Wall Street In History/Chapter 3
CHAPTER III
1830-1883
THE GREAT MONEY CENTER.
THE irresistibly fascinating story of the gradual transformation of Wall Street into a power of over-shadowing importance is without a parallel in the literature of fact or fiction. The lines in these pages might easily be multiplied into as many chapters, or volumes even, and ninety-nine one-hundredths of the vast whole yet remain untold. The simple statistics of bold projects and stupendous enterprises that have originated in Wall Street within the last half century would alone constitute a voluminous library. And one of the curiosities of the collection would be the marked individual character of each project and enterprise. When a man steps exactly in the place of the man who has gone before him there is but one set of footprints. Here there is no such monotony. Every man seems to think his own thoughts, and fashion his own career. The extent of Wall Street has never yet found intelligible expression in language or figures. In the olden time it was believed to reach from Trinity Church to the East River. Just when it first overran its local limits the records fail to report with absolute precision. But for full three-score years it has been leaping all manner of natural barriers, while planting towns and cities through the length and breadth of the land; then, as if that were not sufficient evidence of the part it was playing in history, it proceeded to tie them together with a net-work of railroad spanning the continent. The influences of this great money center for good—possibly for evil—are more far-reaching than those of any other locality on the globe; and from no other source has probably ever emanated so much of what the mind cannot measure or the pen portray—human happiness and human misery.
The building of the new Custom House on the site of the old historic City Hall was the great event in Wall Street of the decade between 1830 and 1840. A writer in 1834 says: "The form of the new structure will be 
THE SUB-TREASURY BUILDING.
From an original print in 1834.
similar to an ancient Greek temple, a form best adapted to the ground, and will present two fronts, the principal one in Wall Street, and the, other in Pine Street, each with eight Grecian doric columns, and three return columns at each side of the flank, and nine pilasters attached to the wall and projected boldly from its surface; all elevated some seventeen steps above the pavement of Wall Street, by which spacious apartments will be gained in the basement. This edifice it is said will surpass any other in the Union for permanence in the materials and execution, as well as for its classical beauty. It will be one hundred and eighty feet long and ninety feet wide, and will occupy the entire end to the plot of ground east side of Nassau Street, between Wall and Pine. The cost of this vast and beautiful edifice will probably not be much less than five hundred thousand dollars, and the time consumed in its erection is expected to be nearly four years."
Under the government of the Province the Collector of the Port of New York was called the Receiver-General, and commanded a salary of £55. He was chosen from the highest respectability, and usually represented the largest opulence. Men of wealth only were eligible to the office. When the new Government of the Republic was inaugurated, the importance of this post was, as hitherto, esteemed of the first moment; and from among the men of note whose lives and characters were above reproach, and whose private resources were ample, the appointments were in all the future to be made. The first Collector after the Revolution was the sterling patriot General John Lamb, who resided in the mansion illustrated in a former chapter, and, in the exercise of a spirit of benevolence which characterized his life, kept open house for all soldiers who had fought and bled for the American flag, of whatever rank. His term of service extended from 1784 to 1797. He was succeeded by Joshua Sands, brother of the distinguished Comfort Sands, a merchant of some forty well-rounded years, personally popular with all classes, and, for his day and generation, immensely rich. His real estate in Brooklyn—with the material progress and prosperity of which city he was closely identified—as laid out in blocks and squares in the beginning of the present century was assessed for purposes of taxation at $200,000; and he built houses and wharves almost without number. His name is perpetuated in many ways, and his memory fondly cherished. He was a man of culture and political consequence, and from 1805 to 1825 a member of Congress. When President Jefferson came into power, in 1801, he removed Sands from the collectorship, and named John Swartwout for the office; but the latter declined in favor of his intimate friend, David Gelston, who not only received the appointment but held the position until 1820. His successor was Jonathan Thompson, of whom it was said "His integrity was without a blemish;." He was the son of Judge Isaac Thompson and Mary, daughter of Colonel Abraham Gardiner, of Easthampton, Long Island. He had already held for some years the responsible position of Collector of Direct Taxes and Internal Revenues under the Government, and was the chairman of the Democratic-Republican Committee, wielding great power in political affairs. Such was his high reputation that in 1840 his appointment to the presidency of the Manhattan Company, just after the defalcation of Robert White, restored public confidence in that institution at once. Samuel Swartwout was given the collectorship of the port immediately upon Jackson's accession to the presidency in 1830. He was a man of colossal stature, the picture of robust health, his bright, animated face beaming with good-nature and intelligence. He had been with Aaron Burr in those Western adventures culminating in arrest and trial for treason; and about 1815 created a sensation on his own account by purchasing, in company with his brothers, the spongy Newark meadows, with the intention of converting them into a great beautiful garden. Everybody smiled at this visionary scheme; some laughed outright. But within four years, thirteen hundred acres of solid soil, within sight of Trinity steeple, attested the value of embankments and ditches, and prepared the way for the railroads of the future to be laid across it in safety. Thus far the Swartwouts fought the tides of the ocean on individual responsibility. But as soon as they sought extraneous aid in appropriations and loans, the tables turned, and the signs of promise were henceforward hidden under a cloud. Collector Swartwout went to Europe in 1838 to negotiate a loan for the Cumberland Coal Company, in which he was interested, and while he was 
CORNELIUS W. LAWRENCE.
