¹ This thesis has been most forcefully presented in Sylla, Richard E., “U.S. Securities Markets and the Banking System, 1790–1840,” Federal Reserve Bank of St. Louis Review 80:3 (May/June 1998): 83–98.Google Scholar The established scholars most actively researching the early development of capital markets include Sylla, Larry Neal, Howard Bodenhorn, and Winifred Rothenberg. A small legion of doctoral candidates and recent graduates have also taken up the study of early finance. Those not convinced that additional studies of early banking are needed should consult Edwin Perkins, American Public Finance and Financial Services, 1700–1815 (Columbus, Ohio, 1994).Google Scholar Perkins's survey of the extant historiography of early American finance indirectly shows the many gaps in our knowledge of the subject.

² The term “customer” herein refers to individuals whowere either borrowers or depositors. “Borrowers” refers to recipients of discounts (loans). It should be pointed out, however, that surprisingly often depositors became borrowers by overdrawing their accounts. Also, readers should bear in mind that early American banks did not keep separate “deposit” and “loan” accounts; loans created credits in customer accounts just as deposits did. Generally, loansare identifiable only by the subtraction of discounts. Because early banks did not pay interest, few “depositors” kept large balances; most lodged funds in the bankmerely to draw upon by checks soon thereafter.

³ Hammond, Bray, “Long and Short Term Credit in Early American Banking” Quarterly Journal of Economics 49:4 (1934): 79–103CrossRefGoogle Scholar; Lamoreaux, Naomi, Insider Lending: Banks, Personal Connection, and Economic Development in Industrial New England (New York, 1994), 7–8CrossRefGoogle Scholar; Redlich, Fritz, Molding of American Banking: Men and Ideas (New York, 1968), 11Google Scholar; Henretta, James A., “The ‘Market’ in the Early Republic,” Journal of the Early Republic 18 (Summer 1998): 298.CrossRefGoogle Scholar Redlich claimed that the Bank of North America was crippled by insider lending in the 1790s. Actually, it was the Bank of Pennsylvania that suffered from insider lending practices, not the Bank of North America. See Bank of Pennsylvania, Minutes of Stockholders (1793–1842), 29 Jan., 29 Dec. 1796, Historical Society of Pennsylvania [hereafter HSP]. That the Bank of North America did not encounter such difficulties can be seen by viewing its minute book and general and individual ledgers at HSP.

⁴ Wright, Robert E., “The First Phase of the Empire State's ‘Triple Transition’: Banks' Influence on the Market, Democracy, and Federalism in New York, 1776–1838,” Social Science History 21:4 (1997): 521–58.Google Scholar

⁵ Transfer Books and General Ledgers, 1781–1830, Bank of North America Records, HSP; Lewis, Lawrence, History of the Bank of North America (Philadelphia, 1882), 47, 53, 67, 89, 91.Google Scholar Mark Prager & Co. to James St. Ferrall, Philadelphia, 9 Feb. 1797, Prager letterbook, HSP.

⁶ Wright, Robert E., “Banking and Politics in New York, 1784–1829,” (Ph.D. diss., State University of New York at Buffalo, 1996), 705–735Google Scholar; Lamoreaux, Insider Lending, 82.

⁷ Manhattan Company, Ledger and Subscription Book, Record Group 1, Chase-Manhattan Archives. Longworth's American Almanac, New York Register and City Directory, 1802; Longworth's American Almanac, New York Register and City Directory, 1803. The mostrecent description of the origin of the Manhattan Company is Wright, Robert E., “Artisans, Banks, Credit, and the Election of 1800,” Pennsylvania Magazine of History & Biography 122 (July 1998): 1–30.Google ScholarThe best study of the functioning of that bank is Gregory Hunter, The Manhattan Company: Managing a Multi-Unit Corporation in New York, 1799–1842 (New York, 1989).Google Scholar

⁸ Hubert, Philip, Merchants National Bank of New York City, 1803–1903 (New York, 1903)Google Scholar; Longworth's American Almanac, New York Register and City Directory, 1802; Longworth's American Almanac, New York Register and City Directory, 1803.

