Thursday, July 11, 2013

Dueling Banks of Wall Street

40-50 Wall Street, New York, NY circa 1860

On this day in 1804, Alexander Hamilton was mortally wounded in a duel with his political rival, Aaron Burr. One of the sources of their enmity was banking.

In the late 18th century, new banks could only be chartered with a special act passed by the state legislature. In 1799, the New York legislature was controlled by the Federalists (Alexander Hamilton's party).

To get around politics, Burr convinced the Federalists (including Hamilton) to support a charter for his Manhattan Company, a water utility with a mission to provide "wholesome" water to New Yorkers. Secretly, Burr amended the charter to allow the company to also pursue commerce with its surplus capital, allowing the formation of the The Bank of the Manhattan Company (today part of JP Morgan Chase).

Feeling betrayed, in 1803 Hamilton created a rival (Federalist) bank called The Merchant's Bank of the City of New York. The two banks competed side by side, with Hamilton's Bank operating at 42 Wall St, and Burr's on 40 Wall St.

The rivalry officially ended in 1919, when the two banks merged. The Manhattan Company, with its unique charter, was the survivor--as was Burr on this day in 1804.

Further Reading
NY Times Article: The Hamilton-Burr Bank (Dec 1919)

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Flannery O'Connor

You shall know the truth and the truth shall make you odd.