Fallen Founder

by Nancy Isenberg

  Burr also found an ally in Dr. Joseph Browne, his brother-in-law. When, in 1783, Aaron Burr and Theodosia Prevost had married at the Hermitage, Browne and Theodosia’s half sister, Catherine De Visme, stood beside them under the low ceiling, taking their vows too. Early in the 1790s, Burr and Browne had encouraged construction of the Boston Post Road, to provide an easily accessible route from New York City to New England. They again joined forces in 1798, when Browne presented a proposal to the New York City Common Council for a new waterworks: the Manhattan Company, which would soon be associated primarily with the efforts and strategic manipulation of Aaron Burr, received one of the most favorable charters ever granted by the state legislature. Its board of directors would include the man who held a sixty-year charter on the Boston Post Road, and John Swartwout would be one of its major stockholders. In the early republic, big business nearly always involved the extension of patronage, and so it should not seem odd that Burr sought advantages in this way. To get things done, one made deals.8

  Moreover, state charters followed certain patterns. They allowed private corporations to fund internal improvements. In doing so, they cemented alliances: the merchant-speculators who ran these projects were supported by the mechanics who built them. But even public projects relied on the same kind of cooperation. The military fortifications of New York Harbor were no exception: The New York City Chamber of Commerce, dominated by merchants, organized the Military Committee on which Burr served. Burr made certain that the mechanics got paid, and stood as a key protector of the city’s commercial center. He made political capital.9

  Burr was pro-growth in the western and unsettled counties, too. Some deals, however, created more problems than political gains. For instance, he assisted the Holland Land Company, a Dutch-owned venture that had purchased 3.3 million acres in western New York State. Since 1793, Théophile Cazenove, the company’s land agent, had been attempting to get a law passed that would allow non-Americans to own New York land outright. It was typical, at this time, for foreign investors to hire Americans to act as trustees, holding temporary title to the land. But the Holland Company could not rely on this strategy. A 1796 statute had stipulated that if the land was not in American hands at the end of seven years, the title reverted to the state. The writing was on the wall, and Cazenove was urgently shopping for new law.10

  He approached Hamilton for help. Through his Federalist friends in the legislature, the former treasury secretary arranged a sweetheart deal in 1797. The Dutch firm would get an extension on its grace period to 1816, but only if it agreed to pay the Western Inland Lock Navigation Company $250,000. Why the Lock Company? By no coincidence, Hamilton’s father-in-law, Philip Schuyler, was its president, and in desperate need of a fresh infusion of capital to keep his canal company afloat.11

  This was business as usual. It is hard to imagine that Hamilton or Schuyler lost any sleep over the decision to bribe Cazenove. Nevertheless, the deal fell through. A year later, Burr got around to shepherding a similar bill through the state legislature, a bill Cazenove liked, which caused Hamilton and Schuyler to blame Burr for their failure to secure support for the Lock Company.

  Burr was as much of a realist as Hamilton and Schuyler were. He understood that a foreign landholders bill would not pass until key assemblymen and senators were paid off. Cazenove distributed legal fees to several prominent Federalists: Josiah Ogden Hoffman, the state’s attorney general ($3,000); Thomas Morris, the state senator who steered the bill through the upper house ($1,000); and a “Mr. L,” whose identity remained secret. Burr secured a $5,500 loan from Cazenove, hardly odd for a man who routinely borrowed money from his clients—it was a small sum compared to what he borrowed from others. Burr, along with Hamilton, Richard Harison, and David A. Ogden, had already been hired by Cazenove for $400 to issue an opinion on the new Alien Landowners Act.12

  Federalist David Ogden, an attorney for the Holland Land Company, was perhaps even more important than Burr in buying political support for the bill. Hoffman was his cousin, and the mysterious “Mr. L” was most likely his brother, who was in the assembly. Though a relative of Burr’s (Timothy Edwards had married into the Ogden clan), Ogden was extremely close to Hamilton, who no doubt was aware of the payoffs.13