in London a serious defalcation in the Custom House became known. He at once surrendered to the Government every dollar of his large property, including the Newark lands; he bore all the odium of the dishonor, although the wrong-doing was chargeable strictly to those under him. For years afterward every New York man who was caught in embezzling funds was styled a "Swartwouter." Jesse Hoyt was his successor, and while engaged with the celebrated Poindexter Committee in examining into the affairs of the Custom House, Swartwout returned from abroad and was received with kindness and invited to meet with the Committee. The Government never regarded him as a criminal. The great political commotion connected with the election of William Henry Harrison to the presidency, and his death one month from the day of his inauguration, led to the successive appointments in the Wall Street Custom House of John P. Morgan, Charles G. Ferris, Edward Curtis, and C. P. Van Ness. Edward Curtis occupied the office three years. He was one of the most polished gentlemen of his time, and a great friend of Daniel Webster; he also for a considerable period represented New York City in Congress. Cornelius W. Lawrence was appointed Collector by President Polk. He had been mayor of the city, and a member of Congress, as well as in many other places of public trust; he was also twenty years president of the Bank of the State of New York. From 1849 to 1853 Hugh Maxwell was Collector of the Port. He was then about sixty years of age, one of the finest-appearing men in the city—tall, of fine figure, dignified and graceful—and such were his gifts for public speaking that he was greatly in demand on special occasions. He was a classical scholar, having been graduated from Columbia College in the early part of the century. In the war of 1812 he was successively lieutenant, captain, colonel, and judge-advocate. He afterward distinguished himself as a lawyer, particularly in the great "conspiracy trials" of 1823. From 1819 to 1829 he was district-attorney for New York City and County, and upon his retirement from that responsible office the merchants of the city presented him with an elegant and costly silver vase, said to have been worth $3,000, now in possession of the Law Institute.
With the election of Franklin Pierce to the presidency came another group of notable appointments within a twelvemonth: Daniel S. Dickinson, the renowned lawyer and Democratic leader, who had figured in the senate of the State as well as in the senate of the nation, and had been Vice-Chancellor of the University and Lieutenant-Governor of New York; Greene C. Bronson, a judge of the Supreme Court, and one of the ablest of men; and Heman J. Redfield, whose high reputation had been nobly won in places of trust, and who occupied the post until 1857. President Buchanan coming upon the scene of public affairs, appointed Augustus Schell to the collectorship—a prominent lawyer of vast wealth and solid culture, who possessed the entire confidence of the community. He is now the honored President of the New York Historical Society. His successor, in 1861, was Hiram Barney, a lawyer of eminence; and in 1864 Simeon Draper, an able and influential man of scholarly tastes and generous impulses, was favored with the appointment. He was distinctively a politician, and long the warm friend of William H.Seward. In 1864 he was chairman of the Union State Central Committee; for many years, also, he was an administrator of the public charities. After the death of President Lincoln, Andrew Johnson appointed Preston King to the collectorship. He was a statesman of ability, a lawyer and an editor. He had been some years a member of Congress, and from 1857 to 1863 a factor of the national Senate. Within three months after his appointment he jumped from a ferry-boat during a fit of aberration of mind, and was drowned. He was in the sixtieth year of his age. Henry A. Smyth, a merchant of large wealth, was the next appointee. He was succeeded in 1869 by Moses H. Grinnell, who was forty-eight years a member of the Chamber of Commerce, and for some time its President, also a member of Congress, a presidential elector, a public spirited citizen, and a model philanthropist. His residence on the corner of Fifth Avenue and Fourteenth Street (subsequently rented to Delmonico) was the abode for many years of a generous and almost princely hospitality. Thomas Murphy was appointed Collector by General Grant in 1870, but resigned after a service of some eighteen months. In December, 1871, Chester A. Arthur received the appointment and entered upon his duties. He occupied the office until 1878. He is now the President of the United States. He was succeeded by Edwin A. Merritt, who had been many years in public life, and since 1877 the surveyor of the Port, and who subsequently was sent to London as United States consul-general by President Garfield—in 1881. William H. Robertson, the present Collector, has been for thirty or more years in active public service as assemblyman, county judge (for twelve years), presidential elector in 1860, representative to the Fortieth Congress, and in the senate of the State ten or twelve years, of which he was president pro tempore from 1874 to 1879. Before the end of the year 1834 the work on the new Custom House had progressed admirably. The foundation was nearly completed. The huge blocks of marble for the columns were the curiosities; of the hour. Forty yoke of oxen were required to transport one of these through the streets to its destination. The Astor Hotel was rising gradually towards the skies about the same time, and the two buildings were watched with interest by the citizens, and visited by all strangers coming to the city and by sightseers generally. The unique style and solidity of the Custom House were much commended; and it is doubtful if the structure in many of its features has since been excelled in any part of the country. It is an example of the effort for strictly scientific architecture. The great hall for business is in the "form of a Greek cross shortened in the transept part, with a dome over the intersection." The ornamentation represents the fashion and taste of half a century ago. No wood or inflammable material of any sort enters into its construction. The interior columns, numbering twelve, are each ninety-three inches in circumference; a section of one of these, upon the opposite page, illustrates its relative magnitude.
CHESTER A. ARTHUR, PRESIDENT OF THE UNITED STATES.
The controversy in relation to the removal of the deposits from the United States Bank, which raged for years with many phases in its symptoms and violence, was as its height while the Custom House was becoming a fixed fact. The great fire of 1835 swept away the Merchants' Exchange, that was supposed fire-proof, and called fresh attention to the new edifice. Just as his second term of office was drawing to a close, President Jackson issued the famous "specie circular" which turned the financial world upside down. The gold and silver of the country was drawn into the treasury of the Government. Then came disaster. Business men could not pay their debts. The storm struck Wall Street with terrific force. Within the first three weeks in April (1837) two hundred and fifty New York houses stopped payment. In New Orleans the failures reached twenty-seven millions in two days. The panic extended to the remotest quarter of the Union. Universal bankruptcy seemed impending. After deliberate consultation every bank in New York suspended payment.
With these troublous events, purely commercial in character, the stock market had only an incidental connection. There came a depression in the stock business as in the general trade of the country. The New York Stock Exchange was not then of age, so to speak, it having seen but twenty years of actual life. It has a traditional history, indeed, dating back to 1792; but the real formation of the association was in 1817. At first it consisted of twenty-five members, and no initiation fee was required. Anthony Stockholm is said to have been the first presiding officer. The meetings were held here and there—in the office of Samuel L. Beebe, 47 Wall Street; in the old Tontine Coffee-House; in a room in the rear of Leonard
SECTION OF INTERIOR COLUMN.
