A Political History of the State of New York, Volumes 1-3

by De Alva Stanwood Alexander

Two years after, in 1805, the Federalists desired to charter the Merchants' Bank of New York City. But the Legislature, largely Republican, was led by DeWitt Clinton, now at the zenith of his power, who resented its establishment because it must become a competitor of the Manhattan, an institution that furnished him fat dividends and large influence. Clinton had undoubtedly acquired a reputation for love of gain as well as of power, but he had never been charged, like John Taylor, with avarice. He spent with a lavish hand, he loaned liberally to friends, and he borrowed as if the day of payment was never to come; yet he had no disposition to help opponents of a bank that must cripple his control and diminish his profits. In this contest, too, he had the active support of Ambrose Spencer, who fought the proposed charter in the double capacity of a stockholder in the Manhattan and the State, and a member of the Council of Revision. Three banks, with five millions of capital and authority to issue notes and create debts for fifteen millions more, he argued, were enough for one city. He had something to say also about "an alarming decrease of specie," and "an influx of bills of credit," which "tended to further banish the precious metals from circulation."[160]

Governor Lewis would have been wiser had he joined Clinton and Spencer in their opposition. But Lewis would not play second fiddle in any game with Clinton, and so when he discovered that Clinton opposed the bank, he yielded party principle to personal prejudice and favoured it. With this powerful recruit the managers still lacked a majority, and, to influence others, Ebenezer Purdy, a Republican senator, employed his gifts in offering his legislative associates large rewards and rich benefits. As a statesman, Purdy seems to have been without any guiding principle, or any principle at all. He toiled and pushed and climbed, until he had landed in the Senate; then he pulled and bargained and promised until he became a member of the Council of Appointment, and, later, chairman of the legislative caucus that nominated Chancellor Lansing for governor; but not until the Merchants' Bank wanted a charter did Purdy find an opportunity to develop those aldermanic qualifications which distinguish him in history. He was getting on very well until he had the misfortune to confide his secret to Stephen Thorn, a senator from the eastern district, and Obadiah German, the well-known assemblyman from Chenango, whose views were not as liberal as Erastus Root's. "No one would hesitate, from motives of delicacy, to offer a member shares in a bank," said Root. This was Purdy's view also; but Thorn and German thought such an offer had the "semblance of a corrupt influence," and they made affidavits that Purdy had attempted to corrupt their votes. According to these affidavits the Senator promised German fifty shares of stock, with a profit of twenty dollars a share, and Thorn thirty shares, with a profit of twenty-five dollars a share. Similar affidavits were made by other members.

Erastus Root took exception to such transactions. "The Merchants' Bank in 1805," he says, "had powerful opposition to encounter, and, of course, made use of powerful means to accomplish the object. Then the shares and the assurance became down-right corruption."[161] But it is not easy to observe the difference between the methods of the State Bank managers, which Root affirms "had not the least semblance of a corrupt influence," and those of the Merchants' Bank, which he pronounces "down-right corruption," except that the one was open bribery and the other secret bribery. In either case, votes were obtained by the promise of profits. It is likely the methods of the Merchants' would have escaped notice, as did those of the State Bank, had not Clinton, determined to beat it, complained of Purdy's bribery. The latter resigned to escape expulsion, but the bank received its charter. This aroused the public conscience, and in the following winter the Legislature provided suitable punishment for the crime of bribery.

It was not until 1812 that any one had the hardihood to suggest another bank. Then the Federalists sought a charter for the Bank of America, with a capital of six millions, to be located in New York City. The applicants proposed to pay the school fund four hundred thousand dollars, the literature fund one hundred thousand, and the State one hundred thousand, provided no other bank be chartered for twenty years. In addition to this extravagant bonus, its managers agreed to loan the State one million dollars at five per cent. for the construction of canals, and one million to farmers at six per cent. for the improvement of their real estate. This bold and liberal proposal recalls John Law's South Sea Bubble of the century before; for, although the Bank of America sought no monopoly and promised the payment of no national debt, it did seem to be aiming its flight above the clouds, since, counting the Manhattan at two, the united capital of the banks of the State did not exceed five millions. The promoters, anticipating an outcry against the incorporation of such a gigantic institution, employed David Thomas of Washington and Solomon Southwick of Albany to visit members of the Legislature at their homes with the hope of enlisting their active support.

