Every figure in this series so far was ruined by something forgivable. Robert Morris by conviction, Haym Salomon by generosity, James Wilson by belief in his own thesis, Henry Knox by living the dream a little too literally. This installment is different. William Duer was ruined by the thing Wall Street would spend the next two centuries being ruined by, and he got there first: borrowed money, inside position, and a one-way bet.
He signed the Articles of Confederation. He was the United States Treasury's first assistant secretary. And on March 9, 1792, he stopped paying his creditors, cracked the young republic's securities market by more than 20 percent in a matter of weeks, and set in motion the first financial panic, the first federal market rescue, and, in the wreckage, the meeting of brokers that became the New York Stock Exchange. He died in debtors' prison. Almost nobody knows his name, and unlike the rest of this series, he'd probably prefer it that way.
The most interesting résumé in the founding
Duer's origin is nothing like the orphaned clerks and bookbinders this series usually meets. Born in Devon, England on March 18, 1743, son of an Antigua plantation owner, educated at Eton, he served as an ensign and went to India in 1762 as aide-de-camp to Robert Clive, the conqueror of Bengal. He inherited plantations in Dominica, came to New York in 1768 to arrange lumber, and stayed: land at Fort Miller near Albany, sawmills, warehouses, a store, and by 1773 a Royal Navy contract for masts and spars.
When the Revolution came, the Crown contractor turned rebel with striking speed and total commitment. New York's Provincial Congress in 1775, the committee that drafted New York's first constitution in 1776, the state senate, then the Continental Congress in 1778 and 1779, where he served on finance committees and the Board of War alongside John Adams and Robert Morris, and put his signature on the Articles of Confederation. In 1779 he married Catherine Alexander, "Lady Kitty," daughter of the American general Lord Stirling; they had eight children. Wealth, war service, a founding signature, an aristocratic wife: by 1780 William Duer had assembled the complete founding-elite kit.
What he did with it is the cautionary part.
The machine of schemes
Peace turned Duer into the young republic's most relentless operator. Two ventures define him.
The first is the Scioto Company, organized in 1787 as the Northwest Territory opened. Its Paris arm, the Compagnie du Scioto, run through the poet Joel Barlow and a Scottish agent named William Playfair, sold French buyers roughly 150,000 acres of Ohio land in the fearful early days of the French Revolution. The deeds were worthless: the company held only an arrangement with the Ohio Company and never completed the underlying purchase. Two hundred eighteen emigrants sailed anyway in 1791 and learned on arrival that their company owned no land at all. I've told their full story, America's first real estate scam and the settlers who paid for their land twice, on the Condo Trap blog, because its lessons about title are evergreen.
The second venture ended the world's patience. When Hamilton organized the Treasury in 1789, he made Duer his first assistant secretary, putting the republic's most aggressive speculator inside the building where the debt was being restructured. Duer soon left office and went all-in on the trade of the decade: with Alexander Macomb and a circle of partners, he set out early in 1792 to corner the market's benchmark paper, driving up United States debt securities and bank stocks, financing the position by a lattice of mutual endorsements, partners guaranteeing each other's notes, credit conjured from a circle of signatures. He borrowed from everyone, and contemporaries recorded everyone as meaning everyone: merchants, widows, tradesmen, anyone with savings and an appetite for his promised returns.
The timing was catastrophic in a way modern readers will find familiar. The brand-new Bank of the United States had expanded credit aggressively from its opening in December 1791, then reversed: between December 29 and March 9 its cash reserves fell 34 percent, and it declined to renew nearly a quarter of its thirty-day loans. The easy money that had floated the corner was called in mid-corner.
Nine days in March
On March 9, 1792, Duer stopped payments to his creditors. The same day, a lawsuit landed over shortfalls in his old accounts from the Treasury Board days, the government reaching back for money even as the private empire fell. Securities prices dropped more than 20 percent in a matter of weeks; the contagion of protested notes spread through New York exactly the way his web of mutual endorsements had been built, signature by signature. Within about two weeks of his default, William Duer, signer of the Articles of Confederation, was in debtors' prison, in part for his own protection from the people outside it.
