A Merchant’s Republic: Crisis, Opportunity, and the Development of American Capitalism, 1765-1807 Scott C. Miller Charlottesville, Virginia BA, Vanguard University of Southern California, 2007 MA, George Mason University, 2011 MA, University of Virginia, 2015 A Dissertation presented to the Graduate Faculty of the University of Virginia in Candidacy for the Degree of Doctor of Philosophy Department of History University of Virginia October 2018 Copyright 2018 by Scott C. Miller All Rights Reserved Abstract A Merchant’s Republic: Crisis, Opportunity, and the Development of American Capitalism, 1765-1807 The American colonies stood among the wealthiest societies on earth when revolutionary sentiment burst into rebellion in 1775. While the struggle for independence ultimately succeeded, the war wrought widespread physical devastation, inflation, and economic collapse. While the new United States possessed vast natural resources, relative constitutional stability, and global markets eager to consume American agricultural commodities, historians have confused these opportunities for growth with guarantees of it, casting a deterministic vision that omits the characters that turned growth potential into a dynamic economic culture. Merchants and entrepreneurs led a reformation of American business following the Treaty of Paris. Spurred by depression-era declining imports, falling prices and wages, and rising debts, post-Revolutionary merchant-entrepreneurs made subtle yet radical changes to the way they allocated capital, mitigated risk, formed trade networks, and exerted political power. These changes, and the businessmen that initiated them, sparked a vital economic culture defined by flexible and specialized entrepreneurialism. The Confederation-era business reformation touched almost every part of the American economy. Novel financial institutions and instruments like banks, commercial paper, and asset- backed contracts drove the rapid expansion and integration of the domestic economy and financed exports to previously prohibited markets in Europe, the East Indies, and South America. Increasingly sophisticated capital markets converted booming slave populations into new sources of liquid capital, which underwrote new enterprises. As goods and information began to flow more freely, merchants streamlined antiquated colonial-era business structures. Increasingly sophisticated firms overhauled management and principal-agent relationships to boost trade efficiency and increase profits. At the same time, American merchant-entrepreneurs formed institutions like the New York Chamber of Commerce and the Buttonwood group—the precursor to the New York Stock Exchange—to expand commercial relations and facilitate trust. This dissertation focuses on a cast of approximately 10 merchant-entrepreneurs in Boston, Providence, Philadelphia, New York, Charleston, and the southern agricultural hinterlands, tracing the evolution of their business practices and the capitalist culture they inaugurated. Table of Contents Acknowledgements ii Introduction “To a high pitch of national happiness” 1 Chapter 1 Trade: Independence and Growth 19 Chapter 2 Crisis: Uncertainty and Growth 63 Chapter 3 Markets: Integration and Growth 123 Chapter 4 Networks: Connection and Growth 174 Chapter 5 Business Practices: Opportunity and Growth 224 Conclusion Neither Predestined, Nor Accidental 272 Bibliography 278 Appendix I: Regression Analysis of William Constable’s Network 292 Figures I.1: Exports from American Colonies/States to England and Scotland 5 I.2: Imports to American Colonies/States from England and Scotland 6 1.1: US Exports to the Danish, French, and Spanish Empires, and 34 Hamburg and Bremen, 1791-1808 1.2: US Exports to the Netherlands and its Colonies, 1791-1808 37 1.3: US Trade with Far East Compared to Ireland, 1791-1808 38 1.4: US Exports to Spain and its Colonies, 1791-1808 41 1.5: American Export Tonnage by Destination, 1766-1772 50 1.6: US Nominal Domestic Output, 1790-1819 53 1.7: US Nominal GDP, 1790-1819 54 1.8: Annual Share of GDP Change, 1790-1814 55 1.9: Share of Net Change in GDP, 1794-1818 (Five-Year Overlapping 57 Periods) 2.1: Commodity Price Index, 1769-1791 73 2.2: Asset Price Bubble, July-August 1791 95 2.3: Hamilton Treasury Market Intervention, August 1791 98 2.4: Second Bubble and Crash, September 1791 99 2.5: US Export Tonnage per Capita, 1791-1807 109 2.6: US Commercial Sector, 1790-1815 115 4.1: William Constable's Reliance on RBSCs, 1786-1802 198 4.2: William Constable's Reliance on Connections with Levi Hollingsworth 198 4.3: Average Transaction Value by Sector, 1786-1802 202 4.4: Average Transactions per Counterparty, 1786-1802 203 4.5: Total Connection Value by Sector, 1786-1802 204 4.6: Number of Commercial Connections by Sector, 1786-1802 205 4.7: Connection Value as Percentage of Total, 1786-1802 206 4.8: William Constable Network Structure 209 Tables 1.1: Average Annual Exports to Overseas Areas--The 13 