From Rufus King
[New York] Monday Evening. [August 15, 1791]1
The fall of Bank certificates2 may have some good effects, it will operate to deter our industrious citizens from meddling in future with the funds, & teach them contentment in their proper vocations. So far as I am informed, the loss will be divided among a great number of individuals, and where it is heaviest, the sufferers will generally be characters who will neither excite nor deserve commiseration. The Fall having been hitherto gradual, the most timid have had an opportunity to retire with something less money, & much more wisdom, than they brought into the market. I see no reason to apprehend an alarming depression of the Stocks; they have risen within the last two months faster, & higher, than any prudent calculation would justify, but notwithstanding the pressing demands for cash, to discharge the contracts for Bank Certificates, as well as to support their credit under the present Check, & in opposition to the united exertions of some of the Dealers to tumble them lower, the other Stocks have not been greatly depressed. The 6 pr Cts. sold this evening for cash at 21/. the three per Cts. & deferred at upwards of 12/. and the Bank certificates at 160 Dollars.3 If they do not fall below these prices, perhaps we may think ourselves fortunately extricated. The Business was going on in a most alarming manner, mechanicks deserting their shops, Shop keepers sending their goods to auction, and not a few of our merchants neglecting the regular & profitable commerce of the City. A check was necessary, the explosion will restore order, and we shall return to our regular pursuits. Several of the Speculators sold their Bank Certificates from 50 to 100 Dollars. The subsequent rise mortified them, and they don’t fail among other means employed to depress the Stocks, to quote your opinion, that the Stocks are all too high.4 They go further and mention prices, below the present market, as the value sanctioned by your authority. It can scarcely be believed that these gentlemen have any foundation for their assertions, but the fact will suggest to you the utmost caution on this subject. I know you must have regretted the late extravagance, but at the present juncture, the most unfair advantage may be made of your remarks, and consequences ruinous to individuals, and quite foreign from your wishes, may proceed from them.
In regard to our Bank,5 although some specie has been drawn from us, and sent to the other States to purchase Stock, and the discounts are large; yet you are sensible of the prudence of the direction, and that they must be extremely well acquainted with the Circumstances of all the Dealers with the Bank. I understand that it has been reported, that the late check has been produced by the bank’s having refused their usual discounts. This has by no means been the case. The Bank has continued, & will continue, to discount as far as their safety will authorize. The present agitation will render them cautious, but they will not under the influence of that temper withold those accomodations, which may be made with safety to the Bank, and which may likewise be essential in preventing a violent depression of the funds.
I think Duer has been injured in being supposed to have been particularly engaged in raising the Bk Certificates.6 So far as I can learn his conduct has been as correct as any Buyer’s & seller’s could be.
ALS, Hamilton Papers, Library of Congress.
1. King was a Federalist Senator from New York.
Although this letter is undated, H in his reply on August 17, 1791, refers to “Your Letter of Monday Evening.” Since the decline of the bank script which King discusses did not occur until August 11, the letter must have been written on Monday, August 15.
3. By August 12, in Philadelphia, the six percents had reached 22s.7d., the three percents 13s.1d., the deferred 13s.6d. On August 11, Bank of the United States stock certificates in New York went as high as 280.
4. Joseph Stancliffe Davis states that H “allowed himself to be quoted regarding the proper price of the speculative securities” (Davis, Essays description begins Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations (“Harvard Economic Studies,” XVI [Cambridge, 1917]). description ends , I, 204), but he gives no source for his statement.
5. The Bank of New York, of which King was a director.