⁹ Carey, H. C., The Credit System in France, Great Britain, and the United States (Philadelphia, 1838), 82.Google Scholar

¹⁰ Bank of Geneva Minutes, Hawley Collection, Hobart College, Geneva, New York. Stockholder biographical information was taken from Thompson, Gary, Index to the Newspapers Published in Geneva, New York (Geneva, N.Y., 1981).Google Scholar The early newspapers, as well as several histories of the bank, detail the changes in the directorship. Kent, Norman, The National Bank of Geneva: Being an Account of the Bank & the Community it has Served for a Century ir a Quarter, 1817–1942 (Geneva, N.Y., 1942)Google Scholar; Plank, D. H. Ver, Geneva National Bank: Centennial Anniversary of the Geneva National Bank, Geneva, New York 1817–1917 (Geneva, N.Y., 1917).Google Scholar

¹¹ Karmel, James, “Banking on the People: Banks, Politics and Market Evolution in Early National Pennsylvania,” (Ph.D. diss., SUNY Buffalo, forthcoming), Tables 5–3, 5–4, 5–5.Google Scholar

¹² This is not to say that shares were not widely held in some “western” states. Ohio bank shares, for example, were widely held in the early 1840s (see below).

Ownership of Bank Stock in Ohio:

Occupation/Category $ amount Percent

Females 515,424 2.00

Retired/aged 1,951,720 29.59

Minors 632,547 9.59

Merchants, mechanics, farmers, traders 2,431,837 36.87

Savings banks 226,500 3.43

Physicians and clergymen 140,350 2.13

Lawyers 141,671 2.15

Insurance and other corporations 297,029 4.50

Officers of other banks 118,714 1.80

Counties 132,410 2.00

Brokers 8,000 0.12

Total 6,596,302 100.00

Source: Philadelphia Commercial List and Price Current, 27 Feb. 1841. The following text accompanied this table: “By a statement in the Cincinnati Gazette, it appears that the capital stock of twenty-three bank[s] in that State, amount to $9,019,222, is distributed, as far as ascertained, among the following classes of persons.”

See Howard Bodenhom, A Watchful Trade: Banking, Economic Growth and Financial Integration in Antebellum America (New York, forthcoming), ch. 1; ibid., “Private Banking in Antebellum Virginia: Thomas Branch & Sons of Petersburg,” Business History Review 71 (Winter 1997): 513–42; ibid., “Free Banking and Financial Entrepreneurship in Nineteenth Century New York: The Black River Bank of Watertown,” Business and Economic History 27 (Fall 1998): 102–14.

¹³ Samson Fleming to William Edgar, Philadelphia, 9 Feb. 1784, Papers of William Edgar, New York Public Library (hereafter NYPL).

¹⁴ Stockholders are creditors and borrowers are debtors. Samson Fleming to William Edgar, Philadelphia, 28 Mar. 1784, Alexander Henry to William Edgar, Montreal, 4 Dec. 1784, Papers of William Edgar, NYPL.

¹⁵ George Anthon to William Edgar, Detroit, 26 Sept. 1785, Papers of William Edgar, NYPL.

¹⁶ Papers of Elkanah Watson, Journal E, New York State Library. Emphasis added.

¹⁷ Papers of Elkanah Watson, Isaac Bronson to Elkanah Watson, New York, 26 Feb.—2 Mar. 1803, New York State Library.

¹⁸ New York State Bank, Minutes of the Board of Directors, 1 Sept.1803, Special Collections Manuscript 1034, Albany Institute of History & Art.

¹⁹ For New York, see Wright, “Banking and Politics,” 463–91, 769–86, 806–12, 835–43, 850–60, 985–97. For Pennsylvania, see Karmel, “Banking on the People,” ch. 5.

²⁰ Journal of the Senate of the State of New York, 35th Session, (1812), 5–9.

²¹ Based on a dataset of weekly prices, semiannual dividends, and daily trade volumes built from tables and lists in the Philadelphia Commercial List and Price Current, 1830–1839.