The first Assistant Treasurer of the United States for New York, in accordance with the act of Congress bearing date August 6, 1846, was Ex-Governor William C. Bouck, duly nominated by the President "with the advice and consent of the Senate." He was succeeded in 1849 by another ex-governor, John Young, who died in office, in 1852. Luther Bradish, ex-lieutenant-governor, and one of the most elegant and accomplished of men, was chosen to the vacant office, which he filled with great satisfaction to all parties during the remainder of President Fillmore's administration. He was subsequently President of the Bible Society and of the New York Historical Society. When President Pierce came into office, in the early part of 1853, he was in great embarrassment about the Sub-treasury in New York, which was without a head, and requested Gen. John A. Dix, as a personal favor, to hold it for a few weeks until the time should come for him to sail (as then expected) on a mission to France. He consented, and performed its duties until midsummer, at which time the eminent banker, John J. Cisco, received the permanent appointment. This administration, it will be remembered, was signalized by the acquisition from Mexico of Arizona, and the organization of the Territories of Kansas and Nebraska. The Sub-treasury occupied during the decade from 1853 to 1863 a small room in the United States Bank building, now the Assay Office. Mr. Cisco was reappointed for another term by President Buchanan in 1857.
This was a year of excitements, of which the great commercial hurricane that swept over both hemispheres was chief. While the political world was in a ferment over the attempt to establish slavery in Kansas, the financial skies were suddenly clouded. Wall Street was the first to feel the effects of the storm, which rapidly spread with devastating fury over the entire country. Enterprises of every description came to a stand-still, industries were paralyzed, the working classes were thrown into a state of extreme destitution, to which a severe winter added fresh terrors, and the avalanche of discredit brought down merchants, bankers, and moneyed corporations without distinction. Among the merchants alone were nine hundred and eighty-five failures, involving liabilities exceeding one hundred and twenty millions.
JOHN J. CISCO
The richest men were poverty-stricken in a day. So many poor people were in a starving condition that food was distributed by the city government as well as by charitable associations; one cold December day ten thousand persons were fed in one district alone by public and private charity. Aid could not reach all, and many perished. Crowds assembled and seized bakers' wagons and other vehicles on the street, and threatened loudly unless hunger was appeased. Serious danger was apprehended. The Custom House and the Sub-treasury were protected by a strong force of United States troops. The exigencies of the next four years called for exceptional wisdom in the man management of the finances of the Government. John J. Cisco acquitted himself so nobly in the discharge of the duties of Assistant Treasurer that in spite of his politics he was chosen to a third term under President Lincoln in 1861. Thus he held the onerous and responsible position during the dark years of the Civil War, and through one of the most formidable riots the city ever experienced, and with great acceptance to the Government. Meanwhile the quarters occupied by the Sub-treasury in the Assay building had grown too small for its volume of business, and Mr. Cisco conceived the happy idea of converting the Custom House into a repository of the golden treasures of the Government. The marble edifice seemed admirably suited to the purpose, and it is possible that a touch of sentiment was blended with the wish to make this point the permanent financial center of the country—as it had long since been made historically famous through the blended acuteness and argumentation of thinkers, philosophers, orators, financiers, jurists, and statesmen. Mr. Cisco instituted investigations, and learned that the Merchants' Exchange could be rented for a Custom House, with the privilege of purchase by the Government for $1,000,000 (property worth fully $4,000,000 at the present time), and persisted in his endeavor until an act was quietly passed (in 1863) through which the Custom House was removed, and the Sub-treasury took possession of its new home within a few weeks.
John A. Stewart succeeded to the assistant treasurership, but resigned upon being elected president of the United States Trust Company, and Henry H. Van Dyck received the appointment. He had been superintendent of Public Instruction from 1857 to 1861, and superintendent of the Banking Department of the State of New York from 1861 to 1865. His successor in the Sub-treasury was Major-General Daniel Butterfield; who was followed in 1869 by Charles J. Folger, the present Secretary of the Treasury of the United States. He was a senator when he received this appointment from President Grant, and resigned his senatorship to accept it. But in 1870 he was elected associate judge of the Court of Appeals, which he had helped to frame, and Thomas Hillhouse was appointed to the Sub-treasury in his stead. Here was also a man who had seen public service, had been comptroller, and State senator, and stood very high in the confidence of the people. He resigned in the spring of 1882 to accept the presidency of the Metropolitan Trust Company, and Thomas C. Acton, who had distinguished himself as a police commissioner, particularly in the draft riot, and for twelve years been superintendent of the Assay Office, received the appointment.
The business of the Sub-treasury has been constantly on the increase during the years of which we have been writing, until in 1882 it amounted to $1,502,607,790.06, of which the receipts for the year, with the balance over from 1881, amounted to $855,793,177.91, and the payments to $735,175,866.38, leaving a balance on hand December 31, 1882, of $120,617,311.53. The cash balance in the Sub-treasury at the present date is about $125,000,000, of which $105,000,000 is in gold and silver coin. This is stored in vaults as inaccessible as the dungeons of the Spanish Inquisition. Numerous great iron doors close over the passages to these vaults, embellished with locks that wind up at night, and which no combination keys can open until they run down again. The silver vault is very spacious—some forty-seven feet long by twenty-eight feet wide, and twelve feet high. It is divided by a corridor into two divisions, on one
THE DOOR OF THE GOLD VAULT.
side of which are four large compartments or bins, some twelve by fourteen feet square, separated by iron lattice-work, and on the other side eight smaller bins similarly separated. The entire vault is surrounded by thick walls of solid masonry on a concrete foundation twenty-five feet deep. It contains at present nearly $33,000,000 in silver coin, weighing over nine hundred tons. The gold vaults are built of solid iron, the walls from floor to ceiling covered with tiers of small bins of equal size, in which the
PLAN OF SILVER VAULT
INTERIOR OF GOLD VAULT.
