B 53875 4 DUP HG' 2613,N54 iR99? lIE 322. I I IWA THE FIRST BANK OF NEW YORK IBUILI)ING ON PRESENT LOCATION, 48 WALL ST.Corner-stone laid June 22. 1797. A HISTORY OF o t 3&ank of Jtu |ordk I1784- I884 Compiled from Official Records and Other Sources at the Request of the Directors BY,i HENRY W. bOMETT FOURTH EDITION I I DEDICATED TO MR. CHARLES E. BILL SENIOR DIRECTOR Preface A CENTURY has passed since the organization of the Bank of New York, and the board of directors have deemed it proper that some account of the origin and progress of the institution should be published in a suitable form for preservation. As the bank is the oldest institution of the kind in the State, and one of the oldest in the country, its existence covers a period of great changes in the financial policy and condition of the United States, and of severe trials in the business world. No attempt has been made to treat of these, except so far as the Bank of New York has been affected by them. A greater degree of interest naturally attaches to the early history of the bank than to the events of a later day, with which the reader is more familiar, and a larger proportion of space is therefore given to it in the narrative. In the appendix will be found some documents which are referred to in the earlier part of the history, and others which will interest those who have been in any way connected with the institution. Among these is a list of the presidents, cashiers, and directors of the bank from its foundation to the present time. v retttace The fac-similes of some of the notes issued by the bank at different periods of its existence, and of the checks drawn upon it by Talleyrand and Aaron Burr, will also, it is believed, be found of interest to the reader. The compiler of this volume desires to acknowledge the valuable aid he has received from Mr. Richard B. Ferris, the vice-president of the bank, who has furnished a large proportion of the statistics, and to whose diligent and intelligent research much of the interest of the narrative is due. Acknowledgments are also due to Mr. John Austin Stevens, from whose published volumes the material for the account of the condition of the city at the time of the organization of the bank, and also for the sketches of the early officers of the institution, was gathered; to General James Watts De Peyster, through whose kind offices a portrait of General Alexander McDougall, the first president of the bank, was obtained, and also to the Honorable William G. Thompson, of Detroit, for the use of the portrait; to Mr. C. V. Quilliard for the use of a miniature of Gulian Verplanck; to Mr. Matthew Clarkson for the steel engravings of his grandfather, Matthew Clarkson; to Miss Ann Wilkes for the use of a portrait of her father, Charles Wilkes; to Mr. D. Colden Murray for the use of a portrait of Isaac Roosevelt; to Mrs. James Suydam for the use of a portrait of Cornelius Heyer; to Mr. William vi preface Oothout for the use of a portrait of his father, John Oothout; to Mr. J. W. Halsey for photographs of Anthony P. Halsey; and to Messrs. Harper & Brothers for the use of a wood-cut of the Walton House. H. W. D. May, I884. I OI.hontcito PAGE Preface.. v CHAPTER I I780-1784 Condition of the Country previous to the Organization of the Bank - The Currency employed - Banking in the United States prior to 1784 - Organization of the Pennsylvania Bank -The Bank of North America -Its Usefulness and Success - Schemes for a Land Bank in New York - Alexander Hamilton's Opposition to the Project - Proposals for a Bank with Specie Capital -Meeting of Subscribers to the Bank of New York - Election of Officers, March I5, 1784 -Hamilton's Connection with the Enterprise —His Letter in Relation to it.... CHAPTER II I784 Constitution of the Bank of New York- The Officers of the Institution -General Alexander McDougallWilliam Seton -Mr. Seton's Visit to PhiladelphiaPayment of Subscriptions to the Stock of the Bank - Opposition to the Enterprise- Objections urged against it - Commencement of Business at the Bank - Rules and Regulations adopted for its Customers - Rates fixed for Gold and Silver Coin - Paper Currency of Pennsylvania and New Jersey in Circulation I ix Conttent CHAPTER III 1784-1791 Appearance and Condition of the City of New York in 1784 - The First Location of the Bank -The Walton House - Annual Meeting of the Stockholders in 1785 - Election of Jeremiah Wadsworth as President - Death of General Alexander McDougall in 1786 - First Dividend of the Bank - Annual Meeting in 1786 - Isaac Roosevelt elected President - Opposition to the Bank - Success of the Institution - Emission of Paper Money by the State in 1786 -Action of the Bank respecting it - Repeated Efforts to obtain a Charter for the Bank —Petition to the Legislature in 1789 for an Act of Incorporation-A Charter granted in I79I. 22 CHAPTER IV 1791-I795 Capital of the Bank - Its Assets and Liabilities at Date of Incorporation - Acceptance of the Charter - Amount of Bills and Notes discounted- Election of Gulian Verplanck as President in 1791 - Isaac Roosevelt -Alexander Hamilton's Relations with the Bank while Secretary of the Treasury —The Bank of the United States - A Branch of the Bank established in New York, in 1792 - Projects for a Rival Bank - Hamilton's Views respecting it - Efforts to obtain an Act of Incorporation for it - Failure of the Scheme - Deposit in the Bank of New York of Funds belonging to the State in I792 -Election of a State Director - Financial Distress in New York in I79I - Hamilton's Efforts for the Relief of the Merchants - Loan by the Bank to the Society for establishing Useful Manufactures - Resignation of William Seton as Cashier - Loan by the Bank to the City of Philadelphia in I793 - Loans to the State of New York and to the United States 36 x ContentB CHAPTER V 1796-I811 Change of Location of the Bank - The New Building in Wall Street - Purchase of United States Stock from the State in 1797 - Aid rendered to the State in 1797 - The Yellow Fever of I798 - Temporary Removal of the Bank to Greenwich in 1799 - Incorporation of the Manhattan Company in I799 -Action of the Bank thereupon - Death of Gulian Verplanck and Election of Nicholas Gouverneur as President in 1799 — Petition to the Legislature for Alterations in Charter in I8oi - Death of Nicholas Gouverneur and Election of Herman Le Roy as President in I802 - Proposal of the City Government with Reference to the Charter of the Bank - Resignation of Herman Le Roy and Election of Matthew Clarkson as: President in I804 - Extension of the Charter by the Legislature in I808-Loans to the State by the Bank - Petition of the Bank to the Legislature respecting the Bank of the United States.. 51 CHAPTER VI 1812-I824 Increase of the Capital of the Bank by Legislative Enactment authorizing Subscriptions for the Stock by Hamilton and Union Colleges in I813 — Financial Aid rendered the Government during the War of 1812 - Suspension of Specie Payments in 1814 - Condition of the Bank of New York at the Time - Action of the Secretary of the Treasury respecting Treasury Notes - Efforts to resume Specie Payments - Final Resumption in I817- Loan to the North River Steamboat Company - Temporary Removal of the Bank to Greenwich in 1822 -Loan of ~200,000 effected in London in 1822 -Payment of Amount due the State in 1823.. 65 xi Contmto CHAPTER VII I825-I85I Resignation of General Matthew Clarkson and Election of Charles Wilkes as President in 1825 —Loans to the Morris Canal and Banking Company in 1827 and 1829- Proposition of Amos Kendall in Behalf of the Secretary of the Treasury to make the Bank an Agent of the Treasury in 1832 - Resignation of Charles Wilkes and Election of Cornelius Heyer as President in 1832 - Petition for an Increase of Capital in 1835 - Financial Difficulties in 1836 - A Loan of ~I12,500 effected in London in 1836 - Purchase of Stock from the State in 1837 - Suspension of Specie Payments in 1837 - Resumption in 1838 - Difficulties of the Philadelphia Banks - Financial Aid to the State in I840- Death of Cornelius HeyerElection of John Oothout as President in I843 — Death of Joshua Waddington.. 76 CHAPTER VIII 1852-1884 Expiration of the Charter of the Bank - Reorganization under the Free Banking Act in 1853 - Increase of Capital to $2,000,000 in 1853 - The Panic of 1857 - Suspension of Specie Payments by the Banks in October, 1857 - An Injunction asked for against the Bank of New York - Decision in Favor of the BankResumption of Specie Payments in December, 1857 -The New Bank Building completed in I858 -Death of John Oothout in 1858 and Election of Anthony P. Halsey as President - The War of the Rebellion - Increase of Capital to $3,000,000 in 1859 - A Loan Committee appointed in I860 — Financial Aid extended to the Government by the Bank of New York - Death of Anthony P. Halsey in 1863 and Election of Charles P. Leverich as President -Orxii Content0 ganization of the Gold Department of the Bank in I864 - Reorganization of the Bank under the National System in I865 - Retention of its Former Title - Death of Charles P. Leverich and Election of Charles M. Fry as President in I876 - Reduction of Capital to $2,000,000 in I878 - Dividends paid by the Bank during its Existence - Conclusion.. 89 APPENDIX Letter of Alexander Hamilton and of William Seton. II3 Jeremiah Wadsworth, Second President of the Bank. 116 List of the Presidents and Cashiers of the Bank of New York. (Brought up to I922.).... 120 List of the Directors of the Bank of New York. (Brought up to I922.)...... 122 Act of Incorporation passed March 2I, I791... I28 Letter from Alexander Hamilton to the Directors of the Bank of New York..... 136 List of Stockholders of the Bank of New York at the Time of its Incorporation in 179I.... 137 UL0t of 311tuttatton PAGE THE BANK OF NEW YORK, 1798... Frontispiece PORTRAIT OF ALEXANDER HAMILTON....10 PORTRAIT OF GENERAL ALEXANDER MCDOUGALL.. I6 THE WALTON HOUSE, 1784...26 PORTRAIT OF ISAAC ROOSEVELT..... 38 FAC-SIMILES OF CHECKS...... 48 PORTRAIT OF GULIAN VERPLANCK..... 58 PORTRAIT OF HERMAN LE ROY.. 62 FAC-SIMILES OF BANK NOTES, I809 AND I8I4.. 64 PORTRAIT OF MATTHEW CLARKSON.... 78 PORTRAIT OF CHARLES WILKES..... 