²² This assertion is based on a careful reading of over one hundred contemporary newspapers. For a list of the New York papers consulted, see Wright, “Banking and Politics,” 1,075–1,078. Important Philadelphia papers consulted included a full-text searchable version of the Pennsylvania Gazette, 1781–1800; Dunlap and Claypoole's American Daily Advertiser [Philadelphia], 1791–1795; Finlay's American Naval and Commercial Register [Philadelphia], 1795–1798; Hope's Philadelphia Price Current, 1805–1813; Grotjan's Philadelphia Public Sale Report and General Price Current [Philadelphia], 1805–1825; Political and Commercial Register [Philadelphia], 1804–1819.

²³ Bingham, Robert W., ed., Reports of Joseph Ellicott as Chief of Survey (1797–1800) and as Agent (1800–1821) of the Holland Land Company's Purchase in Western New York (Buffalo, N.Y., 1937), 466–67.Google Scholar

²⁴ Diary of Henry Van Der Lyn, 246, New York Historical Society (hereafter NYHS).

²⁵ New York American Citizen, 28 Apr. 1800.

²⁶ New York Morning Chronicle, 26 Apr. 1804.

²⁷ Journal of the Senate of the State of New York (1818), 225.

²⁸ Butler, Benjamin Franklin, Remarks on Private Banking Addressed to the Honorable Isaac Pierson, Chairman of the Committee Appointed by the Assembly of New York on the Currency of the State (Albany, N.Y., 1818), 12Google Scholar; Kingston Plebeian, 31 May 1817.

²⁹ New York Patron of Industry, 22 July 1820.

³⁰ Rochester Telegraph, 25 Feb. 1823.

³¹ “One of Their Constituents,” Letter onthe Use and Abuse of Incorporations, Addressed to the Delegation from the City of New York in the State Legislature (New York, 1827), 18, 27–28.

³² New York Spectator, 1 Apr. 1823.

³³ New York Political Bulletin, 22 Dec. 1810.

³⁴ Walker, Verna, “Banking in Buffalo Before the Civil War,” (masters thesis, University of Buffalo, 1933), 15Google Scholar; Chazanof, William, Joseph Ellicott and the Holland Land Company: The Opening of Western New York (Syracuse, N.Y., 1970), ch. 8.Google Scholar

³⁵ Wright, “Banking and Politics,” 255–64, 313–19, 336–44, 364–80, 382–88, 394–417, 497–511, 804–6, 812–14; Karmel, “Banking on the People,” ch. 2.

³⁶ Walker, “Banking in Buffalo,” 15; New York Herald, 20 Apr. 1803; Daniels, Belden L., Pennsylvania: Birthplace of Banking in America (Harrisburg, Pa., 1976), 63Google Scholar; Cleveland, Citibank, 1–13; Wright, “Banking and Politics,” 1,028, 1,032.

³⁷ A large number of newspapers in New York and Pennsylvaniaquoted bank note prices, especially after the War of 1812. Depreciation rates varied, but rarely exceeded a few percent unless a bank suspended specie payments, or its lending practices were questioned, in which cases discounts larger than 50 percent were common. For examples, see the Rochester Telegraph, 17 Aug. 1819; Saratoga Farmer, 17 Jan. 1821. For the Bank of Niagara, see Walker, “Banking in Buffalo,” 6–17. For the Bank of Columbia, see Anon., History of Columbia County, New York (Philadelphia, 1878), 177–79. For the Middle District Bank, see Reubens, Beatrice, “State Financing of Private Enterprise in Early New York,” (Ph.D. diss., Columbia University, 1960), 50.Google Scholar For tables of depreciation rates in Pennsylvania, see Karmel, “Banking on the People,” chaps. 6, 7.

³⁸ John Tayler to Joseph Ellicott, Albany, N.Y., 5 Feb. 1819, Papers of John Tayler, Rutgers University Special Collections.

³⁹ City Bank again became “one merchant's bank” after the period under study, 1837–1891. Cleveland, Harold van B. and Huertas, Thomas, Citibank, 1812–1970 (Cambridge, Mass.: 1985), ch. 2.Google Scholar

⁴⁰ Jones, Charles C. Jr., “William Few, Lieutenant-Colonel Georgia Militia in the Revolutionary Service, with Autobiography of Col. William Few of Georgia,” Magazine of American History (Nov. 1881): 339–58.Google Scholar

⁴¹ Lamoreaux, Insider Lending, 15–21.

