 Okay, as it starts, thank you all for coming. My name is John Bell and I have a website called Boston1775.net. And today I'm going to tell you the story of the Boston bankruptcy that I think helped lead to the American Revolution. This is the story that starts in Boston in 1765. Now that was two years after the British Empire and was a tremendous victory over France. Everything we wanted to hold was over and naturally imperial autonomy went into an oppression. Because at around the same time the British government in London made an important change in how it administered its military forces in North America. And together those forces, the economic situation and the particular administrative issue, I think together they led to the personal bankruptcy of one man in Boston named Nathaniel Millwright. Wheelwright's financial failure that had a rippling effect led to the whole economy of Boston towering for a while. It is a credit crisis. And I can tell that story and then I can argue that that is part of what we have to think about when we think of the Red and the American Revolution. So going back to the war, during the war, national governments borrow a lot of money and pump it into the economy by buying things, by hiring people. And at the end of the war governments tend to shrink their military, shrink their government, shrink their employment. They also try to pay off their debts which might need higher taxes. And then you can usually affect the national economy or the imperial economy. And it has especially had repercussions on a regional economy that was already under economic pressure. Now what's the way the British government pumped money into the economy, especially in North America during the French and Indian war, as we called it, was they literally sent money across the ocean, gold and silver coins to pay to soldiers. On a regular basis or semi-regular, probably in the south, it's not like that to the soldiers, they got their money. They got cash. And they got hard currency, specie as it was called. That meant that somebody had to send, had to collect all the silver and gold on behalf of the British Treasury and send it to North America. That was the job of pay master and money contractors that they were called. It was sought after position because as an ascended to do your job, you got to keep two and a half percent of all the money you sent. Over several shipments a year, that means you were making a very good profit, a steady profit, with lucrative, even after administrative costs and insurance. During the mid-1700s war against France and Spain, now these are the wars that are called things like King George's war, the war of the Ottoman succession, the war of Jenkins' years. They're just constant wars against these other empires. And finally the French and Indian were seven years war. The commander in chief for the British forces for some of the time was William Shirley. We had people from the early years that happened. William Shirley was a governor of Massachusetts and he was in addition, head of the British army in North America, which meant that the wars were basically being run through Boston. Boston was the biggest British port in North America at the beginning of the first half of the 18th century. But frankly we still feel that we are the most important place in North America. But then we really were. But then this population, the population of Boston sort of stalled out at about 15,000, 15,000 people. Two cities to the south, task locked in both population and in terms of importance in commerce. New York and then especially Philadelphia. And a lot of this was due to the geography. There were war reports. They had more land to expand. Boston was really stuck on this peninsula and that happened with a very much larger island in Philadelphia was on the main one. Philadelphia was also more welcoming to immigrants than Boston and Harrison and Boston. So already Boston merchants were seeing their preeminent position in North America within the British empire slipping away. That was even, that was applied in the 1700s it looks like. So with the war, with the war being run through Boston, it still felt like the most important place. The army's money contractors were two men, Charles Aptor and his junior partner, Thomas Hancock. Aptor were the young British settlement who had settled in Boston. He traded extensively. He married a woman named Grisel Eastwick whose family owned these wealthy sugar plantations, slave labor plantations in Jamaica. So they had a very good basis for his fortune. Hancock was a local man. He was the minister, the son of the minister in Lexington. He went into book selling. But book selling at a time that you were selling a lot of other things because you had a luxury clientele and you were importing things from England. So he was just doing a lot of stuff. He was also doing some smuggling. Aptor was sent to be, when he died in 1758, the richest man in Boston. This isn't Monument at King's Chapel. Hancock who died in 1764, well we know what happened to his money. He and his wife, Lydia, had no children. So he raised his bright young nephew John as his heir. And so it was he sourced the money contracting for the British army as well as all the other good things that eventually became a source of John Hancock's fortune. Let's go back to the Aptor family. Charles Aptor and his wife were built in many children. And their daughter Anne, married a man named Nathaniel Wheelwright in 1755. He was described as good natured and friendly. He was especially active during the 1750s, redeeming captives from Canada. People who had been captured on