From Peter Colt
Hartford 7th May 1793
Your favour of 10th April only reached me here the last Mail. I had left Paterson the 17th. of April, on the Evening of the Day that the Board of Directors left Town, in consequence of Letters from Hartford, stating the critical Situation of my Family, Sick with the Small pox. It has proved fatal to one of my children, & another has been confined to the Hospital for upwards of five Weeks; & is yet so weak as not to be removed. This unexpected Circumstance will necessarily detain me longer from Paterson than I had calculated. I hope however no serious difficulty will arrise, or disadvantage accrue to the affairs of the Society in consequence of this detention.
Your Letter not coming to hand before the meeting of the Directors, will prevent my obtaining the Money to discharge the Balance of your account, so soon as would otherways have been done.1 I will attend to it as soon as I get back to Paterson.
The Directors at their last meeting discharged Mort2 from their Service—his Salary to cease the first Instant. They advanced the Salary of Marshall & Pearce3 to £200 Sterlg ann. for one Year, at which period, it is contemplated our Works will be in compleat operation; & when they may be put upon their first establishment. They reduced the Salary of Hall4 to the same sum. As I set out for home immediatly after this was declared to him, I had not time to see how this effected him; I only know he has not quit their Service in consequence of this reduction.
I am well aware that many persons, & even some of the Directors, consider him not only as a bad Man, but particularly unfriendly to the Interest of the Society. That he is an imprudent Man I can have no doubt. He does not conceale his want of confidence in the plans of the Society, respecting the mode adopted for geting command of the water &c.5 It is very possible that his supposed disaffection to the Interest of the Society may arrise from imprudent observations respecting this Business, & the deranged State of their Funds. It is very possible he may have calculated on a general Superintendance of the affairs of the Society; & that the appointment of Majr L’Enfant to construct the Canal & the Mills & other works has mortifyed not only him, but Marshall & pearce also. An English manufacturer cannot bring himself to believe that a French Gentleman can possibly know anything respecting manufactures. From this quarter I believe has orriginated much of the uneasiness amongst the head work men, who appear equally to consider the Factory sacrifised to the Town.
Pearce is certainly a very injenious Man, & at present very necessary to the Society but he has Substantial failings. He is intemperate; & I fear this evil will grow on him. From his natural temper he is easily led to hasty & inconsiderate Measures respecting his workmen &c—& He seems too much prone to new projects.
The Directors at their last meeting Seemed Seriously alarmed at the extensive plans & views of Major L’Enfant. They came together seeminly determind to confine his operations Strictly to the Canal;6 and to place everything else under my Sole direction. But he wishing to have the compleating his plan of the Town, & stating the impropriety of puting that under any other direction it was agreed to. On further conversation it appeard he considered the Cotton Mills as a part of the Canal—at least necessarily connected with it—and shewed the greatest reluctance at having that part of the Business taken out of his Management. After much conversation the Board seemed to acquiese in his having the superintendance of the Cotton Mill, altho they had passed a formal vote to restrict him to the Canal, which is to be compleated on the orriginal plan. He has assured them he will give them the entire command of the water this Season; & yet leave them some thing to operate with in future. Everything depends on his accomplishing this promise.
We have much to fear from the present State of the Funds of the Society. It is probable that the third payment which falls due the 13 Instant will be made wholly in the funded Debt of the united States, as well as the last, which falls due the 13 July next—& that these payments will be compleated only on about one half of the orriginal Shares. Should this prove to be the case, it must add greatly to our present embarrassments; as this debt could not be turned into Cash without great loss; and it will be even difficult to obtain Money, on the Credit of those Funds, in the different Banks, Sufficient for the Expenditures of this summer & fall.7
I have serious fears that Majr L’Enfant will not be able to reduce his plans & operations, so as to square with the present Situation of the Funds of the Society. As he has the greatest relyance on you, it may be of essential Service to the affairs of the Society for you to press on him the necessity of the greatest Oeconemy in executing his plans; & confining his views to those things which are essential instead of what is ornimental in forming his works.
I am with great regard Sir your most obedt humble Servant
Honl Alexr. Hamilton Esqr
ALS, Hamilton Papers, Library of Congress.
