by Albany county state senator Abraham Yates—delighted in the “remorse, despair and shame cloud[ed] upon [Tories’] imaginations” by fear of American reprisals. “A review of the treason, murder and robberies, which you [Tories] have committed, with a long catalogue of your aggravated offenses against an oppressed but zealous band of patriots,” would follow the war, he predicted. His advice to Tories was to “flee then while it is in your power, for the day is at hand, when, to your confusion and dismay” they would face “just vengeance” from “collected citizens.”4 The day was coming, these Whigs promised, when Loyalists would not be able to hide from the things they had done.
As Yates and his colleagues attempted to foment and channel popular anger against Tories, Robert Livingston chalked their motivations up to greed and self-interest. “We have many people who wish to govern this city,” Livingston told his friend Robert Morris, “and who have acquired influence in turbulent times which they are unwilling to loose in more tranquil seasons.” These legislators had won votes from vengeful and frightened voters, and they wanted to keep those voters vengeful and frightened, even if it meant proposing anti-Tory laws they knew they would never actually adopt into law. The chancellor also believed that Whig legislators were using this veneer of patriotism to enrich themselves. Behind their “violent spirit of persecution,” Livingston told Alexander Hamilton, was a “most sordid interest” in “wish[ing] to possess the house of some wretched Tory” or trying to “engross the trade & manufactures of [New York]” for themselves by driving out a Tory “rival” in “trade or commerce.” Some Whigs wanted to avoid repaying lawful debts owed to Tories, and others wanted to lower real estate values and the “price of Living” by “depopulating the town” of Manhattan. “It is a sad misfortune,” Livingston concluded, “that the more we know of our fellow creatures, the less reason we have to esteem them.”5
But however base these motives might have been, Livingston saw real dangers lurking in New York’s political currents. Calling anti-Tory hostilities a “gathering storm,” he worried that the “smallest spark” might cause the city to “take fire” and overwhelm “all [the] barriers which our weak unsettled government oppose” by transforming rhetoric into riot.6 The city’s “violent papers” were encouraging a “spirit of [Tory] emigration,” observed Hamilton. “Many merchants of second class, characters of no political consequence,” were “carry[ing] away eight or ten thousand guineas” from the “popular frenzy” in New York—a loss of capital he predicted “our state will feel for twenty years at least.7 Writing from Paris to raise alarm with both Livingston and Hamilton, John Jay hoped the “indiscriminate Expulsion and Ruin” of Tories would not come to pass; he reported that “the Tories are almost as much pitied in these Countries, as they are execrated in ours.” “Violences and associations against the Tories pay an ill compliment to Government and impeach our good Faith,” he wrote. Events in New York were being read as a sign of “unnecessary Rigour and unmanly Revenge without a parallel except in the annals of religious Rage in Times of Bigotry and Blindness.” Whigs were “carry[ing] the Matter too far.” Their actions were “impolitic as well as unjustifiable.”8
In the weeks that followed the British evacuation, Robert Livingston, Alexander Hamilton, and a cohort of like-minded, self-styled moderates tried to assuage Whig-Tory tensions in the city of New York by appealing to social ties, crafting legal arguments in favor of revolutionary settlement, and attempting to influence the direction of the city and state’s politics. When those tactics failed, they separately decided that their best chance for success was to found a bank.
In the first three months of 1784, three distinct coalitions began publicly organizing themselves to launch what they hoped would become the first incorporated bank in the state of New York. Each group made it far enough to file petitions with the New York state legislature seeking charters of incorporation. Two of the groups publicly solicited stock subscriptions from investors in advance of those filings. And even after the legislature declined to grant any of their requests for a charter in 1784, one faction went ahead and opened a bank anyway: the Bank of New-York. The directors of that institution persistently filed incorporation petitions throughout the remainder of the decade.
This chapter focuses on illuminating the appeal of incorporated banks at this moment of history in the early American republic. After all, given the avenues open to elite New Yorkers in 1784—from launching a new social club or society to replicating one of the Revolution’s many semi-official committees of notables—why create a bank? And why not simply form a private bank rather than seek state permission for an incorporated one?
On its face, the corporate form is a useful legal instrument that enables a rotating group of people to hold common property over long periods of time and to be a fictitious “person” who could sue and be sued in court as a single entity. But in practice the corporation is a vehicle for the accumulation of capital and influence. The extent of that influence is determined by the underlying purpose and function of the corporation at hand, and a bank’s essential institutional function is to amass capital and offer credit. As institutions that unite human, financial, and political capital under one roof, banks are different from ordinary firms that buy and sell goods. As a route to participation in the Atlantic economy that would reestablish New Yorkers’ access to British and Continental credit, an incorporated bank would present a familiar and reassuring façade to foreign creditors, which would inspire confidence and initiate mutually beneficial transatlantic mercantile alliances.
At the heart of those alliances were transactions; banks could enable them by connecting borrowers with lenders. Yet because a bank’s resources were finite, its directors and managers had no choice but to exercise discretion in deciding who was eligible to gain access to that credit and the institution’s other services. Each time the bank extended itself it was taking a risk; personal relationships therefore were important factors in determining who received credit. Outside the bank’s offices, any person accepting a check drawn on a bank as a substitute for gold coins or paper money had to make a similar set of judgments: about the person passing the check, the name of the person on the check itself, and the bank’s ability to pay that check. Banks, then, were not primarily vaults or even offices. By printing reliable paper money and checks that facilitated the buying and selling of goods and services, they provided a crucial medium of exchange in the local and regional economy. And by lending to borrowers and accepting capital from creditors, banks created institutional networks of obligation and dependence.
For the economically and politically ambitious, no institution in the early American republic offered a more tempting array of advantages than a bank. Bank proprietors and clients were dealmakers and brokers in opportunity, making fortunes for those fortunate enough to be members of its network. The act of granting and tapering access to credit while excluding others from having it is what gives bankers their power; that access was preferential and revocable, enabling bank directors to shower preferred treatment on favored clients, projects, or politics. Banks therefore shape their clients’ interests, and if a bank is a lender to local or state government, its directors calibrate the capabilities and interests of those public entities as well. The existing banks familiar to former British colonists in the late eighteenth century—namely, the Bank of England in London and the Bank of North America in Philadelphia—were quasi-independent arms of the state; no other type of institution was more likely to be regarded with skepticism, suspicion, and outright fear by the public and elected officials alike.9
Figure 1. Partly printed check endorsed by Aaron Burr, 24 April 1788. This is an example of an early American bank check issued by the Bank of New-York. Note that because there was only one bank in New York City, the check refers to the Bank of New-York simply as “the Bank” Source: Private collection.
Understanding the utility of banks and the opposition they provoked is crucial to understanding the development of this era’s political economy, but despite the multiple efforts launched to win