the New England by the French and Indian forces and brought up to Canada for ransom. He was also, while he was in Canada, he went up and visited an ant named Esther Wheelwright who, okay, I don't have a picture of her here. She was, she had been captured in a much earlier war. She had been converted while living with the Catholic natives of French Canada. She had become a nun. She was living in Quebec as a mother superior of a Catholic order, which to her promised to the English family was just a man. And so they were sending messages, trying to get her to come back. And at one point she was given a very large request if she would give up the Catholic Church. And Nathaniel Wheelwright went up and asked him what did she like. But she was committed to the Church. She remained in the Evinom for the rest of her life, which meant that Nathaniel got to inherit some of that money instead of going to her. Definitely. The Apthorps also had a, their oldest son was named Charles Ward Apthorp. And Charles Ward Apthorp and Nathaniel Wheelwright became partner together in the next generation of the family first. They continued to do the money contract for the British Army after Charles's father had died in 1758. Now Boston at this time had no banks. It had no corporations. It had no stock market. The only way you wanted, if you wanted to invest there weren't just a whole lot of possibilities. In the end of the war, one of the ways you can invest during the war is you can invest in private heaters. But as soon as the war was over, so one solid investment you could make. If you had more money than you wanted to keep under your mattress, wanted to make more money for you, you could loan money. You could buy Massachusetts promissory notes, the colonial notes. People loan their money to the province at a designated waffle interest of 6% a year. They got printed notes. These are some examples from North Carolina and from Pennsylvania. They got printed notes which could circulate like money. You could give these to other people to pay off your debts. At the end of the year, whoever was left holding the note could go to the provincial treasurer and ask for the face value plus 6% percent. However, the Massachusetts legislature authorized the treasurer to borrow only a limited amount in 1765 at around 138,000 pounds. The wealthy connected people, the merchants, basically the elite they were the first people to be able to get this crack at this investment. So there really wasn't a whole lot to go around. There was a lot of unfulfilled demand for investment-grade notes. So another way you could invest is you could go to a solid business man and you could say, I will loan you X amount and will you promise to give me back X plus lawful interest? That was a personal note. And who looked like a solid business man in Boston? Well, Nathaniel Wheelwright. Forty-three years old, 1754, had these wonderful connections. He owned the hand-the-money contract. He owned a Wheelwright's Wharf which is over here in this view of Boston by the fall of year. That meant he was collecting rent from the burst for ships, for the warehouses, for the shops. He owned interest in ships himself. He was owned cargo and he had traded back and forth for different parts of the empire. So people lined up to give Wheelwright their money as an investment. As one example, in 1764, a widow named Margaret Bittenhall gave a business man named Arthur Stavage, a hundred and sixty pounds, he went into Boston to invest this to give this money, to loan this money to Nathaniel Wheelwright. Wheelwright gave back a personal promissory note promising to pay the lawful interest. That's six percent at the end of the year. Here is an example of a personal promissory note. It's a printed form with details spelled out. This is not one involving Nathaniel Wheelwright. This involves another business man named Josiah Quincy. Stavage returned the note to the widow Bittenhall. She used his money. She gave it to somebody to pay off her own debts. By 1768, four years later, nobody knew where that note had ended up. It just had passed from hand to hand like cash, money, like paper money. According to James Oden's senior marshal, Wheelwright ended up functioning like the bank or general for the province and almost for the continent. So many people were using his notes as money. People took their money by thousands from the treasury to trust it with this man. So he was seen as an even better investment than the state, or at least a more convenient investment. Now, the problem was that Wheelwright may not have actually been that savvy and end of the matter. There is a story in the Fred Simon's book, which is Rakes and Robes, about how in November 1762, a middle-aged woman from Bedford named Miriam Fitch came into town and told this other merchant, a gripper clerk, that for hard money she could lead him to a place where there was a treasure chest, which she couldn't get to, but she could sell him access. Clark was so excited, he went to Wheelwright, and he said, I need cash to pay off this woman. Wheelwright got all excited. He went to his neighbor, he had silver, she didn't want silver, she wanted gold, so he traded silver and gold and brought them. She led them out to this middle in Bedford and said, you can see down in the cellar, that's where the treasure is, you can see that chest. So the two gentlemen went in and she wanted to sell her around the world. And according to them, they might even have drowned. They were yelling for help. If the water had been let in, the floodgates had no open, and the water had been let into this mill, they could have