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Isaac Bronson: His Banking Theory and the Financial Controversies of the Jacksonian Period

Published online by Cambridge University Press:  03 February 2011

Abraham H. Venit
Abraham H. Venit
Affiliation:
Brooklyn, N. Y.
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Extract

Isaac bronson was a highly successful financier of the Jacksonian era who was also one of the period's most original and influential banking theorists. Bronson accumulated his very considerable fortune in New York primarily by judicious personal money-lending operations on long-term bonds and mortgages at a cautious 7 per cent annual return, supplemented by successful ventures in land speculation. In addition to wealth, he had by the 1830's acquired a weighty reputation for sober financial conservatism and was regarded as an authoritative exponent of sound banking principles. Prominent in the financial community, he had long thrown his weight as a sound banking theorist against the “wild-cat” practices of the then rampant state banks. As controlling stockholder of the Bridgeport Bank for almost thirty years, and as president for much of that time, he prided himself on its successful weathering of the financial storms of the period.”

Type
Articles
Information
The Journal of Economic History , Volume 5 , Issue 2 , November 1945 , pp. 201 - 214
Copyright
Copyright © The Economic History Association 1945

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References

1 This note is written in the course of the preparation of a study based on the Bronson papers at the New York Public Library. These papers are in two collections of some two hundred boxes. They offer a fruitful source of materials for sundry matters, political and economic, relating to the nation's history for the period 1790–1870.

2 Bridgeport Bank Papers, Bronson Papers (hereafter designated BP); Isaac Letters, BP, passim; November 28, 1832, Arthur Letters, BP; Arthur Accounts, 1820–30, Bronson Papers Martin Collection (hereafter designated BPMC), passim.

3 Letter to William Short of Philadelphia, November 2, 1831, Isaac Letters, BPMC. Cf. also the biographical sketch of Isaac Bronson in H. Bronson, History of Waterbury, pp. 370–74, for the statement of Bronson's policy against renewal of loans by the bank, another principle he held of cardinal importance. Four years after his father's death, Arthur, to furnish an object lesson in sound banking, had The Journal of Banking publish anonymously an account of the Bridgeport Bank that he had written. This appeared as a “History of the Bank of ———.” Cf. letter from Sherman, Roger M., a life-long friend of Isaac, February 2, 1842, Arthur Letters, BPMC.Google Scholar

4 Bronson's name can be added to those already listed by Miller, Harry E., Banking Theories of the United States before 1860 (Cambridge: Harvard University Press, 1927), p. 174 and n. 3.CrossRefGoogle Scholar

5 Cf. the open letter, signed “Aurelius,” in the National Advocate, October 25, 1815. Also, An Appeal to the Public on the Conduct of the Banks in the City of New York by A, Citizen, New York, December 1815.Google Scholar

6 Isaac Bronson to Wadsworth, James S., August 7, 1837, Isaac Letters, BP.Google Scholar

7 Miller, p. 147, attributes to McVickar the development of a principle the latter well may have owed to Bronson.

8 This letter is to be found in a collection of papers in possession of Bronson W. Griscom, Syosset, L. I. This collection has been deposited with the New York Public Library, but has not yet been sorted and classified; it is hereafter referred to as BPGC.

9 February 12, 1827, Isaac Letters, BP.

10 February 3, 1829, Arthur Letters, BP.

11 Vol. II (July 11, 1829), 24 ff. Manuscript copy in Bronson's hand can be found in Miscellaneous Papers, BP. On Bronson's influence cf. also Raguet's letter of March 28, 1838, Isaac Letters, BPMC.

12 June 3, 1840, Letters, Frederic, BPMC. Raguet's Treatise on Currency and Banking (26 ed.; 1840), p. 204nGoogle Scholar reads, “The late Isaac Bronson, Esq. of New York, whose skill as a banker was exceeded by that of no financier in this country….”and goes on to quote from his article as follows: “It will be seen from the foregoing premises, that the proposition which the banker makes, or is supposed to make to the public, when stripped of its mystery is simply this: I will exchange my credit for your capital, but you must allow me the use of your capital without interest, and yet pay me interest for the use of my credit; my credit will be of the same use to you as your money, and much more convenient; and your money while in my hands I can make productive, which would produce nothing if it remained in yours. Whenever you prefer your money to my credit, you shall have it. The profits which I make by the use of it increases the national wealth to the amount of such profits; because that portion of your money which you entrust me with is only that which would otherwise have remained unproductive in your hands until you had occasion to use it: and it is for such portion only that I ask, as that will furnish me with a sufficient capital for my business. To this proposition the public replies, you shall have the use of my money on the terms you propose; but in a bargain so advantageous to yourself, it will be expected as you have my money without interest, that you will give security to return it without loss.”

13 Cf. April 8, 11, 1814, David Parish Letter Book in the New York Historical Society.

14 December 24, 31, 1814, January 26, 1816, Isaac Letters, BP. Cf. also the letter of Secretary of Treasury Dallas to Willet, Marinus, son-in-law to Bronson, December 15, 1814, Isaac Letters, BP.Google Scholar

15 July 22, 1829, Isaac Letters, BP.

16 February 26, 1831, Isaac Letters, BPMC. The pamphlet was possibly Senior's Three Lectures on the Costs of Obtaining Money and Some Effects of Private and Government Paper Money (London, 1830), 103 pages.Google Scholar

17 October 17, 1831, BPGC.

18 February 7, 1830, Isaac Letters, BPMC.

19 Cf. James, Marquis, Life of Andrew Jackson (Indianapolis: The Bobbs-Merrill Company, 1938), p. 562, for a similar proposal made to Jackson by Biddle.Google Scholar

20 Cf. McGrane, R. C., Correspondence of Nicholas Biddle (Boston and New York: Houghton Mifflin Company, 1919), pp. 101–3Google Scholar, for an identical interpretation in a letter to Biddle from C. A. Davis.

