From: jeffreydanielrubard@gmail.com   
      
   Chapter One   
      
   Duer’s Disgrace   
      
   The new nation’s first financial panic was not long in coming, threatening   
   to reach its climax on the night of April 18, 1792. The shouting started   
   outside William Duer’s cell in the “New Gaol,” a debtors’ prison near   
   the New York City commons    
   at the northeast corner of what is now City Hall Park. A diverse crowd of   
   three to five hundred “disorderly persons” had gathered there to confront   
   him that evening, including cart men, artisans, and slaves. What began with   
   shouts, catcalls, and a    
   few stones tossed at the prison’s windows soon escalated into an   
   old-fashioned New York riot.   
      
      Colonel William Duer was nearly fifty, a small and delicate man born into a   
   wealthy English family with plantations in the Anglo-Caribbean colonies of   
   Antigua and Dominica. Educated at Eton, Duer had come to New York in 1768   
   searching for timber for    
   his family’s Dominican plantation. Seeing greater opportunities in New York,   
   he had borrowed £1,400 from his sister and established himself the next year   
   on a large plot of land along the Hudson River. With his charming wife,   
   “Lady Kitty,” he had    
   defied convention by dressing his servants in livery, creating a family crest   
   of arms, and entertaining aristocrats in a fashionable town house one block   
   north of Wall Street. As the Revolution began, he used his growing social   
   network in New York to    
   become a furnishing merchant, supplying timber, planks, and provisions to the   
   Continental army. By 1780 he was worth more than £400,000, or nearly 2   
   million. After the Revolution, he had become a member of the powerful Board of   
   Treasury under the    
   Continental Congress, a government bond dealer, and a stock market trader.   
      
      But on March 23, 1792, less than a month before the fracas outside, Duer   
   had voluntarily entered the New Gaol to hide from his creditors. By ancient   
   rules of bankruptcy that still applied in New York, debtors’ prisons were   
   designed to shake money    
   out of debtors, their friends, and their families. Duer’s neighbors in the   
   New Gaol included many who had overleveraged, but no one who had leveraged so   
   much.   
      
      At the height of the mayhem outside the prison, some in the crowd   
   reportedly shouted, “We will have Mr. Duer, he has gotten our money.”   
   Threatening to remove Duer bodily from his cell, the crowd began to throw   
   paving stones, breaking windows and    
   streetlamps. Well after dusk, “friends of legal restraint and good order”   
   helped the city magistrates to arrest some of the most troublesome members of   
   the crowd, including several artisans, the merchant John Hazard, and Tom, a   
   slave owned by Joseph    
   Towers. For the next few nights, crowds returned to the jail to threaten   
   vengeance. The magistrate assigned Duer his own personal guard, though by the   
   middle of April civil authorities and brick prison walls seemed little   
   protection against a mob bent on    
   repossessing the colonel’s assets in this world and sending him to the next   
   one.   
      
      At the time he entered prison, it was estimated that Duer, America’s   
   first famous deadbeat, had defaulted on promises worth more than $2 million.   
   By some estimates this was more than half the nation’s supply of readily   
   available money. For though    
   the American colonies had revolted against the English crown more than ten   
   years earlier, capital, education, and power in America were still   
   concentrated among a small group of insiders. Duer was at the center of this   
   financial network, the man who    
   hired the auctioneers who sold bonds in coffeehouses and shouted current   
   prices from tree stumps on New York’s Wall Street. When he placed a bid,   
   every head turned to see which way his money was moving. In today’s   
   parlance, Duer was a market maker.   
      
      In the beginning of March, Duer and his associates borrowed more than   
   $800,000 to corner the market on U.S. bonds. Few understood that he had bet   
   most of his fortune. When his credit got tight later that month, he had his   
   assistants privately borrow    
   gold and silver at high interest from many of New York’s most unlikely   
   lenders. “Besides shopkeepers, Widows, [and] orphans,” wrote his associate   
   Seth Johnson, Duer owed “Butchers, Car[t]men, Gardners, market women, & even   
   the noted Bawd Mrs.    
   Macarty—many of them if they are unpaid are ruined.”   
      
      In addition to the sufferers outside the New Gaol, the nation’s tiny   
   financial elite—men who spent their hours and their fortunes in the   
   coffeehouses of Philadelphia, Boston, and New York—faced financial ruin.   
   Scores of Duer’s merchant friends    
   along the Eastern Seaboard had signed now-overdue promissory notes on faith   
   under Colonel Duer’s name. Most now rued the day they had ever met the man.   
   Some disappeared into the western wilderness or crossed into Canada to escape   
   Duer’s fate.   
      
      By April all five branches of the newly established Bank of the United   
   States had restricted lending. Lenders demanded immediate settlement in gold   
   and silver. Secretary of the Treasury Alexander Hamilton sought to buoy the   
   nation’s tiny stock and    
   securities market by buying back federal Treasuries, but few lenders were   
   accepting anything but gold. In May interest rates on short-term loans   
   approached 96 percent, or 8 percent per month. Soon there were rumors that   
   creditors in Connecticut were    
   demanding that Congress make good on Duer’s debts. Many doubted if the new   
   nation could survive its first financial crisis. But that is getting a bit   
   ahead of the story.   
      
   How To Fund A Revolution?   
      
   After Americans and British troops began to exchange gunfire at Lexington and   
   Concord in 1775, merchants with capital had to make a decision: support the   
   Revolution or support the crown? Duer and a small group of New York and New   
   England merchant    
   adventurers with names like Roosevelt, Bleecker, Melvill, and Morris threw   
   their financial backing behind the American partisans. They took enormous   
   risks in challenging the British crown, but many of Duer’s associates   
   profited handsomely by providing    
   high-interest loans to this newly formed government.   
      
      
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