If the "Father of our Country" could but step from his statue when it is unveiled a few months hence upon the steps of the Sub-treasury building, and take a tour through the premises, looking into the closets and cellars as in the days when he was about to remove the Presidential residence from Franklin Square to the Macomb Mansion on Broadway, and was short of storeroom for the Sèvres china, he might be led to justify his own foresight in appointing Hamilton to the practical establishment of the public credit; and exclaim in the language of Daniel Webster, "He smote the rock of the national resources, and abundant streams of revenue gushed forth."
SIGNING GOLD CERTIFICATES.
It is said that at least seven-tenths of all the disbursements of the United States Government take place at this office. As many as 11,000 individual pension checks averaging some $26.00 each, are frequently paid in one day. The treasurer is kept busy signing bonds, gold certificates, and other documents, writing his name on some occasions three thousand times during the business hours of each morning.
Adjoining the massive Greek temple just described stands a rusty-looking, unpretentious two-story structure, hardly noticed by the busy multitude who are continually passing and re-passing it, surrounded as it is by so much grandeur in architectural display. Yet it is one of the objects of special interest to all those who are familiar with the mine of precious metals contained within its dingy walls. The New York Assay Office was organized in October, in 1854, and is the most important institution of its character in the country. The edifice itself was originally built for the United States Bank, in 1823. A curious incident in its history was the exhuming of its corner-stone, a short time ago, while repairing one of its famous vaults. A glass bottle filled with historical documents, was discovered, and contained the following written scraps:
I.
"This bottle, which cost one dollar, was bought for this purpose by Richard M. Lawrence, Esq., President of the Union Insurance Office.
"J. Lang.
"May 23, 1823."
II.
"Deposited on the 23d May, 1823. If it should be the fate of these papers to be discovered many centuries hence by the descendants of the present inhabitants of New York, for the gratification of reading the description of the present state of this aspiring city they will be indebted to persons who feel the same interest in its prosperity as if they were to occupy it forever."
III.
"New York, May 23, 1823.
"This bottle is deposited by Lang, Turner & Co., editors and proprietors of the New York Gazette. The contents of it may be useful and interesting to some future generation. The population of this city is about 130,000. This may again come to light a thousand years after this period.
"John Lang,
"John Turner,
"Robert W. Lang."
The bottle further contained a copy of "Longworth's American Almanac," or City Directory, containing much curious information. Also a copy of the "Stranger's Guide to the City of New York," which stated that the number of negro slaves in the metropolis had decreased until they counted at that date only 617.
The utility of the Assay Office is in taking the people's bullion, ascertaining its exact value, refining it, and returning its equivalent to the owner in coin or stamped bars. The first room on the ground floor, after passing the vestibule, is where the bullion is received from depositors and weighed, and where it is paid for when its value has been found. The first "melting-room" is to the right of the "weigh-room," and here the gold is boiled down, so to speak, and poured into molds. In a vault beyond repose a collection of gold bricks to the amount of any number of millions in the course of a season. The assay laboratory is on the floor above, where experts are employed to decide upon the proportion of gold and silver contained in the deposits. The balances here used are the most delicate that genius can invent, and the slightest breath of air must be excluded by glass cases while the weighing goes forward. The "Refinery" is a separate building in the rear, seven stories high, erected for this particular purpose. A section of the great "melting-room," with its furnaces and huge iron pots, together with an array of crucibles above, and gold and silver bars and boxes of granulations on little miniature cars below, may be seen and studied in the accompanying illustration.
THE GOLD REFINERY.
The operations of this department are too multifarious and complicated to be explained with the pen in our limited space. At every step in the work of assaying the metal is weighed by responsible officials, and every grain is rigidly accounted for. The "boiling-room" is in an upper story, and, rough as it seems, is one of the most interesting in the building, its office being to give us the gold and silver pure and true. Each kettle has a great leaden hood, since the vigorous chemical process evolves copious fumes of sulphurous acid. The gold contained in the granulations, not being soluble in sulphuric acid, is left from the cooking in the form of a yellowish brown powder, of which one tub often contains half a million dollars in value. The silver is washed with hot water, and squeezed into the shape of an old Dutch cheese by means of a powerful hydraulic press; after which it is dried in a steam-heated oven, and finally melted into bars of nearly pure fine metal. The gold is likewise washed, pressed, dried, melted, and molded into bars ready for commercial uses or for coinage in the mint. In foreign bullion and foreign coins upward of $90,000,000 in value were melted during the year just past. On one occasion, not so very long since, foreign bullion to the amount of nearly $80,000,000 was in the vaults ready for shipment to the mint for coinage. In the cool, spacious, elegantly appointed moneyed institutions of Wall Street, it is difficult to realize that fiery furnaces are in constant use under a near neighbor's roof, and that huge kettles of liquid gold and silver, enough to pave the whole street, are stewing and steaming from morning until night. But the Assay Office is in its proper atmosphere. It is a money region. From Wall Street in every direction within the radius of a third of a mile, the business of life is finance in one form or another.
THE BOILING ROOM.