82 PORTRAIT OF CORNELIUS HEYER..... 86 FAC-SIMILES OF BANK NOTES, 1838 AND 1843.. 92 PORTRAIT OF JOHN OOTHOUT..... 94 PORTRAIT OF ANTHONY P. HALSEY....96 PORTRAIT OF CHARLES P. LEVERICH.... I02 PORTRAIT OF CHARLES M. FRY.... 106 PORTRAIT OF RICHARD B. FERRIS..... 08 I ?ftitorp of te 3anuk of jetb orkt CHAPTER I 1780-1784 Condition of the Country previous to the Organization of the Bank. - The Currency employed. - Banking in the United States prior to 1784.- Organization of the Pennsylvania Bank. - The Bank of North America. - Its Usefulness and Success. - Schemes for a Land Bank in New York. -Alexander Hamilton's Opposition to the Project. - Proposals for a Bank with Specie Capital. - Meeting of Subscribers to the Bank of New York. - Election of Officers, March i, 1784. - Hamilton's Connection with the Enterprise.His Letter in Relation to it. THE Bank of New York began its existence under conditions that are interesting from several points of view. The state of the country at that time, as well as of the city that has since grown to such proportions, the reputation of the eminent statesman whose name is associated with the beginning of the enterprise, and the fact that the Bank of New York was the first institution of the kind organized in this State, give to its early history a peculiar importance. The country had just concluded, in 1783, a long and exhausting struggle with Great Britain; and when,I al Votorr of peace was declared, its financial condition was far from satisfactory. Great suffering had been caused by the depreciation of the Continental currency, which, having become worthless, had at last ceased to circulate. It was estimated that the depreciation and repudiation of the Continental bills of credit had imposed a tax upon the country amounting to seventy millions of specie dollars. Besides the paper currency authorized by Congress, all the States had issued bills of their own; although in some of them the obligations had been called in and funded at their nominal value. Yet, although the expedients which had been resorted to had proved to be unsuccessful, some of the States continued to make experiments in finance which did not depend upon specie as a basis. In the State of New York a good deal of gold and silver was in circulation, and for some years the amount had been increasing. This was in consequence of the large payments by the English army at New York, the remittances of gold and silver made by France to the army and navy here, and by considerable importations from Havana and elsewhere. For several years after the war the currency was expressed in pounds, shillings, and pence. The money of account of the United States, the dollar, dime, cent, and mill, was legally adopted in New York by an act passed by the Legislature, January 27, 1797, which provided that a dollar should be equivalent to " four 2 ~te L3anBt of lebw jorft tenths of a pound," and fractions thereof in proportion. The "Lyon dollar," which was introduced by the Dutch, and which was for some time during the Colonial period the only legal tender, had entirely disappeared. But in its place had come guineas, and doubloons, and pistoles, and Johannes pieces, and moidores, and sequins. The dollar was therefore only a money of account; and, like the mark banco of Hamburg, was a fictitious symbol by which all others were measured. The history of banking in the United States before the establishment of the Bank of New York is a brief one. The Pennsylvania Bank, which was organized in Philadelphia during the Revolutionary War, was founded for the purpose of facilitating the operations of the government in transporting supplies for the army. It began its useful work in I780, and continued in existence until after the close of the war; finally closing its affairs toward the end of the year I784. But the need was felt of a national bank which should not only aid the government on a large scale by its money and credit, but should extend facilities to individuals, and thereby benefit the community as well as the State. Through the influence and exertions of Robert Morris, then Superintendent of Finance for the United States, the Bank of North America, at Philadelphia, was organized with a capital of $400,000. It was incorporated by Congress in December, I781, 3 a 3f~tor? of and by the State of Pennsylvania a few months afterward. Its success was immediate and complete. It not only rendered valuable and timely aid to the United States Government and to the State of Pennsylvania, but it greatly assisted in restoring confidence and credit to the commercial community, and afforded facilities to private enterprise that were especially welcome. So profitable were the transactions of the bank while it was rendering such services to the country and to individuals, that, during the years 1783 and I784, it declared annual dividends averaging fourteen per cent. This result was so satisfactory to the stockholders that in February a new subscription of one thousand shares, of $500 a share, was speedily taken up. A scheme for another bank, to be called the Bank of Pennsylvania, was soon set on foot; but by an arrangement which gave to the projectors of the enterprise an interest in the additional capital of the original bank, the rivalry was avoided. The par value of the stock being reduced, the capital of the bank amounted to $830,000. The success of the Bank of North America, and the advantages which the citizens of Philadelphia enjoyed from the facilities it offered them, naturally suggested the founding of a similar enterprise in the city of New York. On the i2th of February, 1784, an article appeared in the New York "Packet," then a semiweekly paper, setting forth the advantages of a bank, and pro4 ~be aani of 0ebo Por posing the establishment of an institution to be called the Bank of the State of New York, with a capital of $750,000, in shares of $Iooo each. The management was to be in the hands of a governor and six directors, who were to serve without compensation until the first dividend was declared. Two of the directors and the governor were to be in constant attendance at the bank, and no money was to be paid out without their consent. The subscribers were to pay one third of their subscriptions in cash, and for the other two thirds landed security was to be given by mortgage or deed of trust. No lands out of New York and New Jersey were to be accepted, and all lands were to be appraised at not more than two thirds of their value. The directors could borrow to the extent of one third of the value of the lands in case they found it necessary to increase the cash resources of the bank, but no further. The folly of this enterprise and the danger to the community which would attend it were soon pointed out to the public by several writers, in the papers of the day. It was shown that a land bank would not answer the purposes of the merchants, that the public would not deposit their money in a bank which circulated more paper than was in due proportion to the specie actually held by the company, and that in time of trouble the bank could afford no assistance to individuals or to the State. It was also maintained that 5 5% retore of the hope of deriving any interest from landed property by this means would be disappointed. For as it would finally be necessary to base the circulation upon the stock of specie on hand, the landed security would be unavailable. Others took the ground that such an institution would be the beginning of a landed aristocracy in this country. Alexander Hamilton joined in the opposition to the scheme, and in the following extract from a letter to J. B. Church, dated New York, March 1o, 1784, refers particularly to it: - "In my last to you I informed you that a project for a land bank had been set on foot by Mr. Sayre, as the ostensible parent; but that I had reason to suspect the Chancellor [Livingston] was the true father. The fact has turned out as I supposed; and the Chancellor, with a number of others, has since petitioned the Legislature for an exclusive charter for the proposed bank. I thought it necessary, not only with a view to your project, but for the sake of the commercial interests of the State, to start an opposition to this scheme; and took occasion to point out its absurdity and inconvenience to some of the most intelligent merchants, who presently saw the matter in a proper light, and began to take measures to defeat the plan. " The Chancellor had taken so much pains with the country members, that they all began to be persuaded that the land bank was the true philosopher's stone that was to turn all their rocks and trees into gold; and there was great reason to apprehend a majority of the Legislature would have adopted his views. It became necessary to convince the projectors themselves of the impracticability of their scheme; and to 6 tje 3anft of Deb pot o counteract the impressions they had made by a direct application to the Legislature." The agitation of the subject resulted in a project for a bank which should be founded on a more solid basis. The following notice appeared in the New York "Packet" of February 23d:BANK It appearing to be the disposition of the gentlemen in this city to establish a bank on liberal principles, the stock to consist of specie only, they are therefore hereby invited to meet to-morrow evening, at six o'clock, at the Merchants' CoffeeHouse, where a plan will be submitted to their consideration. As a result of this call a meeting of the principal merchants and citizens was held at the Coffee-House on the 24th, and another on the 26th, of February. General Alexander McDougall was made chairman, and a series of proposals for the establishment of a bank were read and unanimously agreed to. They provided that the capital stock of the bank should consist of five hundred thousand dollars in gold or silver, divided into one thousand shares of five hundred dollars each; that as soon as five hundred shares should be subscribed for, a general meeting of the subscribers should be held to choose a president, twelve directors, and a cashier, and to invest them with the proper authority; that at all meetings of the subscribers or