2. Joseph Mort.
3. On April 16, 1793, the directors of the Society for Establishing Useful Manufactures adopted the following resolution: “Mr. Colt having reported to the Directors, that in his opinion the Salaries of Thomas Marshall and William Pearce ought to be raised; and the Board taking the same into consideration, Resolved, That the Salary of the said Thomas Marshall be at the rate of Eight Hundred and eighty eight dollars and eighty eight cents for one year to commence from the date hereof; on condition that he undertake and obliges himself to instruct such persons as the Superintendent may point out, in the art and mystery of making and erecting the Cotton Mill Machinery, and Spinning thereon by Water, within the said term of one Year. And that the Salary of William Pearce shall be at the rate of Eight hundred and Eighty eight dollars and Eighty eight Cents for one Year to commence from the date hereof” (“Minutes of the S.U.M.,” description begins MS minutes of the Society for Establishing Useful Manufactures, City of Paterson, New Jersey, Plant Management Commission, Successors to the Society for Establishing Useful Manufactures. description ends 83–84).
4. On April 16, 1793, the directors of the society “Resolved that the Salary of William Hall be reduced from the date hereof to the sum of Eight hundred and Eighty eight dollars and Eighty eight cents per Annum” (“Minutes of the S.U.M.,” description begins MS minutes of the Society for Establishing Useful Manufactures, City of Paterson, New Jersey, Plant Management Commission, Successors to the Society for Establishing Useful Manufactures. description ends 84).
6. For L’Enfant’s views on the construction of the proposed canal, see L’Enfant to H, September 17, 1792; March 26, 1793. On April 16, 1793, the directors of the society passed the following resolution: “Whereas Mr. Colt has been appointed Superintendent & no particular duty has hitherto been assigned to him; and Whereas it is essential to the Interest of the Society, that the Aquaduct be constructed in the Speediest Manner possible, consistant with a due regard to Œconomy, Therefore Resolved that Major L’Enfant be requested to confine his attention entirely to the completion of the Aquaduct for the use of the Works,… and that the erection of the buildings and other works devolve on Mr. Colt” (“Minutes of the S.U.M.,” description begins MS minutes of the Society for Establishing Useful Manufactures, City of Paterson, New Jersey, Plant Management Commission, Successors to the Society for Establishing Useful Manufactures. description ends 83).
7. Joseph S. Davis has described the society’s financial problems as follows: “Throughout the period of construction the problem of finance was a serious one. The ingenious plan originally devised … [was] to have the subscriptions invested in stock of the United States or the Bank of the United States; to finance both construction and operation by loans on these stocks as collateral, at rates more than covered by the income from the securities; to reserve a considerable part of the authorized capital stock of the company for sale when its marketability was assured. Experience, however, soon disclosed weaknesses in this plan, although, with Hamilton’s effective support, it worked better than might have been expected.
“The subscriptions totalled 6388 shares. On most of these the first instalment (one-fourth) was paid with few delinquencies in January and February, 1792. Since United States stocks ruled at this time higher than their cash equivalents, payments were largely made in cash; $127,185.08 ($19.91 per share) was therefore due. That most of this was received may be inferred from the fact that in April, 1792, ‘Accomptant’ [Benjamin] Walker accounted for $118,000; and from the statement made to the stockholders in October, 1792, of a sum received ‘in full of the first payment, and in part of the second.’
“The Society was financially injured by the panic in three ways. Through directors who were made bankrupt … it lost large sums. Many of its subscribers were speculators who were hard hit or made more cautious by the disaster and were thus unable or unwilling to risk more for the Society. And the prestige of the Society, whereby it had been able to secure subscribers among less speculative men, was so injured that new contributors were not to be had and some former ones doubtless deserted the ship. Despite, therefore, the leniency of the board in permitting postponements in paying the second instalment, the total received up to October, 1792, amounted to only $160,200.93, which means that the second instalment was paid on only about one-third of the shares.
“Up to this time the penalties of forfeiture of shares for non-payment, though established by the board in January, 1792, had not been enforced, partly at least because objection was raised that the board could not enact such a bylaw. An act amending the charter in this respect was passed Nov. 27, 1792. Still the board hesitated to use this power freely and went to an extreme of leniency in granting till April 13, 1793, to pay the second instalment, and extending the time of payment for the third to May 13 (from January 13), 1793.” (Joseph Stancliffe Davis, Essays in the Earlier History of American Corporations [“Harvard Economic Studies,” XVI (Cambridge, 1917)], I, 473–75.)