It is doubtful if two men better equipped to supply the necessary legislative majority could have been found in the State. Both were stalwart Republicans, possessing the confidence of DeWitt Clinton and an extensive acquaintance among local party managers. Thomas had caution and rare sagacity. Indeed, his service of four years in the Legislature and eight years in Congress had added to his political gifts such shrewdness and craft that he did not scruple, on occasion, to postpone or hasten an event, even though such arrangement was made at the expense of some one else. This characteristic had manifested itself in the removal of Abraham G. Lansing as treasurer of state. The Chancellor's brother, by long service, had won the confidence of the people as a keeper of the State's money, and, although his family had followed the fortunes of Governor Lewis, it did not occur to the Legislature to dispossess him of his office until David Thomas wanted a position. Then, the silent, crafty Washingtonian developed so artfully the iniquity of Lansing's political perfidy that he succeeded in obtaining the office for himself. It was because of this craftiness, this unscrupulous use of every weapon of political warfare, that the bank hired him. His gifts, his schemes, his faults, his vices, were alike useful.

Solomon Southwick belonged to a different type. He lacked the caution of Thomas, but nature had given him the appearance and manners which well fitted him for the task of attracting those who came within the range of his influence. He was singularly handsome and graceful. No stranger came near him without feeling an instant desire to know him. He was all the more attractive because there seemed to be nothing artificial or made up about him. He had his intimates, but with an unstudied and informal dignity, he was hail-fellow with every one, keeping none at a distance, and concealing his real feelings behind no mask of conventionalism. It was said of him at this time that he knew more men personally than any other citizen in the State. He had been four times elected clerk of the Assembly, he had served as sheriff of his county, and he was now sole editor and proprietor of the Albany Register, the leading and most influential Republican paper. To ability as a writer he also added eloquence of speech. Southwick could not be called a great orator, but he had grace, wit, imagination, and a beauty of style that appealed to the hearts and sympathies of his hearers. In the conduct of his business affairs, nobody could be more careful, more methodical, more precise. Indeed, we may take it for granted, without any biographical information on the subject, that in 1811 Solomon Southwick was on the road to the highest honours in the gift of his State.

But his connection with the Bank of America covered him with suspicion from which he never entirely recovered. It must have occurred to him, when accepting the bank's retainer, that his opposition to the Merchants' Bank would be recalled to the injury of his consistency. In 1805, he had boldly declared in the Register that any Republican who voted for a Federalist bank was justly censurable; in 1812, he so far changed his mind as to hold that any one "who supports or opposes a bank upon the grounds of Federalism or Republicanism, is either deceiver or deceived, and will not be listened to by any man of sense or experience." A little later in the contest, when partisan fury and public corruption were the opposing forces, several sub-agents of the bank were indicted for bribery, among them a former clergyman who was sent to the penitentiary. Then it was whispered that David Thomas, following the example of Purdy in 1805, had scattered his purchase-money everywhere, sowing with the sack and not with the hand. Finally, Casper M. Rouse, a senator from Chenango, accused Thomas of offering him ten shares of stock, with a profit of one thousand dollars, adding that Thomas had told him to call upon Southwick in Albany. Southwick had evidently fallen into bad company, and, although Rouse disclaimed having seen the Albany journalist, a week or two later Alexander Sheldon, speaker of the Assembly, made a charge against Southwick similar to Rouse's accusation against Thomas. Both men were indicted, but the jury preferred accepting the denial of the defendants, since it appeared that Rouse and Sheldon, instead of treating the accused as bribers and men unworthy of confidence, had maintained their former relations with them, subsequently voting for Thomas for treasurer of state, and for Southwick as regent of the State University. As positive proof of bribery was limited in each case to the prosecuting witness, we may very well accept the defendants' repeated declarations of their own integrity and uprightness, although the conditions surrounding them were too peculiar not to leave a stigma upon their memory.

