1784 Two Hundred Years Ago

On February 23 there appeared in the New York newspaper Packet a notice that read: “ BANK . It appearing to be the disposition of the Gentlemen in this City, to establish a Bank on liberal principles, the stock to consist of specie only: they are…hereby invited to meet…at the Merchant’s Coffee-House; where a plan will be submitted to their consideration.”

The meeting was held the next day and a committee appointed to sell a thousand shares at five hundred dollars each. The bank was to be organized when half the shares were taken; this was quickly managed, and so came into being the Bank of New York.

Alexander Hamilton bought a single share of the stock. He had retired from Congress the previous year to devote himself to the practice of law. He was, with his lone share, elected one of the directors of the new enterprise and remained so until he resigned in 1788.

It was Hamilton who drew up the bank’s constitution, adopted by his colleagues on March 15, 1784. He wanted the bank to be incorporated and, indeed, it was probably at his instigation that the bank had applied for a state charter even before the constitution was approved. But it was seven years before the legislature overcame the objections of Governor Clinton to allow it. Difficult as it now is to imagine, there was then a general fear that large financial corporations might abuse their “privelege” and trample on the fruits of our newly won liberty.

During the same month that the gentlemen met to organize their bank, another event took place that was also to have great implications for the commercial future of America. The Empress of China sailed from New York for Macao. Maj. Samuel Shaw of Boston was aboard, carrying a letter from President Washington. This was the first American ship to visit China, and Shaw was the first American businessman to deal directly with Chinese merchants. When he returned, his account of the trip was read aloud in Congress.

The Chinese wanted ginseng (a root they valued for medicinal purposes), sandalwood, and, above all, the fur of the sea otter. American ships brought home teas, silks, ivory, and objects of art. It has been estimated that a ten-cent investment in some trifle could be traded to the Indians of Oregon for two dollars’ worth of otter skins, which in turn fetched a five-dollar box of tea from China. With a 5,000 percent return, it is no wonder that the China trade flourished.