Gotham_ A History of New York City to 1898 - Edwin G. Burrows [245]
The demise of the Manufacturing Society was nonetheless a signal that large-scale industrial manufacturing faced immense obstacles in New York. Manhattan lacked the water power necessary for mills and factories. City real estate was already very expensive, almost prohibitively so for high-risk ventures that might take years to show a profit. Inexperienced management, the lack of up-to-date technology, and competition from low-cost British imports compounded the problem. Besides, investors could almost always do better, with less danger, in shipping, insurance, and other mercantile enterprises, to say nothing of land or stock speculation. Over time, more and more of New York’s merchants and financiers came to think of manufacturing as a nuisance. It threatened to open competitive outlets for capital, they charged, while the protectionist trade policies advocated by its proponents posed a danger to the free movement of goods, money, and credit across national boundaries.
SCRIPTOMANIA
Fighting over the direction of the nation’s political and economic future resumed in Philadelphia in mid-December 1790 when Hamilton dispatched a second report on public credit to Congress. Among other things, the report recommended creation of a Bank of the United States. British experience proved, Hamilton said, that a bank was vital to national stability and prosperity. It would facilitate the financial operations of the treasury. Bank stock, a portion of which could be bought with the new public stock, would forge yet another link between public creditors and the federal government. Because its notes would serve as a circulating medium, and because its capital could be loaned out to private entrepreneurs, a national bank would further stimulate the nation’s trade and commerce. Jefferson and Madison protested that the Constitution gave the federal government no authority to charter such a bank, but the necessary legislation sailed through Congress and was signed into law by the president at the end of February 1791.
The new Bank of the United States got off to a shaky start. Against Hamilton’s wishes, the BUS board of directors decided to open a branch in New York, where the Bank of New York had just lost another attempt to get a charter from the state. The BONY’s capital resources were larger than ever, but the number of shareholders had dwindled to twenty-five or so, mostly wealthy merchants like Rufus King, Isaac Roosevelt, and Nicholas Low—exactly the men to whom the BUS branch could be expected to appeal for support. Was there room for two banks in New York? Would the potential danger to the BONY cause a local backlash against the new federal institution? Certainly Governor Clinton and his friends thought a state bank might offset the power of the BUS, and they decided to give the BONY a charter after all, reserving the right for the state to buy a hundred shares of stock for fifty thousand dollars.
None of this had been sorted out when, on July 4, 1791, BUS stock went on sale in Philadelphia at twenty-five dollars a share. Within two hours, frenzied buyers—led, as Madison and Jefferson had feared, by northern and European “moneyed men”—snapped up the entire offering. In no time at all, bank stock as well as federal loan certificates were on the auction blocks in New York as well, and as Madison reported to Jefferson, the Coffee House was