drowned, but they were let out and they prosecuted the woman, Miriam Fitch. She was caught and convicted, she had to stand in the pillory, and Wheelwright and Clark returned to Boston. They were probably more than a little embarrassed. Although this story wasn't really in the newspapers at the time, it was told later. In 1764, two years after that incident, Charles Ford Aftor decided to move to New York, and he built a mansion in what was then the Manhattan Countryside. Now this space is midtown, and there is an apartment building in Manhattan. And as I said before, New York had become a bigger, busier port. For the port of London, the London government decided to move its military headquarters for North America to New York. So because the Hudson provided better access to those new provinces in Canada, better access to the Western Frontier, General Thomas Gage, the new commander-in-chief of the British forces in North America. He was stationed in New York. So if Aftor wanted to keep his government business, and of course most of his money was coming from Jamaica anyway, New York was a place to be. So in August 1764, he announced that he was dissolving the freedom of Wheelwright and Aftor. And he asked in the Boston Newsletter all the customers who had outstanding debts or outstanding credits with the partnership to come and settle with Wheelwright as his agent. Around the time, Aftor reviewed Wheelwright's books. And they showed that Wheelwright owed Aftor 80,000 pounds for the payment of the King's troops and 12,000 on the settlement of the partnership. But Wheelwright was owed up to 40,000 pounds from other people, his promissory note, and all told he had 22,000 pounds more in assets than in debts. And by the standards of the time, that looked very solid. Until January 1765, when he stopped honoring his debts entirely and wouldn't come out of his house. Governor Francis Burr reported to London, this was like an earthquake to the town. Numbers of people were creditors, some for their all, everything they owned. Everyone dreaded the consequences. Lesser merchants began to fail, a stup to all credit was expected, and a general bankruptcy was never invented for a time. The diary of an merchant named John Rowe was worth a day-to-day record of this crisis on January 15th. The trade has been much larger this day. Mr. Wheelwright stopped payment and kept in his room. A great number of people will suffer by them. And so Rowe himself spent that evening at the British coffee house talking about Nealwright's affairs with other merchants and businessmen. I do note that the term coffee house there is just a fancy word for a tab. On January 16th in that state, a deputy sheriff detained Wheelwright for debt to a man in Grace Street. That court demanded a full look at his mother-in-law accounts and the new accounting showed that Wheelwright had assets of a hundred and seventy-six thousand pounds, which was a lot. Except a lot of them were debts, sort of Nubia's name for debts that probably should have written down because he wasn't going to be able to collect them. He also owed his own debts, promissory notes and other things to other people, of a hundred and seventy-eight thousand pounds or two thousand pounds more. So even if he had been able to collect all those debts, he still wouldn't have been able to pay off all his creditors at that moment. To put those figures in perspective, the total value of goods traded between Britain and all of New England in 1762 was two hundred and eighty-nine thousand pounds. So his personal debts and assets were about two-thirds of all the trade between the mother country and the region. Now all those, and what you can do with that, all those promissory notes that Wheelwright had been passing out that people had been passing around as money, they were not worthless. He would not be able to pay off those promises. They seemed to have no value and that caused this ripple effect and other people admitted that they couldn't pay their debts either. One of the biggest losers was a new Boston selectman named John Sculley. This is a corporate of Sculley by John Sibleton Cogley. It's a lovely chalk and ink drawing that is now in the Philadelphia Fine Arts Academy. On January 19th, Sculley and two other business men had to shut their doors to creditors. This is five days after Wheelwright closed down. On January 20th, John Rowe consulted with a sheriff about legal action against Sculley. So John Rowe had been a helpful man. That was a Sunday, but he was still doing business. He should have been a sheriff, but he said he wrote in his diary, he did not go to church. My mind is too much disturbed. Too disturbed for church. Too disturbed to know and talk to the sheriff about taking legal action against this man. On January 21st, Monday, young John Hancock, he had just inherited his other business the year before. He was very new, still, and he told his contacts in London, trade has met with the most predictive shock. I would advise you to be careful who you trust. James O. the senior compared Wheelwright's failure to the South Sea bubble in 1720. It was that level of disaster financially. Winnows and orphans that are ruined can only go away with a litter of fate, he wrote. The more residents have been hauling and hauling, attaching into summoning to secure themselves, and attaching into summoning meant going to court, putting in lawsuits, taking out grids against the people who owe you money. Then, if you got into line first, you would be paid before the other creditors. It was really, it was a free-for-all. Shopkeepers started to add new language to their advertisements. You