deal in the early 1930s, ‘revolving door governance’ was foundational to financial oversight in the United States. The institutional design of bank supervision encouraged officials to hire early-career bankers who would bring professional knowledge and social capital into government service; who would develop further knowledge, skills, and professional contacts in government service; and who would continue their careers in private employment. In this way, federal officials sought to improve bank performance through public oversight and through the private careers of former supervisors. Revolving door governance, as a means of harnessing professional expertise for public purposes, emerged in the nineteenth century in the absence of organized professions and endured through banking professionalization and the institutionalization of bureaucratic careers in the Progressive Era. Although embraced by government officials as a solution fitted to the American political economy, revolving door governance had deep and enduring flaws. Favoritism and corruption undermined the effectiveness and legitimacy of the public-private career carousel. This article provides historical context for contemporary debates about regulatory capture and regulatory schooling while uncovering revolving door governance as an important mode of nineteenth-century U.S. state building in policy areas–such as bank supervision–that required specialized professional or technical knowledge.