⁴² Transcripts of Dockets of Judgments, Supreme Court of Judicature, Utica, 1807–1830, New York State Archives.

⁴³ The public and the law did not countenance bank directors who “shaved,”—borrowed money to re-lend it at usurious rates. With that avenue blocked, borrowing directors had to find bona fide investments. New York Herald, 6 Apr. 1808. Averages and ratios derived from data presented in Sylla, “U.S. Securities Markets,” 83–98, table 1.

⁴⁴ Indeed, Bank of Pennsylvania stock may have stopped trading forseveral months in late 1796 and early 1797, before quickly rebounding by mid-1797 after reforms had taken effect. See Table 5.

⁴⁵ Mark Prager & Co. to Thomas Giese, Philadelphia, 14 Dec. 1796, Prager letterbook, HSP.

⁴⁶ The bank regularly reclaimed the stock of defaulters. Within about a decade of its opening, the Bank owned 508 shares of its own stock through that practice. Bank of North America memorandum book, 2 Mar. 1792, HSR Also, it seems likely that stockholders had a higheraverage net worth than nonstockholders.

⁴⁷ Rappaport, George David, Stability and Change in Revolutionary Pennsylvania: Banking, Politics, and Social Structure (University Park, Pa., 1996), 233–36.Google Scholar

⁴⁸ Ibid., 233–36, 303, 305. Doerflinger, Thomas, A Vigorous Spirit of Enterprise: Merchants and Economic Development in Revolutionary Philadelphia (Chapel Hill, N.C., 1986), 304.Google Scholar For the role of women and blacks in early banking, see Wright, “Banking and Politics,” 657–704; Karmel “Banking on the People,” ch. 5. For Hannah Holland's accounts, see Individual Ledgers, Bank of North America Records, HSP.

⁴⁹ For a fuller discussion of artisanal use of banks, see Wright, Robert E., “Ground Rents Against Populist Historiography: Lower Mid-Atlantic Land Tenure and Economic Development, 1750–1820,” Journal of Interdisciplinary History 28 (1998): 23–42CrossRefGoogle Scholar; Wright, Robert E., “Thomas Willing (1731–1821): Philadelphia Entrepreneur and Forgotten Founding Father,” Pennsylvania History 63 (1996): 525–60Google Scholar; Wright, “Artisans, Banking”; Miers Fisher Papers, “A Plan for the Support of the Poor, and for the relief of the necessitous,” n.d., but probably 1790 or 1791, HSP.

⁵⁰ Thomas Passmore, letterbook, ledger, journal, day book, (1795–1802), HSP; Wright, “Artisans, Banking.” This case is cited only for illustrative purposes. I have enough material to write a book on this subject and hope todo so in the future.

⁵¹ Schwartz, Ann, “The Beginning of Competitive Banking in Philadelphia.” Journal of Political Economy 55 (1947): 417–31CrossRefGoogle Scholar; Gilchrist, David T., ed., The Growth of the Seaport Cities, 1790–1825 (Charlottesville, Va., 1967), 39.Google Scholar Statistics for artisanal numbers based on the Philadelphia Directory, 1790, 1800, HSP and the General Trade Directory for Philadelphia, 1800, HSP. Loan volume is defined as total credits, be they lodged deposits, deposits created by discount, or intrabank account transfers. Data compiled by the author from the Individual Ledgers of the Bank of North America, 1790, 1800, Bank of North America Records, HSP.

⁵² The average account volume is simply the arithmetic mean of thetotal credits of each account in the Individual Ledgers.

⁵³ Wright, “Artisans, Banking.”

⁵⁴ There were a number of persons (I have counted at least four) living in the Philadelphia area at that time with the name of John Knight, so the bank's tellers distinguished between them as best they could. I have seen at least six persons in the Bank of North America ledgers labeled as “black.” There could very well have been other black customers with distinctive names not so labeled. One of the richest merchants in Philadelphia in this period was an African American by the name of James Forten (1766–1842).