stockholders, every subscriber or stockholder having one or more shares, to the number of four, should have one 7 a 1)0to1ti of vote for each share; a subscriber for six shares should have five votes, one for eight shares six votes, and one for ten shares seven votes; but no stockholder should have more than seven votes, be the number of his shares ever so great. A dividend should be made at the end of twelve months, and every six months afterward; and no subscriber or stockholder should be answerable for the debts of the bank beyond the amount of his stock. The proprietors of the bank, wishing to encourage trade, proposed to establish the rate of discount at six per cent. per annum. The following gentlemen were unanimously appointed a committee to receive subscriptions: SAMUEL FRANKLI N, COMFORT SANDS, HENRY REMSEN, '_ THOMAS B. STOUGHITON,' WILLIAM MAXWELL,' ALDERMAN NEILSON. Subscription books were also lodged with John Alsop, Broadway, Robert Bowne, No. 39 Queen Street, and Nicholas Low, No. 27 Water Street. The opportunity of subscribing to a bank upon so substantial a basis was quickly embraced by the public, and five hundred shares having been taken, a meeting of the stockholders was called to be held at the CoffeeHouse at ten A. M. on Monday, the 15th of March, 1784, to elect a president, cashier, and twelve directors. At the meeting held pursuant to this notice, a ballot 8 ~e canfi of iPeo port was taken, which resulted in the choice of the following officers:General ALEXANDER MCDOUGALL, President. SAMUEL FRANKLIN, WILLIAM MAXWELL, ROBERT BOWNE, NICHOLAS Low, COMFORT SANDS, DANIEL MCCORMICK, ALEXANDER HAMILTON, ISAAC ROOSEVELT, JOSHUA WADDINGTON, JOHN VANDERBILT,,THOMAS RANDALL, THOMAS B. STOUGHTON, Directors. WILLIAM SETON, Cashier. The enterprise had made some progress before Alexander Hamilton was solicited to become connected with it. It appears that he had already been interested in a similar project which had been set on foot by other persons. In the letter already quoted from, he says, referring to the defeat of the scheme for a land bank:"Some of the merchants, to effect these purposes, set on foot a subscription for a money bank, and called upon me to subscribe. I was a little embarrassed how to act, but upon the whole I concluded it best to fall in with them, and endeavor to induce them to put the business upon such a footing as might enable you, with advantage, to combine your interests with theirs; for since the thing had been taken up upon the broad footing of the whole body of the merchants, it appeared to me that it never would be your interest to pursue a distinct project in opposition to theirs; but that you would prefer, so far as you might choose to employ money in this way, to become purchasers in the general bank. The object, on this 9 ~tIe Banif of jeci Porft supposition, was to have the bank founded on such principles as would give you a proper weight in the direction. Unluckily, for this purpose, I entered rather late into the measure; proposals had been agreed upon, in which, among other things, it was settled that no stockholder, to whatever amount, should have more than seven votes, which was the number to which a holder of ten shares was to be entitled. At an after-meeting of some of the most influential characters, I engaged them so far to depart from this ground as to allow a vote for every five shares above ten. "The stockholders have since thought proper to appoint me one of their directors. I shall hold it until Wadsworth and you come out, and, if you choose to become parties to this bank, I shall make a vacancy for one of you. I enclose you the constitution, and the names of the president, directors, and cashier. "An application for a charter has been made to the Legislature, with a petition against granting an exclusive one to the land bank. The measures which have been taken appear to have had the effect upon the minds of the partisans of the land bank." Z/" CHAPTER II 1784 Constitution of the Bank of New York. - The Oficers of the Institution. - General Alexander McDougall. - William Seton. - Mr. Seton's Visit to Philadelphia. - Payment of Subscription to the Bank. - Opposition to the Enterprise. - Objections urged against it. - Commencement of Business at the Bank. - Rules and Regulations adopted for its Customers. - Rates fixed for Gold and Silver Coin. - Paper Currency of Pennsylvania and New Jersey in Circulation. THE constitution which was adopted at the meeting of subscribers embodied the conditions set forth in the original call, but with some important modifications. The document was written by Alexander Hamilton, and, as given in his complete works, edited by his son, John C. Hamilton, is as follows:CONSTITUTION OF THE BANK OF NEW YORK. ARTICLE I. - That the Bank shall be called by the name and title of the Bank of New York. ARTICLE 2. - That the capital stock shall consist of five hundred thousand dollars in gold or silver, divided into one thousand shares of five hundred dollars each share; and that a majority of all directors may, at their discretion, open new subscriptions for increasing the capital stock, where they shall judge it for the interest of the Bank so to do, provided the said new subscriptions do not exceed the sum of five hundred thousand dollars. ARTICLE 3. - That thirteen directors be annually chosen II ia Ittorr of by a majority of votes, who are to have the sole conduct and management of the Bank. At the first general election, the president and cashier are to be elected by the subscribers to the Bank, but forever afterward the thirteen directors are to choose a president from among themselves; and the cashier, as well as every other person employed in the Bank, is to be appointed and paid by them, and be under their immediate control. ARTICLE 4. - That the first election be on the I5th day of March, 1784; that the next general election for thirteen directors shall be on the second Monday in May, 1785; and so continued yearly, and every year; but in case of any vacancy in the direction by death, resignation, or otherwise, public notice shall be given within one week after such an event, that the vacancy may be filled; the election to be within fourteen days after such notice. ARTICLE 5. - That every holder of one or more shares, to the number of four, shall have one vote for each share. A subscriber of six shares shall have five votes; eight shares, six votes; and ten shares, seven votes; and one vote for every five shares above ten. ARTICLE 6. - That no stockholder, after the first election, shall be entitled to vote, unless such person has possessed the stock three months previous to the day fixed for an election of directors, or any other general purpose. And if any stockholder (who shall have been a resident in this State at least twelve months immediately preceding such election) should be absent, he shall be entitled to vote by proxy, properly appointed; but in no other case shall any vote be admitted by proxy. ARTICLE 7. - That no person shall be eligible to serve in the office of director unless he be a stockholder. ARTICLE 8.- That the board of directors determine the manner of doing business, and the rules and forms to be purI2 tje 2anfi of jw Pornt sued, appoint and employ the various clerks and servants which they may find necessary, and dispose of the money and credit of the Bank for the interest and benefit of-the proprietors; but they are not to employ the money or credit of the Bank in the drawing or negotiating of any foreign bill, or bills of exchange, or advance a loan to any foreign power whatever. ARTICLE 9. - That if at any time it shall be the opinion of a majority of the directors that any of their body are guilty of neglect of duty, or any malpractice, whereby the interest of the Bank is or may be affected, such majority of the directors, with or without the consent of the president, may advertise for a general meeting of the stockholders, to lay before them a complaint of such neglect of duty, or breach of trust; and if it appears to the stockholders to be well founded, such director or directors may be removed by a majority of votes. ARTICLE IO. -That if any of the directors shall convert any of the money or property of the Bank to his own particular use, or be guilty of fraud or embezzlement, he shall forfeit his whole share of stock to the company, and be expelled the direction by a majority of all the directors, and thereby rendered incapable of ever serving again in that office. f ARTICLE II. - That no president or director shall receive any other emolument for his attendance on the duties of the office than such as shall be fixed and agreed to by a majority of votes at a general election. ARTICLE I2.- That there shall be a meeting of the directors quarterly, for the purpose of regulating the affairs of the Bank, and not less than seven shall constitute a board who may adjourn from time to time, and the president if necessary may call a meeting of the directors at any intermediate time; at every meeting of the directors all questions are to be decided by a majority of votes. ARTICLE 13. -That the president or a majority of the directors shall have power to call a general meeting of the I3 .a fitor of stockholders by an advertisement in the public papers, whenever it appears to them there is urgent occasion. ARTICLE 14. - That the cashier and every principal clerk do give a security for their trust to such an amount as a majority of all the directors shall require. ARTICLE 15. — That all notes issued by the Bank shall be signed by the president for the time being, or any director who may be fixed upon for that purpose, and countersigned by the cashier, or in his absence by a clerk to be appointed by the directors. ARTICLE I6. -That no stockholder shall be accountable to any individual or the public for money lodged in the Bank for a greater sum than the amount of his stock. ARTICLE 17. -That such a dividend of the profits of the Bank as a majority of all the directors shall determine to make, shall be declared at least fourteen days previous to the general election in May, 1785; and that all subsequent dividends shall be made half yearly. ARTICLE I8. -That all shares shall be transferable, such transfer to be made by the proprietor or proprietors, or his, her, or their lawful attorney, in books kept at the Bank for that purpose, which books shall be always kept open at the usual office hours, except on particular days previous to the declaring a dividend, of which due notice shall be given. ARTICLE I9.