can see this in the newspapers. All persons indebted, either by the bottom of the note or book, are desired to pay to prevent their being brought to suit in April court. Craftsmen offered discounts to anybody who was paid with hard money, gold or silver, instead of thread. On January 22nd, the Massachusetts House, Fast Tracton, acted for the more equal distribution of the estate of a stock of summoning debtors among their creditors to cut down on panic and lawsuits so that you didn't have to be first in line. They could do something more orderly to figure out where the money should go. The House also proposed lowering the lawful interest from 6% to 5%. Now, the House is the lower house of the legislature, the upper house, the council. Well, those with the gentlemen who had first crack at the Massachusetts bonds, they were the investors. They didn't want to lower their interest rates from 6% to 5%. So there was an argument between the two houses of the Massachusetts General Court. In February, Wheelwright's biggest creditors went to the legislature with a new idea to protect him against all civil suits and processes for up to six months when he put his affairs in order. And the House rejected that idea for special treatment. That is how desperate people were. Within weeks after that, Wheelwright left Massachusetts for the Caribbean, leaving his children behind. In early March, the legislature finally ironed out a compromise bill on bankruptcy. There was a new process based on New York law. This was actually a very important reform. But by the end of the month, John Scullway had entered into that process. He announced first in a newspaper that he was willing to surrender about all of his assets. He was making a public declaration that he was bankrupt. A probate judge has appointed three trustees from the business community to oversee the dispersion of his assets. And they advertise a meeting, again, a public announcement, advertising a meeting of all of Scullway's creditors and at the coffee house in April. In November, they oversaw an auction of Scullway's goods, including all of his household furniture. He had all of the furniture, and things like that. He had two slaves who were sold off to pay his debts. It took years, but eventually he regained his financial standing and his post as selectment. He was remembered for decades and decades as in the name of Scullway Square. We all write, by this point, was he not on the reach of Massachusetts law, but his property wasn't. In July, his creditors could secure a warrant to his tax, his estate, and because he was unobsconding or concealed debt, he was not in the position to do what Scullway did to make the announcement to stay in town to try to work this out in an organized fashion. There was, again, an auction of the creditors. The new law required all those advertisers in the newspaper, which gives us a very good record, but that means that if you read the newspapers up a time, you'll see all these bankruptcy advertisements, all these auction advertisements. The ripples continued to spread. One historian counted 58 formal bankruptcies between March and October 1765, 77 more by February 1768. The Boston Eating Post, they would usually run a list of the burials and baptisms of each past week. They added burial baptism and bankruptcy in Boston on the past week. In November, the New Hampshire Gazette sort of wise that Boston Newsletter contained old news and quote variable wealth except 15 bankrupt advertisements. In June 1766, Bostonians learned that Wheelwright had died of yellow fever in Guadalupe. His old minister, the Reverend Henry Kinger of King's Chapel was looking after his oldest son. Another was living with the widow Revelle Atthorpe, the boy's grandmother, and the youngest with the widow's uncle. What a dispersion of a late flourishing family, Kinger lamented. So this was the end of not just the Wheelwright fortune, but the Wheelwright family as a, that Wheelwright family as a unit. Charles Ward Atthorpe ended up controlling most of Wheelwright's property from New York. And you can see down here that what was Wheelwright's war was in 1769 called Atthorpe's war. Now a lot of locals, we're in Boston, we do directions by what used to be places and things used to be called. So a lot of people still called it Wheelwright's war. But it was owned by Charles Ward Atthorpe. He had, as I said, he had this solid foundation for his fortune in Jamaican sugar and rum so that he was safe from bankruptcy and that provided a certain foundation for the economy. That was the, what used to be the Wheelwright Atthorpe part of the economy. The Wheelwright Atthorpe, the Wheelwright Atthorpe still had a big effect on politics, however. As his agent in Boston Atthorpe chose a British war hardware merchant then from Wolverhampton named William Molyneux. And in the late 1760s and early 1770s, Molyneux, he appears to have lived off the Atthorpe income. The income from managing properties for Atthorpe in New York. And that allowed him to become very politically active. And he was very politically active on the big side. He was a leader of the crowd. He was really pushing the non-importation boycotts and the other protests and opposing new taxes from London. He was actually one of the most radical of the Boston Patriots. He sent a lot of money in the early 1770s into a public works project to employ poor women spinning and making cloth. So he had a lot of money invested in looms and spinning wheels and things like that. Wasn't necessarily his own money. That was a problem. Part of it came from the town but also probably part of it came