The steady growth of banks and banking houses since the beginning of the present century would have driven Jefferson to despair, could he have peered into the future. He had a chronic prejudice against banks. He said they were "monarchical inventions," and ruinous in their tendencies. Until 1799 there was but one, the Bank of New York. In 1840 thirty banks existed in the city, of which six were banking institutions formed under the general banking law; and the grand total of capital employed was not far from twenty-nine and one-half millions. Within the next forty years, notwithstanding all the vicissitudes of banking enterprise, the number reached upward of one hundred, independent of loan and trust and safe deposit companies. The first half dozen on the list struggled into existence under great opposition. These were all established in Wall Street. The Manhattan Company originated with Aaron Burr. Its ostensible object was to supply water to New York City. Burr matured his scheme with marvelous dexterity, determined to found a bank for his political party that should be as great a power as the New York Bank was to Hamilton's party. He drafted the charter himself, and it was granted by the Legislature in 1799. Many of the members who voted for the bill never so much as read it, and those who did examine it carefully saw nothing of special note in the paragraph providing that "the surplus capital might be employed in any way not inconsistent with the laws and Constitution of the United States, or of the State of New York." While the charter was pending in the Senate, some one proposed to strike out the clause quoted above. Burr promptly explained that it was only intended to give the directors a chance to found an East India Company, or a bank, on anything else that would pay, as the furnishing a little city of fifty thousand inhabitants with water could not possibly be very remunerative. The sarcastic reference to the East India Company or the bank was regarded as a visionary expression and little notice was taken of it. Even the grave Council of Revision, of whom was John Jay, Governor of the State, and other notables, had no suspicion of a bank hidden between the lines. The bill passed, and Burr was jubilant. In a few days, however, when it became actually known that a bank had been unwittingly chartered to rival the great Federal financial institution, the feeling against Burr was so bitter that he lost his election to the Assembly, and his whole ticket was beaten. The bank was duly organized, and has had an honorable record ever since in the financial history of Wall Street. Its first board of directors were, Daniel Ludlow, John Watts, John B. Church, Brockholst Livingston, William Edgar, William Laight, Paschal N. Smith, Samuel Osgood, John Stevens, John Broome, John B. Coles, and Aaron Burr. Its presidents, and the dates of their election, are as follows: Daniel Ludlow, 1799; Henry Remsen, 1808; John G. Coster, 1825; Maltby Gelston, 1829; Jonathan Thompson, 1840; Caleb O. Halstead, 1847; James M. Morrison, 1860; John S. Harberger, 1879, and William Henry Smith, 1880. Among its original stockholders were such men as Nicholas Fish, John Delafield, John Jacob Astor, Richard Varick, Stephen Van Rensselaer, Rev. John Rodgers, Joshua Sands, Peter Stuyvesant, Governor George Clinton, Israel Disosway, John Slidell, Henry Rutgers, and Daniel Phoenix.
The Merchants' National Bank was chartered in 1803, in the face of a violent opposition from both the Bank of New York and the four-year-old Manhattan Company. It was started purely in the interests of commerce, and Oliver Wolcott became its first President. Its Directors were chiefly merchants, with the exception of Peter J. Munroe, the celebrated lawyer. Its original capital was one million two hundred thousand dollars. Joshua Sands was its second President, in 1804; Richard Varick became its President in 1808; Lynde Catlin in 1820; John J. Palmer in 1833; Augustus E. Silliman in 1857; Jacob D. Vermilye in 1868. Among its original holders we find also such names as Gilbert Aspinwall, Josiah Ogden Hoffman, Daniel D. Tompkins, Richard Harrison, Cornelius C Roosevelt, John Peter de Lancey, and John F. Suydam. The next bank in order of years, and the fourth in New York, was the Mechanics' National Bank, incorporated in 1810. It was an outgrowth of the General Society of Mechanics and Tradesmen, a historical body of philanthropic and enterprising mechanics and tradesmen, dating back as far as 1785. Of the original stock of the new bank, two million dollars in twenty-five dollar shares, the society had the right to take six thousand shares, and each member of the society was entitled to subscribe individually. Presently the privilege of subscribing to the stock was considered so valuable that the society was offered one thousand shares as a gratuity if it would relinquish the right to take the six thousand. By the terms of the charter, seven members of the board of direction were required to be members of the society, and of that number four must actually follow a mechanical profession—a regulation which is still observed. The first President was John Slidell. In 1812, on the outbreak of the war, this bank, which then had the largest capital of any banking institution in New York, came to the rescue of the Government nobly. When President Jackson, many years later, ordered the withdrawal of the Government funds from the United States Bank, they were deposited in the Mechanics', in the Manhattan, and in the Bank of America. The total amount on deposit without interest aggregated upward of twelve millions of dollars: this was the only serious ill-luck the Mechanics' Bank has ever had to record. From 1838 to 1873 Sheppard Knapp was its President, and upon his resignation the eminent financier, Benjamin B. Sherman, was elected to the office, who is also vice-president of the Central Trust Company of New York, and treasurer of the New York Historical Society.
The Bank of America dates from 1812—as does also the City Bank, of which Moses Taylor was President. When the charter of the Bank of America was in agitation, such was the temper of the opposition that the Legislature was prorogued to prevent the passage of the bill. The history of the extraordinary contest of this bank for a place in the world is mixed with all the events and politics of the war of 1812, and is an instructive lesson. Its capital was far greater than that of any other bank of the time. It was expected to take the place of the United States Bank, hence its comprehensive name—Bank of America. Its first President was Oliver Wolcott; in 1814 William Bayard became President, and George Newbold cashier; Jonathan Burrall was President in 1815; Thomas Buckley in 1816; George Newbold from 1832 to 1858, through both of the panics of 1837 and 1857; James Punnett from 1858 to 1870; William L. Jenkins was elected in 1870, and is now its President. David Thompson, son of Collector Jonathan Thompson, was cashier from 1834 to 1846. He was one of its early Board of Directors, for some years its Vice-President and at various times its acting President. He retired from the cashier's office in 1846, to accept the presidency of the New York Life Insurance and Trust Company, which he held for twenty-five years, retaining at the same time his directorship in the Bank of America. He succeeded William Bard, who was the first President of this aristocratic Trust Company, which was founded by and has always been in the hands of the real estate owners and capitalists of the oldest New York families. Among its trustees from time to time have been such men as Hamilton Fish, William B. Astor, W. C. Schermerhorn, Rutherfurd Stuyvesant, Jolm David Wolfe, Robert Ray, Robert Goelet, John O. Jones (President of the Chemical Bank), Joseph Sampson, Moses Taylor, and Robert Lenox Kennedy.
