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POLITICAL CAPITALISM IN THE GILDED AGE: THE TAMMANY BANK RUN OF 1871

Published online by Cambridge University Press:  17 January 2017

Jeffrey D. Broxmeyer
Jeffrey D. Broxmeyer*
Affiliation:
The University of Toledo
*
Jeffrey.broxmeyer@utoledo.edu
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Abstract

The Tweed Ring spawned a vibrant financial sector that was integral to its brief success but has never been previously examined. William “Boss” Tweed and his allies employed banks controlled or comanaged by Tammany politicians to embezzle funds, build political alliances, and invest in a wide array of business ventures. The capital of these savings and commercial banks—city money, deposits from Catholic charities, and the savings of immigrant laborers—was accumulated through political channels. During their operation between 1867 and 1871, politician-bankers engaged in a mix of patronage deals and profit-driven financial speculation. In effect, Tammany banks were ground zero for the Ring's conversion of political hegemony into a windfall of economic capital that fueled party activities and buoyed personal fortunes. Importantly, the anti-Ring mobilization by upper-class reformers was more than a revolt of wealthy taxpayers concerned with abstract goals of good government or rescuing city credit; it was also a reaction by old-line bankers in direct competition with Tammany upstarts. A dramatic bank run catalyzed by reformers in November 1871 drove them into bankruptcy, bringing this novel experiment in political capitalism to an end.

Type
Articles
Information
The Journal of the Gilded Age and Progressive Era , Volume 16 , Issue 1 , January 2017 , pp. 44 - 64
Copyright
Copyright © Society for Historians of the Gilded Age and Progressive Era 2017 

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References

NOTES

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3 New York Leader, Dec. 12, 1871.

4 New York Herald, Nov. 18, 19, 20, 21, 22, 1871; New York Evening Post, Nov. 18, 20, 29, 1871; New York Tribune, Nov. 20, 31, 1871; Commercial Advertiser, Nov. 20, 1871; New York World, Nov. 21, 1871; New York Times, Nov. 25; Dec. 13, 14, 15, 16, 1871.

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8 New York World, Nov. 21, 1871.

9 For a survey of these theories, see Interview with Mrs. Holly Tweed by David Murrah, Borger, Texas, Nov. 28, 1977, Richard M. Tweed Papers, 1836–1932, Southwest Collection, Texas Tech University, Lubbock, Texas.

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20 These figures sat on the boards of directors of the Viaduct Railway, the Real Estate Trust Company, and the New York Mutual Gaslight Company.

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23 Testimony to the Board of Aldermen, Folder: Account of His Services, Henry Fox Taintor Collection: Correspondence and Papers, 1858–1913 [hereafter HFT], New-York Historical Society.

24 Under receivership only 34 percent of deposits were returned by the Bowling Green Savings Bank. The Guardian paid out all accounts under $200, while larger accounts only received between 45 percent and 50 percent of their original value. Paine, Willis Seaver, A Summary of Savings Banks That Have Failed in the State of New York (New York: The Financier, 1906), 28–31, 35–41Google Scholar.

25 The Banker's Magazine and Statistical Register 13:11 (May 1879): 890–91.

26 Fourteenth Annual Report of the Corporation of the Chamber of Commerce of the State of New York for the Year 1871–72, in two parts, compiled by George Wilson (New York: Press of the Chamber of Commerce, 1872), 185 Google Scholar, in New York Chamber of Commerce Records MS#1440, Box 92, Folder 2, Series II, Vol. 14, 1871–1872, Rare Book and Manuscript Library, Columbia University.

27 McBride's safes, paid for by taxpayers, ended up in Tammany bank vaults. They became a focus of litigation after bankruptcy. New York Herald, Dec. 5, 1877.

28 Mushkat, Tammany Hall, 186, 353–55, 361–62.

29 Genet ran the Yorkville Bank. His uptown political base in the 8th Senate District was independent of Tweed but allied with him.

30 Proceedings of the Board of Supervisors of the County of New York, from January 1 to June 30, 1867 (New York: New York Printing Company, 1867), 91–147 Google Scholar. See also Davenport, John I., The Election and Naturalization Frauds in New York City, 1860–1870 (New York, 1894), 250–51, 279Google Scholar.