from Charles Atthorpe who he was in New York. He was on the council for the royal governor. He was on the Tory or loyalist side of the political conflict. So when British troops came to Boston in 1768, Atthorpe insisted that Bolano had been one of the most vocal people engaged having troops come to Boston. Atthorpe said that Bolano had been one of the most vocal troops. Meanwhile another aspect another conflict of this stemming from the bankruptcy probate George Thomas Hutchinson who would soon become governor of Massachusetts. He chose a gentleman to administer legal rights estate. Interestingly Dr. Warren's mother we don't mother out front spring had been one of the people who had to go bankrupt in the late 1760s. I don't know if this was a conflict or if it might have given him more sympathy for people who were undergoing the bankruptcy process. Dr. Warren as we know also became much more politically active over the late 1760s and 1770s. Dr. Warren was representing legal rights estate and its economic interest and they were potentially at odds but we don't know any direct conflict between them but it might have been awkward. In the fall of 1774 General Gage had come from New York to be governor of Massachusetts as well as military commander of the army in North America and his second command in New York General Frederick Holman sent him a letter in French with secret news Charles Ward Atthorpe was coming to Boston to audit Malano's books to audit what Malano was doing with his Atthorpe property and soon after that we don't know what happened during their meeting but soon after that Malano took to his head and on October 21st and loyalists insinuated that he killed himself with Dr. Warren in order to avoid the disgrace of being exposed as an investor and that was just one rumor the patriots had their own rumor that Malano had been poisoned by British officers but any place that's why we don't remember William Malano because he died on October 1774 before the revolution really started he was still wrestling with this horrible complicated estate for Wheelwright the next year when he went off totally into politics and became head of the provincial congressman who was going to be commissioned to major general and went to Bunger Hill and died as late as April 1782 newspapers were still running ads for all of Wheelwright's predators to come and meet it was still complicated it was still all mixed up that same year 1782 the Massachusetts legislature finally authorized a bank in the state and that provided a different way of thinking about credit thinking about investments those more for what we were used to today but all that with Warren and Malano and that complication I don't think that was the biggest effect of the Wheelwright bankruptcy on the American Revolution why I really think that it led to the American Revolution is that you have to go back to May 1765 when bankruptcies were spreading when this new law was in place and these newspaper ads were showing people declaring bankruptcy and there were lawsuits and all this what else happened in May 1765 well in that month the American Power learned that Parliament had passed a stamp act now this was designed to move money gold and silver to the Imperial Capital from the colonies from everywhere that are applied so that Britain could pay off its national debt from the war the law placed a small price on newspapers on court violence which was exactly what everybody needed my law needed to use in this fiscal crisis in other words just as people in law were starting to get terribly worried about their financial health and the financial health of their society and the economy of New England the stamp act promised to make life more expensive and money harder to obtain then that must have made I think that made people feel even more anxious and even more resentful and if I don't think it's any surprise that the first public protests against the stamp act or wide based protests appeared in Boston in August 1765 those were also violent protests there was a lot of passion involved and they involved crowds not just the elite anymore but they had children marching they had small merchants they had shopkeepers marching those protests eventually spread up and down the Atlantic coast they provided a unified force for the anti-crown forces in all these different colonies they provided the impetus to a stamp act congress this was I think the very beginning it would necessarily have been that passionate that immediate that angry if people hadn't been worried about the Daniel Newright and his bank thank you does anyone have any questions or comments or feedback yes sir what was the day that you mentioned when Boston opened its first bank or a group when was the day that Boston opened its first bank it was authorized to open by the legislature in 1782 it took two more years before it actually opened in 1784 okay and the for quite a while different as that bank was absorbed by different things different other banks and bigger they would keep using these since 1784 underneath their so I think the last bank that used that was Bay Bank and then Gainesley and Bank of America and they no longer traced their roots all the way back there but that was the root of the Massachusetts banking industry was the Massachusetts bank in 1784 when did institutional banking replace individual individual's name when did it really take hold of Boston when did individual banking replace and that I'm not I couldn't say for sure it's what would be in the early republic but what replaced it was the system with issues by banks and therefore the value of the money you