  Hamilton never missed a chance to use gossip for political advantage. He engaged in a whispering campaign, insisting that Burr had accepted a bribe while ignoring or rationalizing his own attempt to extort money from the Holland Company. The rumors did not begin to circulate, however, until at least a year after the fact, in September 1799. It was this nasty piece of gossip that led Burr to challenge Hamilton’s brother-in-law, John Barker Church, to a duel, in which Burr barely missed being hit when a bullet passed through his coat, and Church ultimately offered his opponent an apology.14

  By today’s standards, neither Burr nor Hamilton could claim incorruptibility with respect to Cazenove. And though the Holland Land Company deal has often been used as evidence of Burr’s venality, it just as easily underscores Hamilton’s inability to admit that he was no different from Burr in orchestrating backroom deals. Moreover, Hamilton and Schuyler’s greed exceeded Burr’s, for they had demanded a much bigger payoff: $250,000, compared with Burr’s meager $5,500 loan.

  This was not the end of Burr’s dealings with Cazenove. He purchased a large tract of land from the Holland Company, expecting to sell his portion to European buyers. But like most speculative ventures he became involved in, this one proved disastrous for Burr. He was unable to sell the land, and was forced to return his holdings to the company to cover his debts; he had to hand over 20,000 acres as a penalty for breaking the contract.15

  Burr’s culpability is undeniable, but his erstwhile Federalist allies were just as guilty, and Hamilton’s scheming was no less unattractive than Burr’s. Suffice it to say that the actions taken cannot be reduced to flawed moral character; all of the men involved knew only too well how the patronage game was played. Burr played it well—up to a point. In the case of the Holland Company, he proved himself a bit cleverer than Hamilton, without looking much better in the eyes of history.

  THE “MONSTER IN OUR CITY”

  The rumors about Burr’s so-called “bribery” in the Holland Land Company deal came in the wake of yet another contentious election. The previous spring, Federalists had ridiculed every major piece of legislation Burr supported, claiming that, as one man, he had “half disorganize[d] the state in a single winter.” Both parties knew that the 1799 assembly election was crucial for New York City; it would determine which party had control over the city’s electorate.

  Though Burr’s pet project, the Manhattan Company, gave Federalists a ready target, there were other, equally profound activities on Burr’s part that roiled his New York antagonists. For them, a larger political issue was at stake: they saw Burr as the driving force in a social upheaval that they greatly feared: the empowerment of the “middling sorts.” The Manhattan Company became merely a symbol (albeit a poignant symbol) of class warfare, pitting elite merchants against lowly mechanics. The former needed protection from the “monster in our city,” as one newspaper column projected, a monstrous set of liberal financial policies that threatened to elevate upwardly mobile Republicans and weaken the traditional power brokers. Federalists won the 1799 assembly election, but victory came at a cost: They were no longer able to bridge class divisions in the city with their old rhetoric. Instead, they were seen from this point forward strictly as the party of the commercial elite.16

  The Manhattan Company began innocently enough as an effort to provide fresh water to the city. In July 1798, Dr. Joseph Browne presented a proposal to the Common Council for establishing a state-chartered private company that would supply water from the Bronx River. Browne believed that a plentiful supply of fresh water would prevent yellow fever—a dread disease that killed New Yorkers every few years and was ravaging the city that very summer. The council agreed, but with signifi
cant reservations. It had no intention of surrendering the city’s control of this valuable public utility to a private company.17

  Burr had different plans. He wanted his water delivery corporation to function also as a bank. He had been studying bank charters for three years, and was aware that the Federalist-dominated legislature would never, under ordinary circumstances, endorse the creation of a new bank to rival their monopoly. In 1799, a branch of the Bank of United States and the Bank of New York jointly ruled the city’s finances; both were run by the same circle of Federalist merchants. Burr intended to establish a different kind of financial institution, one that would involve “middling sorts” of citizens who were excluded from the Federalist monopoly.18