The New York Clearing House was established by the banks in 1853. The suggestion first came from the great financier, Albert Gallatin, who published a pamphlet emphasizing its vast importance. The system had been in operation in London since about the beginning of the present century, and the bankers, by the daily exchange of drafts at the Clearing House, were able to reduce the balance to a very small sum; and that balance was immediately paid in notes at the Bank of England. The need was so manifest that an association was duly organized, consisting at first of fifty-two banks, five of which were soon closed by their inability to meet its requirements. The number of banks, including the Sub-treasury, connected with the Association at present (1883) is sixty-three. It happened about the time that the Clearing-house came to pass that there was an overgrowth of banks. Some one has said that in 1851 a new bank was started for every month in the year, and in 1852 one for every two months, while nine were added in 1853. The older banks, with their well established machinery, worked together smoothly. But when forty new banks were added, difficulties arose that could not be so easily controlled; thus came an expansion of credit which prepared the conditions of the panic of 1857. Meanwhile the Clearing-house went into full operation. Hitherto it had been necessary for each bank in the morning to make up its accounts, and send a man with bills and bags of gold to every other bank to adjust its differences. Where banks were a considerable distance apart the work occupied nearly a whole day, and was attended with fatigue, frequent loss, and no little danger. The Clearinghouse system enabled the banks to settle every day with each other almost simultaneously. The hour for exchanges was fixed at ten o'clock a.m.The process is simple. Each bank is represented by two clerks—one of whom occupies the desk assigned to his bank, and the other, a messenger, carries a receptacle containing the checks and drafts received the day before on the other banks, which are assorted in envelopes in the same order as the desks where they are to be delivered. These are the exchanges. The Clearing-house hall is provided with several tiers of desks, one desk for each bank, with name and number upon it—the banks being numbered according to their age, as, for instance the Bank of New York is No. 1, the Manhattan Company No. 2, the Merchants' National Bank No. 3, the Mechanics' National Bank No. 4, etc. The messengers take their places in a line outside of the tier of desks, each opposite the desk of his own bank. About two minutes before ten the manager calls the house to order, and at the exact moment strikes a bell. The messengers at once move forward, one after another in regular order, delivering the exchanges, and usually make the entire circuit of the room in ten minutes. Thus every bank has been visited, which otherwise would have occupied six or eight hours. The clerks at the desks ate allowed thirty-five minutes after the delivery of the exchanges to enter, report, and prove their work. If any errors are discovered after that time fines are imposed for each error, which are collected monthly by drafts on the banks fined. A fine is the penalty, also, for tardiness. The entire work of the morning is usually accomplished in less than one hour. The debit banks pay to the manager in legal tender notes or coin before half-past one o'clock of the same day, and the credit banks receive immediately after that hour the amounts due to them, respectively; thus with one process yesterday's transactions of all the banks in the city are settled. The magnitude of the business seems almost fabulous, so quietly and quickly is it performed. The statistics show the immense progress of the monetary transactions since it was
CLEARING HOUSE STATISTICS.
WILLIAM A. CAMP.
The machinery of the institution, as well as its value as a financial auxiliary, were thoroughly tested during the late Civil War, when it enabled the banks, united as one, to furnish funds by which the credit of the Government was preserved; and it has proven itself an arm of strength in the various financial panics, notably in 1873.
The decade between 1850 and 1860 was rendered memorable in Wall Street by many events other than those already mentioned. The Stock Exchange was the scene of a fierce tumult in 1854, when the news came that Robert Schuyler, President of the New York and New Haven Railroad, was a defaulter for $2,000,000. Almost simultaneously it was learned that Alexander Kyle, Secretary of the Harlem Railroad Company, had issued forged stock to the amount of $300,000. Other breaches of trust were suddenly discovered. Clerks, accountants and bank officers all fell under suspicion. The effect was painful in the extreme. The first mining board in Wall Street was formed about 1857. Its existence was not of long duration, and its successor in 1859 was short-lived. In 1864 forty-one gentlemen, nearly all of whom had seats in the regular Stock Exchange, organized the Mining Board of New York, and John Simpkins was elected president. The institution was located for a time at 12 Wall Street, afterward in a room in the new Stock Exchange building. Since its birth nearly two hundred mining companies have sprung into being, representing as many millions of capital. The Stock Exchange held its sessions, between 1854 and 1857, in a room over the Corn Exchange Bank, and afterward in a hall in Lord's Court, in Beaver Street. The removal to its present spacious building was in 1865. The gold brokers came into prominence when the banks refused to honor their own bills by payment in coin for the full face value. The Gold Exchange was established in 1864, after gold had taken its succession of immense leaps, and reached the pinnacle of 285. More than half its original members were also members of the Stock Exchange, but the two organizations were entirely distinct, and at one time almost hostile. While the war lasted the gold market was the barometer of success and failure. In 1866 the Gold Exchange Bank was established, which became a clearing-house for the Exchange. Meanwhile the corridors of the Fifth Avenue Hotel seemed to be as much a part of Wall Street as the steps of the Sub-treasury building. A blood-red transparency announcing a petroleum board in the evening, on the corner of Fifth Avenue and Twenty-third Street, attracted crowds; and railways, petroleum stocks and gold were sold at all hours of the night. Brokers seemed to be living without sleep, or rest, or peace. A series of irregularities and defalcations followed, of which that of Edward Ketchurn, leaving behind him a legacy to Wall Street in the shape of a million and a half of forged gold certificates, was one of the chief. The banks and the Stock Exchange resolved unanimously to hold no intercourse with the men engaged in these night operations, and the Gold Board took similar action. Thus, from 1865 to 1869, there were comparatively few startling paroxysms. Early in September of the latter year the atmosphere began to exhibit signs of an approaching tempest. On the 24th came the Black Friday panic, which has burned into the souls of thousands of sufferers in every part of the Continent, and the differences arising out of the operations of that terrible day were not adjusted for six or eight years afterward. The clearings of the day previous had been 325 millions, and the contracts of Friday aggregated 500 millions, but they were not cleared, as the machinery of the Gold Clearing-house broke down. While this 500 millions of gold was in process of sale or purchase the storm of voices—veils and shrieks—lost human semblance. The labor of years was disappearing and reappearing in the wave line of advancing and receding prices. Fortunes melted away in a second, and white terror-stricken faces told the sad story of broken hopes and hearts. In Wall Street masses of men gathered, and riots were anticipated. The police appeared on the scene, and troops were held in readiness to be summoned into Wall Street at any moment. When night came the gas-lights from hundreds of windows in the vicinity of Broad Street, corner of Wall, burned until the dawn of a new day. Men bent over their books without relief. On Saturday the Gold Board met only to adjourn, as the Clearing-house was crippled. Failures followed failures. The Stock Exchange was suspected of weakness for a time, and throngs crowded its corridors, and overhung the stairway for a glimpse of the commotion, but could hear only the roar of the biddings. The run upon banks in the street, the assaults of angry brokers, the threats of violence against those who were suspected of treachery, and wild outbreaks of despair from such as had been ruined, will never be obliterated from the memory of those who witnessed the scenes.