- That the president and directors shall petition the Legislature to incorporate the subscribers or stockholders under the name and title of the President, Directors, and Company of the Bank of New York, and to pass laws for inflicting the most exemplary punishment on those who may commit fraud or embezzlement; and also to punish the counterfeiters of bank notes and checks in the like exemplary manner, with such other clauses in the act as they shall judge necessary and proper for the security of the stockholders and the public. 14 ~e z3anB of Ojeb York ARTICLE 20.- That this constitution shall be fairly transcribed upon parchment and remain at the Bank; the president and directors when chosen, and prior to the opening of the Bank, shall severally sign and seal the same, and take an oath or affirmation before a magistrate that he will, to the best of his knowledge and abilities, conduct the business of the Bank for the interest and benefit of its proprietors, and agreeable to the true intent and meaning of this constitution, which oath or affirmation shall also be taken by every future director when chosen, and before he enters upon the execution of his trust. As the newly elected officers of the bank were not familiar with the methods of banking business, Mr. Seton, the cashier, was empowered to go to Philadelphia, with a letter of introduction from Hamilton, and procure the desired information from the Bank of North America.' The new institution was fortunate in the choice of its principal officers, not only on account of their capacity and their fitness for the offices they were to fill, but because they represented two distinct elements in the community at that time. General Alexander McDougall was born in the island of Islay, Scotland, in 1731, and came with his father to New York when a boy. In his younger days he followed the seas and became master of a small coasting sloop. In 1758 he commanded a privateer called the Tiger; but relinquishing a seafaring life he settled in New York. He was successful in business, i See Appendix. I5 a ftorV of took an active part in politics, and like many others of foreign birth, warmly espoused the interests of his adopted country. In 1765, at the age of thirty-four, he was one of the most prominent of the "Sons of Liberty." In I775, when affairs were rapidly approaching a crisis, McDougall was placed at the head of the first of the four patriot regiments raised in New York. On the 9th of August, I776, he received his commission as brigadier-general, and superintended the embarkation of the Americans in their retreat after the battle of Long Island. He also succeeded General Putnam in command of the Highlands, and was in charge of West Point after Arnold's treachery. He was commissioned as major-general in I777, and after peace was declared he was elected to the new State Senate. When the Society of the Cincinnati was formed he was chosen as its president. He was a man of strong will, vigorous and fearless in the expression of his opinions on political subjects, and he naturally exerted a considerable influence in the community in which he lived. William Seton was also a Scotchman by birth, having been born in Fifeshire, Scotland, in I746. He came to America at an early age, and in 1767 married a daughter of Mr. Richard Curson of Maryland. In I768 the young merchant was admitted to membership in the Chamber of Commerce, being engaged in the shipping and importing business at Cruger's Dock with his brother-in-law, and at a later period was of the firm I6 PRESiDENT f78+ -17& 5 Zte l3ant of Act jDorVI of Seton, Maitland & Co. He seems not to have taken an active part in the events which immediately preceded the Revolution. Though moderate in his opinions, his sympathies were evidently with the royal side, and he remained in the city when the British troops took possession in the fall of I776. His business was probably not prosperous during the war, for in 1777 he was appointed assistant warehouse keeper, an office which he retained until I780. In 1783, when the new line of French packets began to run to the port of L'Orient, he was placed in charge as deputy agent under the French consul. He was especially fitted for the office of cashier of the bank by his sterling business qualifications, his diligent, precise, and methodical habits, and by an amiability and courtesy which made him very popular. His appointment as an officer of the bank, with General McDougall, the early leader of the "Sons of Liberty," and a distinguished officer of the Revolution, shows the esteem in which Mr. Seton was held by the liberal party at the close of the war. On reaching Philadelphia, Mr. Seton found everything at the Bank of North America in a state of great confusion. The opposition to the bank by the projectors of a new institution had resulted in so far reducing the stock of 'specie as to make it necessary to stop discounting. But an arrangement was made by which those interested in the new bank were allowed 17 a itotr of to take stock in the Bank of North America, and the serious results which had been anticipated were happily avoided.1 The subscription books to the Bank of New York were advertised to be kept open for further subscriptions at the offices of Robert Bowne, Esq., No. 39 Queen Street; Nicholas Low, Esq., 27 Water Street; and Wm. Maxwell, Esq., No. 4 Wall Street. On the ist of May, 1784, public notice was given to the subscribers to pay the first moiety of their subscriptions, on the ist of June, to William Seton, cashier, at No. 67 St. George's Square; and, on the 22d of May, "the president and directors qualified before His Worship, the Mayor, as required by the constitution." The organization of the bank seems not to have satisfied all the subscribers, for, in Mrs. Elizabeth Holt's New York "Journal and State Gazette," a few days later, one of them complained that the directors did not call a meeting to decide whether or not they would proceed without first obtaining a charter. He says: - " I am a subscriber to that institution, and heartily wish that a bank which may have the confidence of the Government, as well as of the merchants of the city, may be established; but unless it can obtain a charter, I cannot consider myself under any obligation to pay in my subscription. When the regulations were published and agreed upon, it was stipulated that no subscriber should be liable for more than his stock. This 1 See Appendix. I8 1je Lanti of 1ebm &orb presupposes the grant of a charter; for, without it, this article could not take effect; should the subscription money be at present paid in, the stockholders become to all intents and purposes bankers, and every man is liable - however small his share may be - for all the engagements of the bank to the extent of his whole fortune." But so desirous was the mercantile community to obtain the facilities of a bank, and so encouraging a prospect of ample returns, in view of the dividends of the bank in Philadelphia, was offered by the enterprise to investors, that it was thought inexpedient to wait for any legislation in the matter. Accordingly, on the 7th of June, the subscriptions having been paid in, and some deposits already having been made, notice was given that the bank would formally commence business on Wednesday, the 9th of June, I784; and that applications for discount would be received on the succeeding Wednesday. The following rules, to be observed at the bank, were also published:"The bank will be open every day in the year, except Sundays, Christmas Day, New Year's Day, Good Friday, the Fourth of July, and general holidays appointed by legal authority. "The hours of business will be from ten to one o'clock in the forenoon, and from three to five o'clock in the afternoon. }" Discounts will be done on Thursday in every week, and bills and notes brought for discount must be left at the bank on Wednesday morning, under a sealed cover, directed to William Seton, Cashier. The rate of discount is at present fixed at six per cent. per annum; but no discount will be made for longer than thirty days, nor will any note or bill be discounted 19 a Vfotorr of to pay a former one. Payment must be made in bank notes or specie. Three days of grace being allowed upon all bills, the discount will be taken for the same. "Money lodged at the bank may be re-drawn at pleasure, free of expense; but no draft will be paid beyond the balance of the account. "Bills or notes left with the bank will be presented for acceptance, and the money collected free of expense; in case of non-payment and protest, the charge of protest must be borne by the party lodging the bill. "Payments made at the bank must be examined at the time, as no deficiency suggested afterward will be admitted. "Gold coin is received and paid at the Bank of New York at the following rates:A Johannes, weighing i8 dwt... $I6.00 A half " " 9 "... 8.oo A Spanish doubloon, " 17 ".. I5.00 A double Spanish Pistole, " 8 " 12 gr.. 7.48 A Spanish Pistole, " 4 " 6 ". 3.72 A British Guinea, " 5 " 6. 4.64 A British half Guinea, " 2 " 5". 2.32 A French Guinea, " 5 " 4 " ~ 4.52 A Moidore, " 6 " 8 ". 6.oo A Caroline, " 6 " 8. 4.72 A Chequin, " 2 " 4. 