⁵⁵ Bank of Germantown, Individual Ledger D, HSP. Philadelphia Directories, 1825, 1830, HSP. Bank of Germantown Individual Ledger D, “Sundry Discounts,” 488–92, 606–09, 626–29, HSP.

⁵⁶ Directors' Minutebook, Reading Branch, Bank of Pennsylvania, 1808–1840, HSP. Because the minutebook did not record all discounts, the author does not wish to supply exact percentages.

⁵⁷ Farmers' Bank Discount Book, Reading, Pa., 1831–36, HSP.

⁵⁸ Lamoreaux, Insider Lending, 82.

⁵⁹ Wright, “Banking and Politics,” 588–611; Bank of Utica Ledgers, Oneida County Historical Society.

⁶⁰ Butler, Benjamin (or Ferris Pell), Vindication of the Currency of the State of New York (New York, 1818).Google Scholar

⁶¹ A sample of the 180 accounts on ledger pages 100 to 160 shows that customers averaged about six credits (deposits and discounts) over the year-and-a-half covered by the ledger.

⁶² Lamoreaux, Insider Lending, 26. Newburgh Papers, Box 2, Bank of Newburgh, NYHS. On the eve of the Civil War dealers continued to supply bank officers with credit information about other dealers in order to win favor. Gibbons, J. S., The Banks of New-York, Their Dealers, the Clearing House, and the Panic of 1857, with a Financial Chart (New York, 1858), 55.Google Scholar

⁶³ See Johnson's correspondence with Simon Newton Dexter in Simon Newton Dexter Papers, Cornell University Special Collections; Bagg, Moses, Memorial History of Utica, N.Y. (Syracuse, N.Y., 1892), 108Google Scholar; Todd, Charles and Blackwood, Russel, eds., Language and Value: Proceedings of the Centennial Conference of the Life and Works of Alexander Bryan Johnson (New York, 1969), 146, 155–57.Google Scholar

⁶⁴ Hunt, Freeman, Lives of American Merchants, 2 vols. (New York, 1856), 1:394–95.Google Scholar

⁶⁵ Directors' Minutebook, Reading Branch, Bank of Pennsylvania, 10 May 1819, HSP.

⁶⁶ Pred, Allan R., Urban Growth and the Circulation of Information: The United States System of Cities, 1790–1840 (Cambridge, Mass., 1973).CrossRefGoogle Scholar

⁶⁷ Thomas A. Biddle to William Payne, 18 Aug. 1813, Thomas A. Biddle and J. Wharton Company Letterbook, 1813, HSP.

⁶⁸ Gibbons, The Banks of New-York, 21, 27, 51.

⁶⁹ For Willing, see Wright, “Thomas Willing.” For Johnson, see Todd, Charles and Sonkin, Robert, Alexander Bryan Johnson: Philosophical Banker (Syracuse, N.Y., 1977), 306.Google Scholar For professionalization, see Redlich, Fritz, Molding of American Banking: Men and Ideas (New York, 1947), 19–20Google Scholar; Wright, “Banking and Politics,” 571–73.

⁷⁰ See, for example, Clement Biddle Letterbook, 1789–1792, HSP; Clement Biddle Letterbook, 1809–1814, HSP; Thomas A. Biddle Papers, HSP; Peter A. Grotjan's Memoirs, HSP; Directors' Minutebook, Reading Branch, Bank of Pennsylvania, 1808–1840, HSP; Mathew Carey Letterbooks, Lea & Febiger Collection, HSP; Constable-Pierpont Papers, NYPL; John Delafield Letterbook, NYPL; Andrew Craigie Papers, American Antinquarian Society; Bank of Columbia items, Library Company of Philadelphia.

⁷¹ Thomas Arnat to the Directors of the Bank of Baltimore, Philadelphia, 14 Sept. 1802, Richard C. Sharp Collection, Library Company of Philadelphia.

⁷² Directors' Minutebook, Reading Branch, Bank of Pennsylvania, 1808–1840, 16 July 1808, HSP.