21 Letter to G. Tomlinson, January 27, 1834, BPGC. Also, J. A. Hamilton, Reminiscences, pp. 253–58, where Hamilton reproduces the answers given by Bronson to a series of queries on the anticipated effects of the contemplated removal of deposits from the Bank. Hamilton had submitted these questions on behalf of the Treasury and gave Branson's answers to Jackson. (Manuscript copy is in Isaac Miscellaneous Papers, BP.) Bronson there indicated his change of heart on rechartering, giving as his reason the policy pursued by the Bank.

23 For reactions, cf. letter from Cruger, H. N., March 24, 1832Google Scholar, Isaac Letters, BPMC; from Cambreleng, March 18, 1831, and February 18, 1832, BPGC. Bronson defended his plan against charges, probably by Louis McLane, that it would force a “paper money system on the public”; he insisted his plan would have an opposite effect. March 3, 1832, Isaac Letters. BP.

23 April 24 and May 23, 1832, BPGC. January 22, 28, 30, 1832, Isaac Letters, BPMC. May 3, 20, 1832, Isaac Letters, BPMC.

24 Acknowledging receipt of a copy of Bronson's petition to Congress for a bank charter, he continued, “I have read the petition and … it appears to me that its principles are perfectly sound. I have no doubt that a bank conducted upon your plan would obviate most of the objections which exist against a large monied Institution, and would unquestionably prevent those terrible revulsions which are so frequent, and under the operation of which, the mercantile community is now suffering. What you say, about the inability of capital loaned upon promissory notes to add to the profits of banking, are [sic] true …. The whole banking System, is, as you say, radically defective, and I sincerely wish that I had no constitutional scruples to prevent me from advocating such a bank as yours, which I am persuaded would exercise a more salutary control over the State banks, than any one established upon a different plan.”

25 March 14, 1832, Isaac Letters, BPMC. Cf. letter of June 14, 1832, for rejection of the invitation and A. J. Donelson's expression of regrets on behalf of the President. Bronson had purchased the residence of President Timothy Dwight of Yale in 1796.

26 Undated, but of the period 1832–36, Isaac Letters, BP.

27 Isaac Letters, BP. In Isaac Miscellaneous Papers, BP, are several documents bearing upon the maturation of this fiscal plan: (1) copy of a Memorial to the Senate and House of Representatives to the effect that the undersigned financiers and merchants had submitted a proposal to the President of the United States in March 1836, offering to act as fiscal agents of the United States under the proposed “Articles of Association” (2) copy of a draft, drawn by a committee of which Isaac Bronson was chairman and Arthur Bronson secretary, of “Articles of Association” for an “American Joint Stock Banking Company” in 1837; (3) a list of names from which were to be chosen twenty-four directors of the proposed company under the “Articles of Association.” The list reads like a roster of the most prominent men of property in New York, from John Jacob Astor down.

28 February 28, March 13, 15, 20, 24, 28, April 20, 1836, Isaac Letters, BP.

29 Bronson was apparently making dire prophecies in his letters to Whittlesey, for the latter secured permission to publish in the National Intelligencer extracts from Bronson's letters touching on the “derangement of exchanges and its causes.”—Ibid., April 28, 1836. The Intelligencer of this date contains such extracts as were authorized. There is a gap in the letters from Whittlesey between April and the following March, arising either from an actual suspension of communication or, much more likely, the subsequent loss of the letters.

30 Bronson to Cambreleng, May 10, 1836, BPGC.

31 Cambreleng to Bronson, May 12, 1836, ibid.

32 Bronson to Cambreleng, May 19, 1836, ibid.

33 April 20, 1837, Isaac Letters, BP.

34 August 3, 1837, ibid.; letters from McLane, August 15, 1837, Arthur Letters, BPMC. The letters of “Franklin” were published in the Journal of Commerce, August 12, 1837. Miller, p. 228, tentatively identifies “Franklin” as Isaac H. Bronson. There are two errors involved here. Isaac Bronson is not to be confused with Isaac H., his nephew, the son of Isaac's brother, Ethel, of Rutland, N. Y. Also, although “Franklin” presented views held by Bronson, he is better identified as Roger M. Sherman, of Connecticut, nephew of the Roger Sherman of the Revolutionary period, and friend of Bronson. For further data, cf. obituary notice on Sherman in New York Commercial Advertiser, January 14, 1845.

35 Published by Commercial Advertiser, November 29, 1842. For generally favorable editorial comment, cf. issue of November 30. Various manuscript copies in different stages of development are to be found in BPGC.

36 The legislative struggle, although highly interesting, requires no detailed treatment here. Some idea of the factors involved can be derived from letters from Silas Wright, December 10, 1841, February 28, 1842; from Tallmadge, February 7, 1842, December 14, 1842; from Sherman, December 25, 1842; from Cushing, February 11, 1843, Arthur Letters, BPMC. Cf. also Senate Document 133, Twenty-seventh Congress, second session, February 21, 1842, for a report submitted by Tallmadge as chairman of a Select Committee, recommending a fiscal plan which he held out to Bronson as embodying the chief principles of Sherman's draft of a proposed bill; but Sherman and Bronson felt their principles substantially violated, and were sustained in this view by Wright.

37 May 10, 1837, Isaac Letters, BP; May 10, 1837, Isaac Accounts, BPMC.