to Church for instructions in December, his letter did not reach London until February. Church’s response, penned days later, did not reach New York until later in the spring. He and Wadsworth directed Hamilton to discreetly “strain at every nerve” to buy up the new shares in the Bank of North America.37
But during the intervening weeks when letters were in transit, Hamilton’s on-site autonomy and judgment led him to begin working on a different plan. In his December letter, Hamilton suggested to Church and Wadsworth that instead of tangling with Robert Morris and fighting a corporate structure rigged against them in Philadelphia, the partners should open a bank of their own in New York City. Such a bank would be unincorporated and have no shareholders. The only people with equity in the venture would be Wadsworth and Church; although this meant the bank would be smaller than the Bank of North America, the advantage would be that nobody else would have a say in its governance or management. The bank Hamilton offered to help set up would therefore be the partners’ own private commercial bank—their own personal “engine” of regulation and power in New York City.38
Church and Wadsworth envisioned their bank as an avenue to extract profits and deploy leverage in New York, and to maximize this effort they intended to restrict ownership in the bank solely to themselves. Therefore, when Stephen Sayre approached Alexander Hamilton in late 1783 to solicit Hamilton’s principals to join the land bank he would soon propose, Hamilton refused. Moreover, he did not tell Sayre that Church and Wadsworth were already nursing bank ambitions of their own. Recalling the encounter to Church, Hamilton seemed to not realize that Robert Livingston had partnered with Sayre; Church dismissively said he would be “sorry if Mr. Sayre should effect his Establishment” but “astonish[e]d if Men of Property are weak and credulous enough to give him their Confidence.”39
What Hamilton and Church did not yet realize was that those “Men of Property” would soon not need to have confidence in Sayre alone. Once Chancellor Robert Livingston and merchant John Stevens became the highly visible front men for the proposed land bank, they were the authentic men of property threatening Church and Hamilton’s plans.
In response, Hamilton spent much of February working to “start an opposition” to what he called the “scheme” of the proposed land bank. There was “great reason,” he believed, to fear that the legislature would approve the land bankers’ request for both a corporate charter and a law declaring it exclusive, which would prevent competing banks from being incorporated. “For the sake of the commercial interests of the state,” Hamilton was making it his mission to “point out [the land bank’s] absurdity and inconvenience to some of the most intelligent Merchants,” some of whom eventually “saw the matter in a proper light” and joined in opposition.40
Hamilton also began a whispering campaign to “convince the [land bank] projectors themselves of the impracticability of their scheme.” In this he was aided by the land-bank promoters after they raised doubts about the propriety of mortgage-backed paper money, asking if buildings could be accepted as collateral if they were not insured against the risk of fire. On 16 February—one day before their incorporation petition reached the state assembly—Livingston or one of his partners answered their own question by announcing that “some Gentlemen have it in contemplation” to form a fire-insurance company and that once “such houses … are insured, [they] will be of course, received as security in the Bank.”41 This statement must have shaken confidence in the land bank’s backers, sparking investors’ imaginations to begin asking what other risks awaited them besides fire? The land bankers had clearly not thought through the consequences of their plans and had now committed to founding and managing not one but two new institutions in the city: a bank and an insurance company.42
Yet even as support for a land bank eroded in New York City, its prospects nonetheless seemed robust in the state capital. According to Hamilton, Robert Livingston “had taken so much pains” to cultivate support among landowning legislators—Hamilton called them “the country members”—that he feared they were coming to see the land bank as “the true Philosophers stone that was to turn their rocks and trees into gold.”
Hamilton decided he had to block the land bank once and for all, and as he peeled away supporters he hoped he could convince them to rally around the bank he hoped to found on behalf of Church and Wadsworth, who were prepared to sell their Philadelphia bank shares and reinvest the profits in New York.43
The Commercial Bank
Up to this point in February 1784, the one group with the most at stake in Manhattan’s bank machinations had been sidelined: the city’s merchants.
From the periphery, they watched as would-be land bankers sketched an institution incapable of meeting their credit and commercial needs while seeking an exclusive charter of incorporation from the state legislature. At the same time, they learned that Alexander Hamilton’s elite patrons were planning to open a private bank, subjecting the whole of their community to the whims and wills of two faraway and well-connected competitors. The former threatened to place landed aristocrats at the head of the state’s first and only bank; the latter would give John B. Church and Jeremiah Wadsworth a unique capacity to distort New York’s political economy. In response to these prospects, New York City’s mercantile community began countermobilizing by drawing up their own plan for a bank. Of the three proposals, theirs would be the only bank to actually open (and survive to the present day): the Bank of New-York.
The first public sign of the merchants’ organized resistance appeared in the 23 February edition of the New York Packet. A letter from “A Merchant” announced that a proposal would soon be “delivered … for the establishment of a Bank on the most equitable and generous footing” to be called “the Monied Bank of New-York.” The writer then turned to dissecting the flaws in the proposed land bank. Although he agreed with the land bankers’ claims that banks in general could deliver “great benefits,” he believed that “success … depend[ed] on the nature of [its] foundation.” The Livingston-backed land bank was flawed, he explained, because it was “clearly founded” to “[add] consequence to the landed interest” in New York. “The language” of Livingston’s prospectus assumed that “commerce is dependent on agriculture” and therefore proceeded as if “the landed interest must be of more consequence to the society than the commercial.” In the writer’s view, however, that “idea is absurd.” Holland, after all, needed “no landed interest to support her.” Instead it was “commerce, the first spring of the whole machine,” that found a market for “the fruits of agriculture.”
In addition, the writer alleged that the land bank had been designed to benefit particular landholders, including Robert Livingston. He believed that even before its subscription books were officially opened to the public, the land bank’s board—“its Governor, Directors, and Cashier”—were “already in nomination.” He had been told, he reported, “one gentleman has been induced to subscribe to four shares, as he is intended for a director.” The mercantile letter writer hoped the land bankers’ petition would “meet with the fate it merits,” because “free people” had no need to show “such partiality,” particularly when no “thing was known before in a Free Country.” Even the Bank of England, “that source of wealth,” did not have “an exclusive privilege,” and the “resentment of the Public will not be less than their surprize” if the New York legislature granted Livingston’s request for an exclusive charter of incorporation—one that would not only establish the land bank as a corporation but also bar any other bank promoters from receiving a corporate charter for years or even decades to come. A more equitable alternative, the “Merchant” promised, would materialize “shortly.”44
Three days later, on 26 February, retired major general and current state senator Alexander McDougall presided over a meeting at the Merchants Coffee-House where “merchants and citizens … unanimously” vowed to form a bank of their own. The “Bank of New-York,”
