1792 - right from the start, this was the sort of disaster that comes from trying to "aid" trade. Unfortunately, nobody could cure William Duer’s speculative bent. He was now the colossus of New York financial markets and derisively crowned “King of the Alley” by Jefferson.64 In late 1791, determined to corner the market in government bonds and bank shares, he formed a secret partnership with Alexander Macomb, a wealthy land speculator. Hamilton had just chosen Duer as governor of the Society for Establishing Useful Manufactures, where Macomb also served as a director. Now, to finance stock manipulation, the reckless Duer borrowed vast sums on his The 1792 financial panic came on the heels of the two great projects by which Hamilton hoped to excite the public with the shimmering prospects for American manufacturing: the Society for Establishing Useful Manufactures and submission of his Report on Manufactures. The outlook for both was badly damaged by the panic. Even a short list of the worst offenders in the share mania—William Duer, Alexander Macomb, New York broker John Dewhurst, Royal Flint—included so many SEUM directors that it almost sounded like a company venture. Duer’s notoriety was especially detrimental since he had been SEUM governor, its largest shareholder, and its chief salesman in hawking securities. When Hamilton dispatched his friend Nicholas Low to sound out Duer in prison, the unyielding financier refused to resign as SEUM governor or account for the whereabouts of society funds. People who had pledged to purchase shares retreated in droves as the society’s good name was muddied. The remaining SEUM directors rummaged through its books to assess the damage and were dismayed to learn that Duer had emptied the society’s bank accounts for his own use. “I trust they are not diverted,” Hamilton had warned Duer in a letter. “The public interest and my reputation are deeply concerned in this matter.”89 When the panic had hit, Duer had had ten thousand dollars of society funds in his possession, and that money now simply vanished. It turned out he had taken a liberal fifty-thousand-dollar loan from the SEUM treasury (though much of this was recouped when shares he pledged as collateral were sold), and another fifty thousand to buy textile machinery had gone to John Dewhurst, who had absconded with the funds to Pennsylvania. When the society board held its quarterly meeting in New Brunswick, New Jersey, that April, the New York directors were so distracted by the mayhem that not a single one showed up. Deputy Governor Archibald Mercer appealed to Hamilton to “assist us in our operations as far as [it is] in your power.”90 To revive the board’s spirits, Hamilton promised to try to arrange loans for the society and suggested it hire needed workmen from Europe. What quickly became apparent was that the board was rife with financiers who were abysmally ignorant of industrial matters. “For my part, I confess myself perfectly ignorant of every duty relating to the manufacturing business,” Mercer admitted to Hamilton while begging him to attend a special society meeting in mid-May. Intent upon salvaging the enterprise, Hamilton stole How exactly would the SEUM, its coffers cleaned out by Duer, pay for its property on the Passaic River? Hamilton privately approached William Seton at the Bank of New York and arranged a five-thousand-dollar loan at a reduced 5 percent interest rate. He cited high-minded reasons, including the public interest and the advantage to New York City of having a manufacturing town across the Hudson, but more than the public interest was at stake: “To you, my dear Sir, I will not scruple to say in confidence that the Bank of New York shall suffer no diminution of its pecuniary faculties from any accommodations it may afford to the Society in question. I feel my reputation concerned in its welfare.”91 The SEUM’s collapse, Hamilton knew, could jeopardize his own career. In promising Seton that he would see to it as treasury secretary that the Bank of New York was fully compensated for any financial sacrifice entailed by the SEUM loan, Hamilton mingled too freely his public and private roles. L’Enfant was the wrong man for the job. Instead of trying to conserve money for the cash-strapped society, he contrived extravagant plans for a seven-mile-long stone aqueduct to carry water. He was enthralled by the idea of creating a grand industrial city on the pattern of the nascent Washington, D.C., with long radiating avenues, rather than with building a simple factory. By early 1794, L’Enfant shucked the project and spirited off the blueprints into the bargain. To find qualified textile workers, the society sent scouts to Scotland and paid for the laborers’ passage to America. Even the managers clamored for better pay, and SEUM minutes show that some disgruntled artisans personally hired by Hamilton began to sabotage the operation by stealing machinery. One of the saddest parts of the story relates to the employment of children. Whatever hopeful vision Hamilton may have had of children performing useful labor and being educated simultaneously, they had neither the time nor the money to attend school. To remedy the problem, the board hired a schoolmaster to instruct the factory children on Sundays—which, as Hamilton must have known, was scarcely a satisfactory solution. By early 1796, with Hamilton still on the board, the society abandoned its final lines of business, discontinued work at the factory, and put the cotton mill up for sale. Hamilton’s fertile dream left behind only a set of derelict buildings by the river. At first, it looked as if the venture had completely backfired. During the next two years, not a single manufacturing society received a charter in the United States. Chernow, Ron. Alexander Hamilton (pp. 388-389). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (p. 388). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (p. 387). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (p. 387). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (p. 387). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (pp. 386-387). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (p. 386). Penguin Publishing Group. Kindle Edition. Chernow, Ron. Alexander Hamilton (pp. 381-382). Penguin Publishing Group. Kindle Edition.

— Hamilton’s Society for Establishing Useful Manufactures  

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