31 New York Tribune, Feb. 24, 1874; New York Times, Feb. 24, 1874; New York Herald, Feb. 26, 1874; Amsterdam Daily Graphic, Feb. 27, 1874.

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36 Street openings were a legal and fiscal process subject to intensive real estate speculation. New York Herald, Sept. 16, 1869; New York Times, Feb. 14, 1872.

37 Roche convinced the Sisters of Charity to deposit $92,000 in the Bowling Green Bank. He was a major fundraiser for the Roman Catholic Orphan Asylum and his wife was active with Convent of the Sacred Heart. Owen Brennan was city commissioner of Charities and Corrections. In the Senate, Tweed's Committee on Charitable and Religious Societies appropriated $2.5 million for charities—more in 3 years than the previous 17 combined. See New York Times, Mar. 11, 1872; New York Herald, Jan. 3, 1871; Pratt, “Boss Tweed's Public Welfare,” 403–5, 409.

38 Ackerman, Kenneth, The Gold Ring: Jim Fisk, Jay Gould, and Black Friday, 1869 (New York: Dodd, Mead & Co., 1988), 77 Google Scholar.

39 Ackerman, Gold Ring, 14–30.

40 Grant's Treasury Secretary, George Boutwell, referred to the Tenth National Bank as a “brothel of certified checks.” Ackerman, Gold Ring, 113, 150–1, 164; Hubbard, J. T. W., For Each, For the Strength of All: A History of Banking in the State of New York (New York: New York University Press, 1995), 127 Google Scholar; Kessner, Capital City, 119–20.

41 New York Herald, Jan. 12, 1870. Renehan, Edward Jr., Dark Genius of Wall Street: The Misunderstood Life of Jay Gould, King of the Robber Barons (New York: Basic Books, 2005), 168 Google Scholar.

42 A post-Tweed audit showed $825,000 from the Police Department, $262,000 from the Fire Department, $80,000 from the Public Works Department, and $50,000 from the Seventh Avenue Improvement Fund. Documents of the Board of Aldermen of the City of New York For the Year 1872, Document No. 6 (New York: M. B. Brown & Co., 1873).

43 Mihm, Stephen, A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States (Cambridge, MA: Harvard University Press, 2007), 305–18Google Scholar, 330–40; Bensel, Yankee Leviathan, 248, 268–74.

44 New York Times, Apr. 21, 1864. The Bankers’ Magazine and Statistical Register, Aug. 1871, 95.

45 See, for example Callow, Tweed Ring, 182–3, 198–206.

46 The Ring's percentage of contracts grew over time. Table of Percentages from Warrants, Testimony to the Board of Alderman, Folder: Account of His Services, HFT Collection.

47 Other politicians affiliated with the Ocean Bank were Cornelius Corson, clerk for Tweed's senate committee on municipal affairs; Charles Cornell, city water register; and George Caulfield, a Tammany leader from the 17th Ward.

48 Richard Connolly, Deposit Receipts, Folder: Correspondence 1858–1870, HFT Collection; Andrew Garvey Checks, Folder: Business Papers, 1871–1873, HFT Collection.

49 New York Leader, Dec. 23, 1871; New York Times, Jan. 4, 1872.

50 A. E. Smith to Samuel Tilden, Dec. 19, 1871; A. E. Smith to Lucius Comstock, Dec. 25, 1871; and Cashier of Bank of New York to Lucius Comstock, Dec. 29, 1871. Tweed Ring Correspondence, 1870–1872, Nov. –Dec. 1871 and Undated, Series 1 Correspondence: 1810–1919, Samuel J. Tilden Papers, 1794–1886, New York Public Library.

51 Tweed was chair of this commission. “Report of the Committee Appointed to Investigate Into the Matter of the Alleged Frauds in the Building of the Ninth District Court House, in the City of New York,” Document No. 25, Documents of the State of New York Senate, Ninety-Sixth Session, Vol. 2 (Albany, NY: Argus, 1873)Google Scholar.

52 Ring Frauds, 593–4.

53 Communication from Henry W. Genet to the Senate of the State of New York In Relation to the Report of the Committee to Investigate the Alleged Frauds in the Building of the Ninth District Court House in the City of New York (Albany, NY: Argus, 1873), 7 Google Scholar.

54 The New York Tribune on Jan. 4, 1872, accused the Bowling Green Bank of allowing state legislators such as Wood to draw unlimited sums from their accounts. There is no such extant evidence.