There are many points connected with the Stock Exchange of great public interest, and which are far too imperfectly understood. We hear of "corners" and "pools," and of "bulls" and "bears," and, have, it is presumed, a tolerably correct knowledge of the significance of the terms thus used. But in discriminating between the various kindred institutions to which the same forms of speech are applicable, one is reminded of the story of the bear's house in the old spelling-book. The mind does not always hit the right bear. Excessive speculation in stocks—that which goes beyond ability to pay losses—is equally reprehensible with over-trading in any other sort of merchandise. The New York Stock Exchange is really the most important business organization in the United States, and probably combines in its membership more quick and ready intelligence, more personal honor in respect to the keeping of engagements, at whatever pecuniary sacrifice, without reference to legal liability or compulsion, and more liberality and generosity in business dealings than can be found among any equal number of men engaged in the pursuit of gain in any other business relation whatever. The business in which its members are engaged, and the manner in which it is transacted, necessitate and develop promptness of judgment and the faculty of instantaneous decision; the strict and rigidly enforced laws of the Stock Exchange, as well as the high tone of public sentiment among its members, enforce honorable dealing independently of legal obligations; while the habit of and familiarity with large pecuniary transactions, and a kind of reliance on mutual good will and consideration among themselves, promote magnanimity in their pecuniary relations with each other. These assertions are verified and strikingly illustrated by the fact that transactions amounting to from 300 to 700 thousand shares of stock, involving from 20 to 50 millions in value and many hundreds of thousands of dollars in profits and losses take place daily for months at a time, without giving rise to a dispute that is not good-naturedly settled on the spot
WALL STREET IN 1883-SUB-TREASURY AND STOCK EXCHANGE.
by an appeal to the bystanders, or by the toss of a coin; while a resort to the courts between members growing out of these enormous transactions is almost unknown. The Exchange has its own tribunal in its "Arbitration Committee," to which are referred all questions between members too serious for instant adjustment by the simple methods above referred to, with the right of appeal to the whole body of the Governing Committee; and the decisions thus reached are accepted as final. The government of the Exchange is vested in a Governing Committee, consisting of forty members, one-fourth of whom are chosen at each annual election, together with the president and treasurer. Suitable standing committees are appointed by the Governing Committee from their own number, to whom are intrusted the details of the several departments of the government of the Exchange, and of the administration of its affairs. Its organization is thus rendered compact, symmetrical, and efficient, and its government commands the confidence and respect of the membership. There is probably no equal area of territory on the earth's surface within which transactions so numerous and involving interests so large are entered into and faithfully carried out almost literally upon honor, without written contract or other evidence than hastily scratched pencil memoranda, as on the floor of the New York Stock Exchange.
Contrary to the prevailing notion that there is no public utility in anything which does not produce something, or that does not transform and improve products by the processes of manufacture, or interchange them by the operations of commerce, the Stock Exchange is an institution of the highest utility and of vital necessity in an age and country of progress, of commercial and financial activity and of material development. It is the great national mart and market place, where investments inviting capital and capital seeking investment are brought together, where the relative values of money and of securities representing national, municipal or corporate credit are established and expressed, where securities may be quickly turned into money, and where money, in itself inert and incapable of self-increase, may find its way into the channels in which it will impart life and activity to business enterprise and material development, and become productive to its owner through interest, dividends or the fluctuations in values. While there is much of what may be deemed pure speculation (some of it reckless and unprincipled enough) carried on through the medium of the Stock Exchange, it should be remembered that there is no business, however legitimate or conservative in its character or pretensions, that has not its speculative side, and does not present ample opportunities for reckless or inexperienced men to ruin themselves if they choose. It is a fact, moreover, not generally known perhaps, that most of the men whose names are associated in the popular mind with gigantic speculations, and who are credited with deep-laid schemes for taking in the innocent and unsophisticated lamb, are not members of the Stock Exchange, but carry on their operations through members who are generally ignorant and innocent of the designs of the parties from whom the orders come to buy or sell, these orders often passing through several hands before reaching the broker who executes them.