  To defeat the council members’ proposal, he had to outmaneuver them. He knew that without compelling reasons, his fellow assemblymen would be unwilling to dismiss the council members’ request for a city-owned waterworks. It took him a mere ten days in February 1799 to effect his plan. Leaving Albany for Manhattan, he recruited a six-person committee made up of prominent city officials to convince the council to change its position. The gist of Burr’s argument was one of fiscal responsibility; the city lacked funds. Unaware of the full scope of Burr’s intent, Hamilton joined him in this endeavor, drafting the counterproposal that ultimately won over the council. Mayor Richard Varick, a die-hard Federalist and presiding member of the council, grudgingly conceded defeat. In an angry letter to Governor Jay, he grumbled that Burr had flattered Hamilton so as to secure his support.19

  Why did Hamilton come to Burr’s aid? It was primarily a matter of money. The city simply could not raise the cash to pay for the waterworks; it was already committed to funding harbor fortifications, and the state assembly had already refused to burden the city’s residents with any additional taxes. Private companies were the accepted means, at this time, for providing public services.

  As always, Hamilton had personal reasons besides. He was sure to guarantee a spot for his British brother-in-law, John Barker Church, on the board of directors. This meant that Hamilton’s family would benefit from the company’s stock sales. (Hamilton often acted as an agent for his family’s business interests.) His role here was, in fact, no different than his wrangling to get the Holland Company to subsidize his father-in-law’s failing canal venture two years before. With Church on the board, Hamilton could keep his eye on the Manhattan Company. Of course, Burr had personal motives, too; the bank would keep his finances afloat for several years, granting him loans to cover his debts.20

  Hamilton estimated a higher capitalization of the corporation ($1 million rather than Dr. Browne’s original $200,000), and he suggested that the city (or the council) retain its authority over the waterworks by owning one third of the stock. In the final version of the state charter, however, Burr removed this last privilege, reducing the number of shares held by the city so as to diminish the power that the Federalist-controlled council could wield.21

  Even before the ink was dry on Hamilton’s proposal, Burr was making other changes as well. Before he returned to Albany, he expanded the number of directors from seven (as Hamilton had suggested) to twelve. While in Manhattan, Burr also collected a list of subscribers to the company, and circulated a series of petitions so that the assembly would favor his plan. His most clever move was to depoliticize the board, curbing partisan jealousies by including representatives of the four principal factions in the state: Schuyler-Hamiltonians, Clintonians, Livingstons, and Burrites all found places as directors. Suddenly, the private water company had everyone’s endorsement.22

  Burr distanced himself just enough, obliging a friendly city assemblyman, James Fairlie, to introduce a bill of incorporation for the Manhattan Company. It easily made its way through the assembly and senate in late March, facing no opposition until Judge John Lansing of the Council of Revision raised objections. But he was outvoted.23

  As to Burr’s unannounced purpose—creating a bank—a clause he inserted in the charter permitted the company to use its “surplus capital” for other unnamed enterprises solely for its own benefit. The charter was not bound by time; it did not have to be renewed at any future date; it existed in perpetuity for as long as the company provided water to the city. Shielded from state interference, the Manhattan Company could never be dismantled.24

  Burr did something rather remarkable at this point. He set the cost of a public share at $50, a fraction of what other banks typically charged for their stock. This created a new class of investors: ambitious Republicans of the “middling sort” and entrepreneurial mechanics. New Yorkers were keenly aware of this innovation. There was nothing so Republican, so inclusive—so non-Federalist—as to put in place a means by which lowly cartmen, as stockholders, could potentially receive discounts on credit.25

  The election season began just as the stock for the Manhattan Company went on sale, and with the Federalists staking everything on discrediting Burr. The Commercial Advertiser led the attack in a series of spiteful harangues which began on April 26, 1799. The election rested on “the gilded name of Aaron Burr,” one anonymous writer claimed, and it was his “services of the past year” that would determine the fate of his party. All of Burr’s legislative measures came under scrutiny: his opposition to the Massachusetts Resolutions (to disenfranchise naturalized citizens), his support of debtor relief, the role he played in election reform, and his orchestration of the Manhattan Company.26