55 Wood Charges, 48–58, 62, 67–68, 73–76, 81–9, 103, 108–9; see also New York Herald, Mar. 16, 1872.

56 Mr. Tweed's Statements and Promises, Tweed Case, Folder 195–270, Box 1: 1873–1886, Charles S. Fairchild Papers, New-York Historical Society [Hereafter Fairchild Papers].

57 The building contractor James Ingersoll at one point owed $300,000 to the Tenth National Bank, who noted, “I had to pay it all.” Ring Frauds, 598.

58 A similar phenomenon was true of police funds and building contractors.

59 Gill v. Guardian, 198.

60 The Bankers’ Magazine and Statistical Register, Jan. 1872, 491–3.

61 Transfers were made through Reeves Selmes's “secretary account” in both banks. New York Times, Feb. 26, 1874.

62 New York Times, Jan. 25, Mar. 11, 1872.

63 Harry James Carman, The Street Surface Railway Franchises of New York City (PhD diss., Columbia University, 1919), 132–3.

64 New York Times, June 16, 1874.

65 Shepherd F. Knapp, as Receiver of the Bowling Green Savings Bank, of the City of New York, against Walter Roche, New York State Court of Appeals: Records and Briefs (New York: E. Wells Sackett & Bro. Law Book and Job Printers, 1874), 51–76 Google Scholar.

66 New York Times, Feb. 22, 1872.

67 New York Herald, Dec. 5, 1877.

68 New York Times, Dec. 16, 19, 1871.

69 New York Leader, Dec. 16, 30, 1871.

70 The “Smith” in the firm was Henry N. Smith, the Wall Street broker and gold trader—not to be confused with “Hank” Smith of the police commission, and Guardian and Bowling Green banks. Henry Martin to Lucius Comstock, Dec. 27, 1871, Tweed Ring Correspondence: Nov.–Dec. 1871, Tilden Papers.

71 George Opdyke to Lucius Comstock, Jan. 9, 1871, Tweed Ring Correspondence: Nov.–Dec.1871, Tilden Papers.

72 Hershkowitz, Tweed's New York, 193.

73 New York Times, Feb. 26, 1874.

74 The New York Clearing House was “a bank for bankers.” Kessner, Capital City, 20–22.

75 The Schells were old Tweed rivals dating back to the 1850s and 1860s Mushkat, Tammany Hall, 303, 306, 370; Hammack, Power and Society, 132–3, 161.

76 Foord, Life of Green, 94–98.

77 The Attorney General in Account with the City and County of New York, Jan. 11, 1877, Fairchild Papers.

78 Keyes, Emerson Willard, A History of Savings Banks in the United States from their inception in 1816 down to 1877, Vol. 2 (New York: Bradford Rhodes, 1878), 544 Google Scholar.

79 The National Savings Institution and the Bowling Green Bank offered 6 percent interest on all sums of $5 and upward, which accrued monthly. The Greenwich Savings Bank responded by offering 7 percent. Many banks had minimums of $1 for deposits, the average daily wage of a laborer, but the Bowling Green accepted “deposits of any sum, from ten cents to ten thousand dollars.” New York Tribune, Oct. 28, 1869, and June 30, July 13, 1871; History of the Greenwich Savings Bank of New York (New York, 1896), 24 Google Scholar.

80 Rivals derisively called this the “municipal pap.” New York Herald, Nov. 19, 1871.

81 Albany Evening Herald, Apr. 12, 1871; Commercial Advertiser, Aug. 18, 1871.

82 The Financier, Jan. 27, 1872.

83 New York Times, Nov. 25, 1871.

84 New York Truth, Dec. 29, 1880.

85 Communication from Genet, 25.

86 Gill v. Guardian, 231, 403–4.

87 New York Times, Feb. 26, 1874.

88 New York Herald, Nov. 19, 1871.

89 Foord, Life of Green, 102–4.

90 Bankers’ Magazine and Statistical Register, May 1879, 890–91Google Scholar.

91 Shefter, Martin, “The Emergence of the Political Machine: An Alternative View” in Theoretical Perspectives on Urban Politics, eds. Hawley et al. (Englewood Cliffs, NJ: Prentice-Hall, 1976), 14–44 Google Scholar.

92 New York Herald, Nov. 22, 1871.