1.78 "An allowance is made on all gold exceeding the above standard at the rate of three pence per grain; on all gold short of the above weight four pence per grain is deducted. "By order of the Board of Directors, "ALEXANDER MCDOUGALL, Pres't." Both the Johannes and the moidore were gold coins of Portugal; the Johannes being so called from the figure of King John which it bore. The Caroline was a German coin, and the pistole was of the same value 20 ~je 3antit of 3ebo jorI as the Louis d'or. The chequin, sometimes written zeechin, zechin, and sequin, was a gold coin, and had its name from La Zecha, a place in the city of Venice, where the mint was situated. The clipping and sweating of the gold coins in circulation had long been carried on in New York, and as far back as I770 the Chamber of Commerce had stigmatized it as "an evil and scandalous practice," and had passed a resolution agreeing not to take the light coins, except at a discount of fourpence for each deficient grain. A good deal of trouble was experienced at the bank after it commenced business, from this source, and Hamilton was for some time occupied in devising a method of receiving and paying out gold. This had been done elsewhere by weighing in quantities; a practice which was attended with many difficulties, and for which, in the absence of a national coinage, it was not easy to find a substitute. The paper currency of Pennsylvania and of New Jersey, which circulated in large quantities in New York, gave a great deal of trouble to the merchants, and the subject was frequently discussed by the Chamber of Commerce. As late as the 3d of April, 1787, a committee was appointed by that body, to consider what countenance should be given to the circulation of the currency of other states, and a report was made that " the Chamber should not for the present interfere in the matter." 21 CHAPTER III' 1784-I79I Appearance and Condition of the City of New York in 1784.- The First Location of the Bank. - The Walton House. - Annual Meeting of the Stockholders in 1785. - Election of Jeremiah Wadsworth as President. - Death of General Alexander McDougall in 1786. - First Dividend of the Bank. - Annual Meeting in 1786. - Isaac Roosevelt elected President. - Opposition to the Bank. - Success of the Institution. - Emission of Paper Money by the State in 1786.Action of the Bank respecting it. - Repeated Efforts to obtain a Charter for the Bank. - Petition to the Legislature in 1789 for an Act of Incorporation. - A Charter granted in 179I. IT will not be inappropriate to recall the appearance of the city and the condition of affairs at the time when the Bank of New York first opened its doors to the public. The limits of the settled part of the city did not extend beyond Murray Street. According to Mr. John Austin Stevens, the greater part of the population dwelt within a line drawn from the North River at the foot of Reade Street, across the island in an easterly direction to the East River at the foot of Catherine Street. Beyond, on a part of what was called the Out-Ward, was an irregular parallelogram, with Division Street as a base, extending easterly as far as Norfolk Street, and northerly to Hester Street, through which ran the old Bowery Lane to Kingsbridge. The total surface averaged about three quar22 ~1e tanft of Aebo ott ters of a mile in width, and was embraced within a circumference of about four miles. The streets throughout the city were irregular, the better class of houses of brick, mostly painted, and with tiled roofs. Water and Queen (now Pearl) streets were low and narrow, poorly paved, with indifferent sidewalks, in some parts with none. They were the chief business streets. Broad Street, which extended from the Exchange, at the water side, to the City Hall, on the corner of Wall Street, was the main avenue. Wall Street was one of the widest streets; the buildings in it were large and elegant. The upper part was occupied by fashionable residences; the lower was exclusively given up to stores and offices, here and there interspersed with lodging-houses. At the comer of Wall and Broad streets stood the City Hall. It was built upon broad open arches through which the pathway lay from street to street. Nearly opposite was the modest dwelling of Alexander Hamilton, upon part of the present site of the Mechanics' Bank. A statue of William Pitt stood at the corner of William Street, mutilated and defaced after his speech against American Independence. Great Dock Street, or that part of Pearl Street between Whitehall and Coenties Slip, had long been the court end of the town, but Wall Street had grown to be a rival as a seat of fashion. Here dwelt the Verplancks, the Ludlows, the Marstons, the Winthrops, the Buchanans, and other well23 a itoitor! of known families. William Street was the principal street for the retailing of dry goods. Broadway was then, as now, the backbone or ridge of the island. It was fast growing in favor as the most agreeable part of the city, and the buildings upon it extended from the Bowling Green as far as St. Paul's Church. From the rear of the houses on Broadway gardens were laid out on the slope which ended on a sandy beach, and the street commanded a delightful prospect of the town and the Hudson. Cortlandt Street was the principal street cut through the green embankment, and at its foot were the Bear (now Washington) Market, and the ferry to Powles Hook, now Jersey City. On the corner of Vesey Street a signboard bore the inscription "Road to Albany," and on the opposite corner, on the house where the "New York Herald" building now stands, a similar sign pointed out to the traveler the "Road to Boston." At the foot of Maiden Lane stood the Fly Market, so called from " Vly " or valley, its site having originally been a salt meadow. At this point was the ferry to Brooklyn, then a pleasant agricultural town of three or four hamlets or neighborhoods and with some four thousand inhabitants. It is difficult to estimate accurately the population of New York in I784. A considerable change had taken place within a year by the emigration of the loyalists, 24 ~be 1 3anBi of Qeb i otorf the return of the patriots who had left the city during the war, and the influx of newcomers who were to make the city their home. Two years later, in 1786, the dwelling-houses numbered 3340 according to Noah Webster, a trustworthy authority, and the population 23,604. New York was therefore, at that time, the second city in size in the country; Philadelphia the first, having 40,000 inhabitants; Boston 16,000, Baltimore I5,000, and Charleston Io,ooo. The first directory of the city of New York was published in 1786; and a comparison of the little volume with those of the present day strikingly illustrates the growth of the city during the century. In the directory for 1786, which is printed in large type, 33 small pages, 3x6 inches, contain the names of 933 residents. The city directory for 1884 contains about 300,029 names, occupying 1940 pages of fine type. Two additional leaves in the directory for 1786 have a list of the inhabitants of Brooklyn numbering I28 names. The Brooklyn directory for 1884 contains 161,238 names in its 1456 pages. Inland communication for some time after the war was slow and infrequent. In 1787 the Boston stage set out from Hall's Tavern, No. 49 Cortlandt Street, every Monday and Thursday morning, and reached Boston in six days. The fare was four cents per mile. In 1785 the first stages began their trips between New York and Albany. In 1787 two stages set out for 25 a fFtort of Philadelphia at four o'clock every afternoon, stopping for the night in Newark, and reaching Philadelphia the next day. A line of packet ships, five in number, was established by French capital in the fall of 1783, and trips were made monthly to the port of L'Orient. The line was under the direction of the Consul-General of France at New York, and the immediate supervision of William Seton, afterward cashier of the Bank of New York. The Black Ball line of packets to England was not established until 18I6. These facts give some idea of the appearance and condition of the city when the first bank was established in it. The original location of the Bank of New York was No. 67 St. George's Square (afterward changed to Franklin Square in honor of Benjamin Franklin), and also known as No."I56 Queen Street, afterward Pearl Street. The building was the wellknown Walton House; an edifice of historic interest, and until within a few years one of the relics of old New York. It was a handsome building of yellow Holland brick, with brown-stone lintels and massive walls, fifty feet wide and three stories high, and was entered by a "stoop" raised a few steps above the street. It was built by William Walton in 1752 for a private residence; and few of those who saw the shabby old lodging-house that stood until I88I opposite the establishment of Messrs. Harper Brothers 26 -I,_ THE WALTON HOUSE. THE WALTON HOUSE, IN WHICH THE BANK OF NEW YORK COMMENCED BUSINESS, JUNE 9, 1784. ~te 3anft of PeoD Voqu imagined that it had been one of the elegant mansions of colonial times. The bank continued to occupy a part of this building until I787, when it removed to No. I Hanover Square, where the Cotton Exchange now stands. This property was bought for five thousand pounds, New York currency. The cashier, Mr. Seton, lived for a time in the building. At the annual meeting held on the 9th of May, 1785, Jeremiah Wadsworth was elected president, and the following gentlemen, directors:NICHOLAS Low, THOMAS STOUGHTON, JAMES MCCORMICK, ALEXANDER HAMILTON, SAMUEL FRANKLIN, ISAAC ROOSEVELT, THOMAS RANDALL, COMFORT SANDS, ROBERT BOWNE, JOSHUA WADDINGTON, WILLIAM MAXWELL, JOHN VANDERBILT. Mr. Wadsworth was the friend to whom reference is made in Alexander Hamilton's letter of March Io, I784. His connection with the bank terminated with the official year. General McDougall, who declined a reflection, died on the 9th of June, 1786, and the following tribute to his memory was published in the New York "Packet" of the I2th:"In the death of this gentleman, his family lost an affectionate head, his friends a warm and steady friend, and his country a citizen - the dearest object of whose latest mo27 !a itotrr of ments was the Public Good. A republican by nature and habit, his life has been distinguished by many conspicuous proofs of an ardent and pure attachment to the principles of liberty.... He espoused the cause of American liberty in adversity, and was constant to her in all the vicissitudes of her fortune. At the earliest period of the contest he stood foremost, a mark for the indignation of offended power, and in the progress of that contest was ever ready in the field or in the Senate to brave its utmost resentment." The first dividend made by the bank of which there is any