  What did these actions have in common? They all made it possible to paint Burr as a fanatic, a “radical,” whose policies threatened to turn America into a colony of Revolutionary France by overturning the existing social order. In failing to keep seditious foreigners under control, Burr had opened the flood gates for a French invasion. Already, Federalist stalwarts were nervously projecting Jefferson’s election as president, which they claimed Burr had now put in motion. If their worst fears came to pass, Gallic troops would occupy the country, honest industry and religion would disappear, and Americans would quickly be reduced to enslavement under the unprincipled French. This kind of hysterical rhetoric was not new in American politics: Federalists had raised the specter of French domination before and during the Quasi-War. Yet now the same language was invoked to warn of a coup, naming Burr as the arch villain stirring up the underclass.27

  In the Commercial Advertiser on April 27, “The Anti-Revolutionist” spoke out against a new political class in the making. He rebuked Burr’s efforts in the assembly (through the mouthpiece of his good friend Robert Swartwout) to democratize the election of state senators by dividing the state into as many districts as there were electors, giving preference to local favorites over the state’s best known names. “The Anti-Revolutionist” contended that this would bring into office “many a man . . . who would never acquire respectability enough to be elected by a large number of his fellow-citizens.” Men outside the circle of ruling families would get a taste of power.28

  The same article poked fun at “the slough of the Democratic Society.” The Federalist ticket was distinguished by “respectable and confidential names . . . men of personal worth, reputable in their several professions.” Burr’s ticket, in contrast, was a register of “dupes” and “knaves,” which was another way of saying that Burr’s followers lacked the independence that derived, almost as a right, from class position. This made Burr, most significantly, a “master magician.” He held the strings that controlled his puppets; indeed, he was a “Lyon among the beasts,” lifting up a new class of followers from the dregs of society.29

  Burr’s underhanded plan required a bank, in the minds of his reanimated detractors. The Manhattan Company had become an Anti-Federalist plot, and “three quarters of its directors” were “Democrats,” supporting an “anti-federal monied interest.” Its “Politico-Commercial-Financial-Bronx-Operation” would monopolize trade, oppress industry, and upset the value of credit in the city. The clause that Burr had added to the charter was no
thing more than a trick, which he “surreptitiously” slipped by his colleagues in the assembly, through “cunning, intrigue, artifice, and falsehood.” “Preying upon fellow laborers and dupes,” Burr plotted to lure his unsuspecting pawns into the unstable world of “banking, stockjobbing,” and “jewing.”30

  One merchant, writing in the Commercial Advertiser, claimed that Burr’s bank would increase the flow of “fictitious capital.” When men of questionable worth could borrow money as easily as the acknowledged elite, they would destabilize the world of finance, exaggerating their actual credit worthiness. The real problem, of course, was that this new prosperous class would vote Republican.31

  Federalist predictions about the bank, if frenzied, were quite accurate. When the Manhattan Company opened in September, it did as promised, extending services beyond the usual client base of merchants and lawyers. It was the Federalists who had first used their banks for purely political retaliation, refusing discounts to Republicans during state elections, and they now attempted to boycott the Manhattan Company by refusing to accept its bank notes. Yet many Federalists kept their stock, such as Robert Troup, one of the loudest of Burr’s critics, while a concurrent effort was being made (at the instigation of Hamilton and followers) to take over the bank. Here was another reason John Barker Church’s position on the board mattered. The Federalists were leaving mixed messages, divided over whether to slay the monster or to steal it.32

  One of the stranger incidents sparked by the Manhattan Company involved Nicholas Low. A prominent merchant, bank director, and president of an insurance company, Low was a friend of Hamilton’s, and Burr’s most vocal opponent. In this little known episode of 1799, Low received a letter from someone pretending to be Aaron Burr. The imposter hinted that he might challenge Low to a duel. Charging that Low had “taken unwarrantable Liberty with my name and character,” the troublemaker (the supposed Burr) requested that the two men meet as “gentlemen” to establish the operative rules for their affair of honor. When he learned of the letter, Burr wrote Low immediately, denouncing the fake letter, and that was the end of it. Yet the ruse reveals the nastiness of New York politics at this time. Nothing was off limits, even the possibility that two men might shoot at each other for no reason whatsoever. The letter to Low appeared the same month as Burr’s duel with Church, strongly suggesting that one of Hamilton’s cronies had something to do with it.33