These charges of crime, added to the bank's possession of a solid majority in both branches of the Legislature, aroused the opposition into a storm of indignation and resentment. Governor Tompkins had anticipated its coming, and in a long, laboured message, warned members to beware of the methods of bank managers. Such institutions, he declared, "facilitate forgeries, drain the country of specie, discourage agriculture, swallow up the property of insolvents to the injury of other creditors, tend to the subversion of government by vesting in the hands of the wealthy and aristocratic classes powerful engines to corrupt and subdue republican notions, relieve the wealthy stockholder from an equal share of contribution to the public service, and proportionally enhance the tax on the hard earnings of the farmer, mechanic and labourer." He spoke of the "intrigue and hollow pretences" of applicants, insisting that the gratification of politicians ought not to govern them, nor the "selfish and demoralising distribution of the stock." "Nor ought we to be unmindful," he continued, "that the prominent men who seek the incorporation of new banks, are the very same men who have deeply participated in the original stock of most of the previously established banks. Having disposed of that stock at a lucrative advance, and their avidity being sharpened by repeated gratification, they become more importunate and vehement in every fresh attempt to obtain an opportunity of renewing their speculations." As if this were not reason enough, he exhorted them not to be deceived by the apparent unanimity of sentiment about the capital, since it "is no real indication of the sentiments of the community at large," but so to legislate as "to retain and confirm public confidence, not only in the wisdom, but also in the unbending independence and unsullied integrity of the Legislature."[162]

The Governor's arguments were supplemented by others from Ambrose Spencer, whose bank holdings seemed more likely than ever to suffer if this gigantic combination succeeded. Spencer's opposition to the Merchants' Bank in 1805 had been earnest, but now his whole soul was aflame. To counteract the influence of Southwick's Register, he established the Albany Republican, which ceased to exist at the end of the campaign, but which, during its brief life, struck at every head that favoured the bank. Its editorials, following the line of his objections in the Council of Revision, lifted into prominence the injurious effect likely to flow from such an alarming extension of banking capital at a time when foreign commerce was stagnant, and when the American nation was on the eve of a war in defence of its commercial rights. This was mixed with a stronger personal refrain, discovering the danger to his bank-holdings and revealing the intensity of a nature not yet inured to defeat. A bank controlling three times as much capital as any other, he argued, with unlimited power to establish branches throughout the State, must be a constant menace to minor institutions, which were established under the confidence of governmental protection and upon the legislative faith that no further act should impair or destroy their security. "A power thus unlimited," he declared, "may be exercised not only to prejudice the interests, but to control the operations, destroy the independence, and impair the security of every bank north of the city of New York. A bill thus improvisory and alarming, giving undefined and unnecessary powers, and leaving the execution of those powers to a few individuals, would materially weaken the confidence of the community in the justice, wisdom, and foresight of the Legislature."[163]

With Tompkins and Spencer stood John Taylor, whose fear for his stock in the State Bank, of which he was president, made his opposition more conspicuous than it appeared in 1805, when he assaulted Purdy, knocking him down as he left the senate chamber; but in this contest, he did not strike or threaten. He moved among his associates in the Senate with the grace of a younger man, his tall, spare form bending like a wind-swept tree as he reasoned and coaxed. In the same group of zealous opponents belonged Erastus Root, who had just entered the Senate, and whose speech against the Bank of America was distinguished for its suppressed passion and its stern severity. He had waked up, at last, to the scandalous barter in bank charters.