record was one of three per cent. declared on the 25th of April, 1786, payable on the Ist of May; but as it was declared for the six months from the Ist of November, I785, it is probable that previous divi. dends had been paid. In May, 1786, Isaac Roosevelt was elected president, and William Maxwell vice-president. The directors were the same as during the previous year, with the exception of James Buchanan, who was substituted for Jeremiah Wadsworth. The business of the city as well as of the State had by this time greatly increased. Importations of foreign goods had been large, and the effect was felt throughout the State in the drain of specie which naturally followed. The opponents of the bank took advantage of this state of affairs to charge the institution with having produced it. The direst results to the country were predicted from the establishment of the bank, and the only remedy for the existing evils 28 t~e 13anIf of Piet poriT was maintained to be an emission of paper money by the State. The directors were charged with working in the interest of British capitalists and traders, and with refusing discounts a few days before the sailing of the European packet that they, personally, might profit by the distress thus occasioned. The bank, it was contended, had destroyed private credit as well as that confidence, forbearance, and compassion formerly shown by creditors to their debtors. Such was the result of enforcing the payment of a note at maturity when lodged in the bank. And among the terrible consequences to follow it was predicted that "if their number is not restricted, should banks be permitted in America, after the profits they yield are known, we may not alone have one in every State, but also in every county of the different States." In spite of the opposition to the bank its business increased. Regular semi-annual dividends of three per cent. were paid until November, 1788, when the dividend was increased to three and a half per cent. for the previous six months. It continued at that rate until the charter was obtained in I791. But the opponents of the bank succeeded in defeating, until that time, the application to the Legislature for a charter. A strong pressure had been brought to bear upon the Legislature in favor of an emission by the State of paper money, which should be made a legal tender. The merchants of New York as a body were opposed 29 a VoftotT of to the scheme, and the Chamber of Commerce had adopted a memorial remonstrating against the passage of any bill to that effect, and setting forth the evil effects of such an issue. But outside of the city there was a belief that financial relief and permanent prosperity would come with an abundance of paper money. The experience of the past had not deterred the people from such a conviction, and several of the States had lately issued bills of credit. Since the adoption of the state constitution of New York only one law of the kind had been passed in the State. This was in I78i, when $4I 1,250 was issued to pay the proportion called for by Congress to pay the expenses of the war. The bill before the Legislature was passed during the session of I786. It authorized the emission of $200,ooo at five per cent. "for the purpose of increasing the currency." This was the last issue of paper money by the State. The Federal Constitution, framed in I787, contained a clause that "no State shall coin money, emit bills of credit, or make anything but gold or silver coin a tender in payment of debts." The framers of the document thus fixed their condemnation of the old paper-money system, and the people were obliged to look to other agencies for supplying them with a circulating medium more convenient than gold and silver. In June, I787, the paper money issued by the State having obtained a considerable circulation, the directors decided to open accounts and make discounts and 30 tte 'Banti of Deb 1or payments in this currency distinct from those in specie or the bills of the bank. This was continued for several years, and to facilitate the arrangement discounts were done in paper on Tuesdays and in specie on Thursdays. The efforts which had been made since the organization of the bank to obtain a charter had met with much opposition, and had repeatedly failed. A petition had been presented to the Legislature for a charter at the time of the first meeting of subscribers, but had proved unsuccessful, and another effort was made soon after the bank went into operation. On the I3th of November, 1784, a petition from the president, directors, and stockholders was presented to the Senate, praying for an act of incorporation. Mr. Alexander McDougall was directed to prepare and bring in a bill for that purpose. The bill passed a first and second reading, and was committed to a Committee of the Whole. Action upon it was taken in the Committee of the Whole, and being unfavorably reported to the Senate on the 9th of April, 1785, the bill was rejected. On the I5th of July, I789, another petition to the Senate from the president, directors, and stockholders of the bank, asking for its incorporation, was referred to a committee consisting of Messrs. James Duane, Peter Van Ness, and Philip Livingston, who reported favorably, and the petitioners were given leave to bring in a bill. Mr. Duane, in behalf of the petitioners, ac31 2a 1itorr of cordingly brought in a bill, which was read the first time and ordered to a second reading; and a copy of the petition and also of the bill were ordered to be published in one of the public newspapers of New York and Albany previous to the next meeting of the Legislature. The petition, as printed in the New York "Packet" of October I, I789, sets forth the reasons for asking for an act of incorporation:To the Honorable the Legislature of the State of New York: The PETITION of the president, directors, and company of the Bank of New York respectfully sheweth: That your petitioners in the year 1784 became subscribers to a bank, which was then instituted in this city, and has been carried on since that period, to the great accommodation of its inhabitants and to the advancement of the commerce of the State at large. That they flatter themselves (whatever doubts may have been heretofore entertained in regard to the point) their own experience, confirming the experience of other nations, has evinced the utility of institutions of this kind, and has shown that they are worthy the patronage of the government. That standing on the footing of a private company, in which each member is supposed to be personally responsible for all the engagements entered into, it has been found that many persons who would otherwise be desirous of becoming subscribers are deterred by that circumstance from doing so; whereby the increase of the stock of the bank is obstructed and its operations proportionably confined. That one essential object of banks is to afford aid to the government in particular exigencies; which object in the present situation of the Bank of New York, from the cause assigned, must either not be answered at all, or not in the degree 32 Zje zanit of iCeb jPot which is requisite to the due accommodation of the Federal Government. That while your petitioners are fully persuaded that the Honorable the Legislature will be disposed to promote every proper measure which may conduce to that end, they forbear to do more than to remark that there are obvious reasons which shew that it is peculiarly the interest of the State, at the present juncture, to facilitate the means by which that accommodation may be afforded. That the incorporation of the Bank of New York is an indispensable step toward enabling it to give any material aid to the government of the United States. Wherefore, and from the tried utility of the institution in other respects, your petitioners cannot but flatter themselves that the wisdom of the Legislature will discern the expediency of passing an act for that purpose: And they humbly crave leave to present a bill accordingly. For which, as in duty bound, they will ever pray, etc. [Signed.] ISAAC ROOSEVELT, JOHN MURRAY, WM. MAXWELL, SAMUEL FRANKLIN, DANIEL MCCORMICK, THOMAS RANDALL, WILLIAM EDGAR, JOSHUA WADDINGTON, COMFORT SANDS, NICHOLAS Low, ROBERT BOWNE, THOMAS STOUGHTON, WILLIAM CONSTABLE. NEW YORK, 3d July, 1789. On the 14th of January, 1790, at the second meeting of the thirteenth session of the Senate, the petition of the president, directors, and company of the bank was renewed, and Mr. Livingston, having obtained leave of the Senate, brought in a bill to incorporate the bank. 33 a 9ittorv of This bill passed a second reading, and was referred to the Committee of the Whole, in which it was rejected by the casting vote of the chairman. In this rejection the Senate concurred. The effort to obtain an act of incorporation having thus failed in the Senate, a petition was presented to the Assembly on the g9th of January, 1791. It was referred to a committee, which reported favorably, and the committee was directed to introduce a bill. This passed a second reading, and was committed to the Committee of the Whole. The bill was considered on the I th and 24th of February and the Ist, 4th, and 7th of March; some amendments were made to it, and it was ordered as amended to be engrossed. On the 8th of March, 1791, the bill was passed by the Assembly, and Mr. Hoffman and Mr. Pintard were appointed a committee to deliver the bill to the Senate and ask its concurrence. The bill was considered by the Senate on the 9th and Ioth of March, and, having been amended, was passed, and Mr. Clinton and Mr. Carpenter were appointed a committee to deliver the bill as amended to the Assembly. On the I6th of March, 1791, the House of Assembly took up the bill as passed by the Senate, and concurred in all the amendments but one. This action being reported to the Senate, that body receded from its amendment not concurred in by the House. The bill as amended was then passed by both Houses of 34 ~1e 2Banit of Deb N orh the Legislature, and became a law on the 2ISt of March, 179I, by the signature of the governor.1 This charter was substantially the model upon which all the bank charters granted in the State of New York were framed prior to the year 1825. At that time the form of the acts of incorporation was changed, and more stringent prohibitions and restrictions were enacted by the Legislature. 