The membership of the Stock Exchange is limited to eleven hundred, and the privilege is so highly esteemed that as high as $32,000 has been paid for the opportunity to take the place of a retiring member within the past year. An excellent feature of the institution is what is known as the "Gratuity Fund," out of which the wife, children, or other nearest relatives of a deceased member are paid the sum of $10,000, to provide which each surviving member is assessed $10 upon the death of one of their number—a tax which is always paid with sympathetic readiness. This heritage of the widow and orphans of a dead member is most carefully guarded by the laws of the Exchange as a sacred trust, and is exempt from all liability for debt or claims of any kind. It is often a great blessing to the family of one who dies in comparative affluence, as it furnishes the means of providing for immediate necessities which it might take some time to obtain from the estate, while in numerous instances it has proved of inestimable benefit to young wives and children whose husband and father has been stricken down before affluence had come, or on the edge of financial disaster. Among its presidents, in the course of its career, appear such names as James W. Bleecker, John Ward, David Clarkson, W. R. Vermilye, William
A. S. HATCH, PRESIDENT OF THE STOCK EXCHANGE.
In passing thus briefly and rapidly over the years since Wall Street was the dividing line between the bears of the forest and the bulls of intruding civilization, neither its picturesque beginnings, its bewildering charms as the seat of fashion and of the national Government, nor its modern riches and financial renown, must lead us to forget that it is closely associated with historic events in every part of the Western hemisphere. In touching upon its salient features, its solid and substantial men deserve special consideration. Not one of its great moneyed institutions ever reached its present proud position in any hap-hazard manner. Integrity, ability, culture, and persistent industry have all been in perpetual requisition. The banks, for instance, and the banking, trust, and insurance companies, have been and are conducted by men of the highest character and consequence, men deeply concerned in the extension and support of churches and charities, and whose public spirit is written in imperishable lines all over Christendom. George I. Seney, who has given millions for charitable and educational purposes, president of the Metropolitan Bank since 1857, is a notable example of this class. Robert Lenox Kennedy, president of the Bank of Commerce, connected with numberless literary and charitable, as well as financial institutions of the city; George S. Coe, president of the American Exchange National Bank, who originated the expedient of clearing-house certificates in 1859, through which the banks as a body could stand or fall together in times of alarming pressures; William Dowd, president of the Bank of North America, concerned in an official capacity with several other moneyed institutions, and a prominent and active member of the Board of Education of the city; Frederick D. Tappan, president of the Gallatin Bank, and also of the Clearing-House Association; Arthur B. Graves, president of the St. Nicholas Bank; Peter M. Bryson, president of the Phoenix Bank; William H. Macy, president of the Seaman's Bank for Savings; and Percy R. Pyne, president of the City Bank, are among the many who seem inspired by modern progress and development. James Brown, of Brown Brothers, whose reputation as foreign bankers is world-wide, endowed the Union Theological Seminary with $300,000. Hardly less numerous than the banks in Wall Street are the insurance companies, of which the Atlantic Mutual is the largest marine insurance company in the country. Among its trustees are a group of distinguished citizens and philanthropists; as, for instance, the late lamented William E. Dodge, and the late Ex-governor E. D. Morgan, Charles H. Russell, former president of the Bank of Commerce, Benjamin H. Field, vice-president of the New York Historical Society, Josiah O. Low, Royal Phelps, William H. Webb, Robert B. Minturn, Horace Gray, Edmund W. Corlies, Samuel Willetts, and its present president, John D. Jones.
The most valuable real estate in the world is said to be the corner of Wall Street and Broad, the point shown in the illustration of Wall Street on page 25. The Mills Building in Broad Street, running through to Wall Street, cost an enormous sum. The largest bank edifice is on the corner of Wall and Broadway—nicknamed by the Brokers "Fort Sherman"—and is the home of the First National Bank, George F. Baker president, and the Bank of the Republic, Henry W. Ford president. The largest depository in the country is the United States Trust Company, John A. Stewart president, which holds deposits amounting to some $37,000,000.
It is equally interesting to observe that Wall Street is identified with the early newspaper enterprises of the city. The Journal of Commerce for twenty-five years occupied the south-east corner of Wall Street and Water, and the Courier and Enquirer was in a building on the north side of Wall Street between Pearl and William. These two newspapers were in competition, as far as obtaining fresh news was concerned. David Hale and Gerard Hallock inaugurated the famous news schooners, to cruise at sea and intercept European vessels for the latest intelligence. Whereupon the Courier and Enquirer hired vessels for the same purpose, and the races of these squadrons down the bay were among the exhilarating excitements of the period. Long before this time, however, Washington Irving planned and partially executed his "Knickerbocker History of New York" in Wall Street. The charm his genius threw into the title of the work has caused many a grave scholar to search the old Holland records for the origin of the popular term "Knickerbocker," which is not only applied by common consent to the early Dutch inhabitants of New York, but is prefixed to nearly every article in the range of industrial products on this side of the Atlantic: and yet its fame dates no further back than the humorous history of Irving, concocted in the little office in Wall Street, about 1807. At the present moment we have a living, breathing, practical contradiction of the oft-repeated assertion that a poet cannot also be a man of business. Edmund Clarence Stedman is one of the active members of the Stock Exchange, and although of slight, delicate organization, with an excess of nervous force, he finds opportunity and mental strength for some of the finest poetical productions in the language. His studies and his severely refined taste have rendered him an admirable critic, and the service he has rendered to letters by his analytic reviews and aæsthetic essays during the past ten years it would be difficult to overestimate. Perhaps the stimulating vortex of the Stock Exchange may have been a spur to his genius. He is now engaged in his moments of leisure upon an extended work, "The Rise of Poetry in America," a companion volume to the Victorian Poets, and is an active member and trustee of a half dozen or more scholarly societies and clubs. He has remembered Wall Street in a beautiful little poem, written in 1867, of which the following are its opening lines:
"Just where the Treasury's marble front
Looks over Wall Street's mingled nations;
Where Jews and Gentiles most are wont
To throng for trade and last quotations;
Where, hour by hour, the rates of gold
Outrival, in the ears of people,
The quarter-chimes, serenely tolled
From Trinity's undaunted steeple—"