Colonies, 1768- 28 1772, the United States, 1790-1792, and the US, 1804-1806 (Thousands of Pounds Sterling; 1768-1772 prices) 1.2: Annual Average Exports of Selected Commodities from the 13 30-31 Colonies, 1768-1772, and the United States, 1790-1792 and 1804-1806 1.3: Business establishments, by region and type of establishment: 1760- 33 1790 1.4: Percentage Change in GDP, 1792-1818 58 3.1: Population and Rate of Growth for Major American Urban Centers, 134 1630-1840 3.2: New Ship Registers of the Port of Philadelphia, Pennsylvania, 137 1780-1807 3.3: New Ship Registers and Enrollments of Providence, Rhode Island, 137 1780-1807 4.1: Commercial Connectivity, RBSCs vs. Non-RBSC, by Period 194 4.2: William Constable's Commercial Connections, 1786-1802 201 4.3: Analytic Statistics, William Constable's Network, 1786-1802 207 4.4: The Evolution of William Constable's Commercial Network, 1786- 222 1802 Illustrations I.1: Ramsay’s Historical and Biographical Chart of the United States (1810) 2 I.2: Ramsay’s Historical and Biographical Chart of the United States (1810) 3 —Close-Up 2.1: “At a MEETING of the Dealers in the Public Funds in the City of New- 104 York, held at the Coffee-House, on the 21st September, 1791, it was agreed to be governed by the following RULES:” (1791) 4.1: Constable, Rucker, & Co. and Connections 210 4.2: Constable, Rucker, & Co. and Robert Morris Sub-Network 213 4.3: Robert Morris Sub-Network, in Detail 214 4.4: Constable, Rucker, & Co., Robert Morris, and Empress of China 214 Sub-Networks 4.5: William Constable & Co. and Connections 215 4.6: William Constable & Co. and Phyn, Reedy, and Cruden Sub-Network 216 4.7: William Constable & Co. and Phyn, Reedy, and Cruden Sub-Network, 217 with Connectors 4.8: Connection of Constable Periphery Clusters Across Time 218 4.9: Gouverneur Morris and Thomas Russell, and their Connections 219 4.10: Specialized Connection Clusters—Isaac Hazlehurst and William Bell 220 Acknowledgements John Donne wrote that “no man is an island,” and that is certainly the case in academia. I could thank hundreds of people for their kindness, generosity, and assistance. Nonetheless, in the interest of time the following only notes the people or institutions without which this project literally would not exist. My undying gratitude to those not mentioned by name. I am indebted to those scholars who have guided my work and taught me how to do what I do. To Mark Thomas for taking a flyer on the kid who had been rejected twice and never letting me settle. To Alan Taylor for turning me into a historian. To Max Edelson for constantly challenging me. To Doug Bradburn for always arguing with me. To Sharon Murphy for guiding me through five years of craziness. To Rosie Zagarri for showing me what it means to be good and gracious. To Bob Bruner for embodying what it means to be a mentor. To John Wilson for starting me down this road. Additionally, Sam Snyder, Kathleen Miller, Jenni Via, Whitney Yancey, and Scott Alford repeatedly cleaning up my messes. I owe all of you so much. A project of this scope requires remarkable support, both intellectual and financial. UVa’s Early American Seminar made me want to come to the University of Virginia and no other. Since I arrived, EAS has been the indispensable intellectual resource of my graduate education. I am forever indebted to my current and past EAS colleagues. Without financial support from the following institutions, this project would not have been possible. I am forever grateful to The Fred W. Smith National Library for the Study of George Washington, the International Center for Jefferson Studies, the Bankard Fund for Political Economy, the Business History Conference, the PEAES Program at the Library Company of Philadelphia, the Mercatus Center, the John Carter Brown Library at Brown University, the Society of the Cincinnati, the Economic History Association, the Buckner W. Clay Foundation, the Jack Miller Center, the Baker Library at Harvard Business School, and the College of Arts and Sciences at UVa, for supporting my work. Lastly, friends and family have been my saving grace over the past five years. While it will never be enough, my undying thanks goes to: Rachel and Bryce for true friendship and camaraderie; Lauren for amazing food and Kimberly for just making me happy; Julie for inviting me to MVLF and Krysten for saving me from a horrible situation in Edinburgh; Debbie and Dave for being my family in Philadelphia, and Alessio and Jeanie for being the same in New York. To my mom and dad, Jeanne and Chris Miller, for their unconditional love, especially when I don’t deserve it. To my in-laws, Jim and Mary, for considering me their son. To my sister, Erin, for being someone I respect and adore. To my brothers-in-law, Dustin and Dustin, for being true friends and brothers. To Teddy, for keeping my feet warm. To my grandma, Therese, for your undying interest and love, and my grandpa, Raul, because I am like you in so, so many ways.