1 See Appendix CHAPTER IV' I79I-I795 Capital of the Bank. - Its Assets and Liabilities at the Date of Incorporation. - Acceptance of the Charter. - Amount of Bills and Notes discounted. - Election of Gulian Verplanck as President in 179z. - Isaac Roosevelt.- Alexander Hamilton's Relations with the Bank while Secretary of the Treasury. - The Bank of the United States. - A Branch of the Bank in New York in 1792. - Projects for a Rival Bank. - Hamilton's Views respecting it. - Efforts to obtain an Act of Incorporation for it. - Failure of the Scheme. - Deposit in the Bank of New York of Funds belonging to the State in I792. - Election of a State Director. - Financial Distress in New York in 1791. - Hamilton's Efforts for the Relief of the Merchants. - Loan by the Bank to the Society for Establishing Useful Manufactures. - Resignation of William Seton as Cashier. - Loan by the Bank to the City of Philadelphia in i793. - Loans to the State of New York and to the United States. ON the ist of May, 1791, the capital of the bank was $318,250. The unpaid moiety of the subscriptions was called in, and on the Ist of July the capital was $495,0oo. By the ist of August the balance was paid in, making the capital $900,00o. The following is a statement of the assets and liabilities of the bank at the time it commenced business under the charter, May I, 179I. It gives some idea of the volume of the bank's business at that time. 36 tqe TanI of Jewo Paoi SPECIE BANK Bills discounted... $845,940-20 Capital stock.... $318,250.00 Due from Corporation 12,222.44 Notes outstanding.. 18,254.00 Cash $516,081.87 Due depositors... 773,709.67 Less notes Profit and Loss... 47,764.84 on hand 53,266.oo 462,815.87 $1,320,978.51 $1,320,978.51 PAPER BANK House & lot, Queen St. ~5,248 4 9 Notes out.... ~7,822 o o Cash, ~115,373 17 II Due depositors.. x6,920 0 4 Notes Profit and loss.. 6,275 2 4 on hand, 25,605, 89,768 17 11 ~95,017 2 8 ~95,017 2 8 On the 2d of May, I791, the directors named in the act of incorporation formally accepted the charter, assumed all the existing liabilities of the former company, and reelected the former officers. Two thousand sheets of circulating notes were ordered to be printed and signed, ready for emission "as quick as possible." The paper on which these notes were printed was made in Philadelphia, and the notes were struck off on a hand-press in the bank. On the 1st of November, 1791, a dividend of seven per cent. was declared out of the first six months' business of the incorporated bank. During these six months the amount of bills and notes discounted amounted to $10,558,669.59, and the total amount of cash received was $42,681,664.80. These figures illustrate the extent of the mercantile transactions of New York at that period. It will be remembered that no 37 a It0totr of notes or bills were discounted for a longer time than forty-five days, and during the first year of the bank's existence the limit was thirty days. At the annual election in I79I, Gulian Verplanck was elected president of the bank in place of Isaac Roosevelt, who had declined a reflection. Mr. Roosevelt's business was that of a sugar refiner, and his store was originally in Wall Street. He was one of the most noted Whigs of the time. He served as one of the General Committee of One Hundred, chosen in May, I775, to take control of the government. Upon the entry of the British he withdrew from the city. His sacrifices were rewarded by his countrymen, and he was elected to various stations of honor. He represented the city of New York in the convention which met at Kingston in 1777 to form a constitution for this State, and was a member of the New York Convention which assembled at Poughkeepsie in 1786 to deliberate on the adoption of the Constitution of the United States. After peace was declared he served as state senator. When the Bank of New York occupied the old Walton House, Mr. Roosevelt's sugar refinery was just opposite at No. 159 Queen Street. He had resumed business in partnership with his son. He was president of the New York Hospital from I790 to I794, and took a warm interest in its welfare. He died in October, 1797, at the age of sixty-eight years, 38 I I. I k - 40 -1 CT) I'I LD 03 --— 4 1 z U., Q Ln \13 Lll,1-1) -11, a-,Kelly I SIe 23anif of Qeb, Porbh beloved and honored as an excellent citizen and a tried and true patriot. When the Constitution of the United States went into operation, in I789, Alexander Hamilton became Secretary of the Treasury. His public duties had kept him from taking an active part as a director of the Bank of New York after the first two years of the bank's existence, but he continued to show a lively interest in its welfare, and he was the firm friend and adviser of its cashier, William Seton. In I790 the bank was made the agent of the United States for the sale of 200,000 guilders. In the same year Hamilton laid before Congress a plan for the establishment of a great national bank. It was received with much favor, and on the g9th of February, I79I, the Bank of the United States went into operation. In November of the same year, a letter was addressed to the president and directors of the Bank of the United States by the officers of the Bank of New York, offering to them three hundred shares of the new stock of the bank at par. The offer was declined, as the directors of the Bank of the United States did not feel authorized to invest in the stock of the state banks. Arrangements had been made by the directors of the Bank of the United States to establish a branch of that institution in the city of New York. The plan seems not to have met the approval of Hamilton, and 39 a pi torr of under date of November 25, 1791, he wrote to William Seton."I seize the first moment of leisure to answer your letter of the 21st inst. Strange as it may appear to you, it is not more strange than true that the whole affair of branches was begun, continued, and ended, not only without my participation, but against my judgment. "When I say against my judgment, you will not understand that my opinion was given and overruled, for I never was consulted; but that the steps taken were contrary to my private opinion of the course which ought to have been pursued. "I am sensible of the inconveniences to be apprehended, and I regret them, but I do not know that it will be in my power to avert them. "Ultimately, it will be incumbent on me to place the public funds in the keeping of the branch; but it may be depended upon that I shall precipitate nothing, but shall so conduct the transfer as not to embarrass or disturb your institution. I have not time to say more at present, except that, if there are finally to be two institutions, my regard for you makes me wish you may feel yourself at liberty to take your fortune with the branch which must preponderate." Hamilton had evidently hoped to make the Bank of New York the exclusive agent of the United States government in New York. In January, 1791, he had written to Mr. Seton:"I feel great satisfaction in knowing from yourself that your institution rejects the idea of a coalition with the new project, or rather hydra of projects. "I shall labor to give what has taken place a turn favorable to another union, the propriety of which is, as you say, clearly 40 ~Ie 'cBanft of beO jort illustrated by the present state of things. It is my wish that the Bank of New York may, by all means, continue to receive deposits from the collector, in the paper of the Bank of the United States, and that they may also receive payment for the Dutch bills in the same paper. This paper may either be remitted to the treasurer or remain in the bank, as itself shall deem most expedient. I have explicitly directed the treasurer to forbear drawing on the Bank of New York, without special direction from me. And my intention is to leave you in possession of all the money you have or may receive till I am assured that the present storm is effectually weathered. "Everybody here sees the propriety of your having refused the paper of the Bank of the United States in such a crisis of your affairs. Be confidential with me; if you are pressed, whatever support may be in my power shall be afforded. I consider the public interest as materially involved in aiding a valuable institution like yours to withstand the attacks of a confederated host of frantic and, I fear, in too many instances, unprincipled gamblers. "Adieu. Heaven take care of good men and good views!" The proposed plan was carried out, however, and a branch of the national institution called the "Office of Discount and Deposit" was established in New York. On the 20th of March, I792, a committee was appointed on the part of the Bank of the United States, to meet and confer with the directors of the Bank of New York upon the best means of promoting a friendly intercourse between the two institutions. A conference was accordingly held, which resulted in a formal correspondence, expressing a desire and willingness on the part of each institution to cooperate in 4I !a Wftorr of any measure calculated to inspire mutual confidence or public accommodation. The success of the Bank of New York was so marked that early in 1791 a rival institution was projected. Hamilton heard of the scheme and was not slow in expressing his views regarding it. In a letter to William Seton, under date of January I8, I791, he wrote:"I have learnt with infinite pain the circumstance of a new bank having started up in your city. Its effects cannot but be in every way pernicious. These extravagant sallies of speculation do injury to the government, and to the whole system of public credit, by disgusting all sober citizens, and giving a wild air to everything. 