had in your wallet depended on the strength of the bank that provided it and how far away that bank was i.e. the convenience of getting it redeemed for gold or silver and so it was just an incredibly complex system I'm back that the people could actually live their lives that way and that lasted until the late 1800s and when the government began to insist that only it could issue such such money as a big change and very controversial at the time but that's the system that we have all grown up with now we're all used to it we all think that's the most logical system in the world it for a lot of people the idea that okay rather than depend on the credit of this distant government I'll depend on the credit of my neighbor Mr. Wheelwright seemed like a better bet yes sir when the colonies could coin their own money on a pair of cash and then they couldn't when the colonies coin their own money and when they couldn't this talk about gold and silver in the late 1600s Massachusetts actually issued some copper coinage by this period by the mid-70s they weren't supposed it was only supposed to be the imperial government in London because the value of gold and silver depended on the actual weight however a lot of the coins that were circulating in the British empire were actually Spanish coins because the gold and the great gold and silver came from the Spanish empire so when we talk about the dollar or the history and all these other terms those actually referred to Spanish coins and the the species that people would use was probably minted in Spain not in London but the inability to coin money was one of the real problems but that's why there was so much reliance on credit well it wasn't I mean the problem was there wasn't any gold or silver to coin yes there was this great crunch in the colonies for gold and silver and so whenever they needed to pay taxes especially to the London government they needed to actually get out of their credit with their neighbors and their local shopkeepers and find a way to get gold and silver to pay those taxes and that did provide an ongoing headache and resentment this was especially acute I think at the top level of going into society because those government were not spending more than they made and that is bound to make any sort of problem of getting gold and silver even worse because of your if you're trying to trade in your tobacco or your other goods and they just aren't bringing you enough money enough credit from your London merchants as you hoped then it's just going to be worse when you also have to get real hard currency to pay your bills locally what happens with the paymaster position you know in New York in 64 do the payments to the British officers come through New York to back to Massachusetts all the way through the occupations yes yes at that point this is about how did the British our army deal with its payment system when the when General Cage moved the headquarters to New York the paymaster job was based in New York and there were local paymasters the money would be outmined the paymaster in New York to the turtles of the different regiments and the regiments the adjutants would be paying down to the individual soldiers and there is both at that time because the army was smaller it wasn't a big system but during the actual war it was a very elaborate system it was even more difficult for the Americans because for the first few years of the war and then hauling it around and then that money became worthless and fortunately the French began sending money but there were lots and lots of stories of people during the war ferrying these chests of gold from one part of the colonies to another in order to pay the army yes so imagine that you are in everyday costuming free bankruptcy and you're going about your everyday expenses are you like to be using something else? you would likely be running tabs at the various shops that you regularly patronize and every quarter every three months you would be trying to settle up with the shops and when that settlement came yes at that point we'd be trying to pass off the promissory note or the state currency there was also there was the old tenor and the new tenor there was money that was issued by the state before 1760 or so was it a different value than the money or since it was incredibly complex and a lot of people let a lot ride until they were moving or somebody died and then they had to settle up all of the states and that was part of the job of administering or executing the state to figure out who out there owed money and who out there was expecting to pay from this person and it was very much a credit economy and that meant when that's why something like this which was only one man could affect everybody because everybody was depending on everybody else to be able to pay at a certain level of certainty and suddenly that wasn't going to happen Well, I think of a credit economy I tend to think in a lot of trade and border from goods and services going on that happens as well Well, it could work that way if you were going to a shopkeeper and buying shoes then you could also perhaps make a deal with the shopkeeper's wife to sell her cheese and at the end of the quarter you'd figure out okay who would supply more cheese who would supply more cheese and that worked I think better at the channel level where everybody knew each other in Boston there were many more shops and many more more transient population and things like that so there's a bit more of a need for a formal system of based on on money on provisory notes on actual coiling and things like that Well, thank you very much Thank you