'T is impossible but that three great banks in one city must raise such a mass of artificial credit as must endanger every one of them, and do harm in every view. "I sincerely hope that the Bank of New York will listen to no coalition with this newly engendered monster; a better alliance, I am strongly persuaded, will be brought about for it, and the joint force of two solid institutions will, without effort or violence, remove the excrescence which has just appeared, and which I consider as a dangerous tumor in your political and commercial economy. "I express myself in these strong terms to you confidentially, not that I have any objection to my opinion being known as to the nature and tendency of the thing." At the next session of the Legislature, in February, 1792, an attempt to obtain a charter for the proposed bank was made. Two petitions for an act of incorporation were at first presented by different persons; 42 ~te 5anfT of Atv jor1t one for an institution to be called the Million Bank, and another for one to be called the State Bank. The projectors of the first scheme, however, finally withdrew in favor of the latter. A committee to whom the subject was referred reported that, as the proposed plan contained certain propositions for opening canals and furthering the agricultural and commercial interests of the State, it merited the serious attention of the Legislature, and leave was asked to bring in a bill. A bill to incorporate the subscribers to the State Bank was afterward read for the first time, and referred again to the committee. No further report was made upon it during the session, and the scheme thus proved abortive. During the session of the Legislature in 1792, the president and directors of the Bank of New York signified to that body their willingness to receive from the state treasurer any of the money belonging to the State which it was proposed to lend to individuals or bodies corporate, and to pay not above six per cent. interest therefor, the loan to be payable upon three months' notice. The projectors of the rival institution also proposed to the Legislature to take the state funds individually as a loan at seven per cent. on security of the funded debt of the United States, "unless the State would prefer investing the money in the new bank which is to be established, or lending it in small sums upon mortgages of real estate." 43 a tftorr of The Legislature subsequently passed an act authorizing the state treasurer to deposit in the Bank of New York certificates for the funded debt of the United States to the amount of nearly two million dollars; the bank agreeing to collect the interest on the same, and pay it over to the treasurer without charge. In conformity with this act, Gerard Bancker, treasurer of the State, was elected a director of the bank on the 24th of May, I792. i In 1791 there was a mania for speculation in the principal cities, and during August of that year United States Bank scrip sold for I95. In September it fell to IIo, but rallied to I45. Several failures were the result, the public credit suffered, and the six per cent. issues of the United States were depressed. The Secretary of the Treasury accordingly authorized the cashier of the Bank of New York to buy government bonds in small lots to relieve the merchants and sustain the credit of the United States. This had the desired effect for a time, but the relief proved to be merely temporary. By March of the following year the distress had increased until it amounted almost to a panic, and the Secretary of the Treasury was prompted to come again to the rescue of the mercantile community. On the 25th of March, I792, he wrote to the cashier of the Bank of New York, authorizing him to purchase United States stocks at par to the amount of fifty thousand dollars. 44 ~e 3anftI of Pet e Porb "It will be very probably conjectured," he wrote, "that you appear for the public, and the conjecture may be left to have its course, but without confession. The purchase ought, in the present state of things, to be at auction, and not till tomorrow evening. But if the purchase at auction will not tend as well to the purpose of relief as a different mode, it may be departed from; the usual note must be made of persons, time, etc. You will consider whether done all at once, or a part now and a part then, will best answer the purpose. In the state of this market, the latter mode is found preferable. I have just received a letter from Mr. Short, our minister resident, dated Amsterdam, 28th December, by which he informs me that he has effected a loan for three millions of florins at four per cent. interest, on account of the United States. This may be announced; and as, in the present moment of suspicion, some minds may be disposed to consider the thing as a mere expedient to support the stocks, I pledge my honor for its exact truth.... "While I encourage due exertion in the banks, I observe that I hope they will put nothing to risk. No calamity truly public can happen while these institutions remain sound. They must, therefore, not yield too far to the impulse of circumstances." This letter was received on the following day, and the cashier of the bank wrote in reply, under date of March 25th:"We have no public sales of stocks now in the evenings; therefore I cannot go into the market till to-morrow, and although the sum is small, yet be assured it will be a relief. The collector has furnished the list of names of those who have duties to pay between this and the first of May, and our directors have given out that they will discount on a deposit 45 a Vtotorr of of stock. The large dealers in stock are to have a meeting this evening, and, it is reported, will enter into an absolute agreement not to draw out any specie from the banks for three months to come - so that from to-morrow I hope the prospect will brighten. I have made as public as possible the new loan obtained in Amsterdam; it gives most universal satisfaction." The financial trouble seems to have increased in intensity; and on the 4th of April the Secretary wrote to Mr. Seton, saying that he was pained beyond expression at the accounts he had received of the financial distress of his fellow-citizens, and authorizing him to apply $5o,ooo additional to purchases of stock at such times as might be thought most beneficial to the public. On the 12th of April the Secretary wrote again to Mr. Seton, giving him additional latitude in the purchase of the six per cents. and the deferred stock. He also wrote to the directors of the bank, confirming his previous instructions to Mr. Seton, and adding $50,000 more to the amount already appropriated for the relief of the merchants; making in all $I50,000. Mr. Seton's reply, under date of April i6th, shows the beneficial effect of this welcome aid:.. "I received your letter by the express, on Friday morning, previous to which I had been relieving a few by purchases of stock, upon the strength of the second extension of fifty thousand dollars. At noon I went into the market, but the applications were so numerous, and so vastly beyond my expectations, I found it necessary to declare I could take but very 46 ~tre c3anti of ect jorfi small sums from each. However, notwithstanding this, every one pressed forward, and was so eager that I could only take down names upon a declaration that I would average the whole. This I did, that no one might be left without some relief; so that the investment of one hundred thousand dollars goes to upwards of eighty persons, from which you may form a judgment that your orders for purchases were well timed. At the same time, it is an evidence of the great and universal distress which prevails, and which I am sorry to say is such that it would be utterly impossible to make purchases equal to the relief. However, it cannot now be worse; and when the public mind cools down a little, it is to be hoped that good will arise out of the evil, that the spirit of industry instead of gambling will revive, and that the stocks will come to their proper and real value." The judicious course of the Secretary seems to have had the desired result, and the relief that these timely purchases of stock by the Treasury Department afforded to a community which had been almost drained of its specie as a result of excessive importations can hardly be estimated at the present day.' In I792 the Society for Establishing Useful Manufactures, in which Alexander Hamilton was interested, and which had recently been organized in Philadelphia, 1 A similar service has lately been rendered by the bank to the business public. On the i6th of May, I884, at the height of the excitement and alarm which followed the failure of the Marine Bank and of Grant & Ward, the Bank of New York made loans upon United States stocks during the day, amounting to $4,ooo,ooo. This, in a measure, relieved the financial stringency and averted a panic which, if unchecked, would have resulted in the closing of the Stock Exchange and in general disaster. 47 a wfptotr of applied to the Bank of New York for a loan to enable it to carry out its plans for building factories at Paterson, N. J. The busy city which to-day has 60,000 inhabitants was then a settlement with ten dwellings. At Hamilton's suggestion the bank lent to the society $Io,ooo on pledge of United States deferred stock, with interest at five per cent., and a few months later a further loan of $35,ooo was made to the society on similar terms. In his letter to Mr. Seton on the subject Hamilton said: " I will add more, that in my opinion banks ought to afford accommodation in such cases upon easy terms of interest. I think five per cent. ought to suffice, for a direct public good is presented. And institutions of this kind, within reasonable limits, ought to consider it as a principal object to promote public purposes." In Mr. Seton's reply on the 25th of June he indicated the feelings of the officers of the bank toward Hamilton. "Our directors are informed of your sentiments respecting the loan to the Manufacturing Society. Be assured, my dear sir, that they have so much confidence in any measure pointed out by you, and take so much pleasure in promoting your views, which they are well convinced are ever intended for the public good, that by complying with your wishes they are glad to have an opportunity of retaliating the obligations this institution is under to you." At the annual meeting in June, 1794, William Seton 48 .: C{