What happened next created two American institutions. First, his old boss invented the market rescue. Hamilton, working through the Sinking Fund Commission, authorized $100,000 of open-market security purchases on March 26, added $150,000 more through the Bank of New York by mid-April, and promised the bank support of up to $500,000 if needed. By April 16, per the standard account of the panic, market demand was returning to normal. The playbook every modern central banker reaches for in a crisis, buy the panic, backstop the banks, announce a number big enough to calm the room, was improvised in five weeks to clean up after one over-borrowed insider.
Second, the market wrote itself rules. In the same March the crash was running, New York's brokers met at Corre's Hotel to bring order to the securities business, and on May 17, 1792, twenty-four of them signed the Buttonwood Agreement, two sentences fixing a minimum commission and pledging the signers to "give preference to each other in our Negotiations." The New York Stock Exchange counts that date as its founding. The exchange that would one day process every American boom and bust was organized, in its first form, in the debris field of William Duer.
Seven years in the New Gaol's shadow
There was no third act. Duer never emerged from insolvency; he remained confined as a debtor for the rest of his life, roughly seven years, and died in New York City on May 7, 1799, at fifty-six. The man who had dined with Clive in Bengal, married a general's daughter, signed the Articles, and sat at Hamilton's right hand ended in a debtors' cell like Robert Morris, whose ruin the Panic of 1797 would complete the following decade, and like Morris he even shares this series' strangest club: prominent founder, catastrophic finish, near-total erasure.
But the file reads differently from Morris's, and the difference is worth stating plainly. Morris signed his own name and sank his own fortune into a cause and then a bet. Duer's engine ran on other people's signatures and other people's savings, gathered while trading on a public reputation earned inside the Treasury itself. The republic's first market crash wasn't a weather event. It was authored.
Which is why his real monuments are procedural: the first open-market operations, the first broker self-regulation, the reflex, never afterward unlearned, that markets need rules because someone will always be Duer. Every trading halt, margin requirement, and insider-dealing statute is, in ancestry, a plaque with his name on it. I've drawn out what his collapse teaches about borrowed conviction, on the W-2 Trap blog, because the mechanics of 1792 have not aged a day.
Related reading
- Robert Morris: The Founding Father in the Capitol Dome Nobody Can Name: his Board of War colleague, and the other founder to die a debtor.
- Henry Knox Hauled 60 Tons of Cannon Through a Winter. Maine Broke Him Anyway.: Knox's first Maine land partner was Duer, before William Bingham took the seat.
- William Bingham Was the Richest Man in Early America. You've Never Heard of Him.: the speculator who ran the same era's opportunities without the borrowed money.
- Albert Gallatin Ran the Treasury Longer Than Anyone. America Remembers the Man He Fought.: the man who spent thirteen years paying down the debt Duer's generation traded.
Fact-check notes and sources
- Biography (born March 18, 1743 in Devon, Antigua planter father, Eton, ensign and aide-de-camp to Clive in India in 1762, Dominica estates, New York from 1768, Fort Miller land, sawmills and store, the 1773 Royal Navy mast contract, Provincial Congress 1775, New York constitution drafting committee 1776, state senate, Continental Congress 1778-1779, Board of War with Adams and Robert Morris, signing the Articles of Confederation, the 1779 marriage to Lady Catherine Alexander daughter of Lord Stirling, eight children, first Assistant Secretary of the Treasury under Hamilton, bankruptcy in the Panic of 1792, confinement in debtors' prison for his remaining seven years, death in New York City May 7, 1799): Wikipedia, "William Duer (Continental congressman)", attributed as the consolidated account.
- The Panic of 1792 (the Duer-Macomb attempt to drive up United States debt securities and bank stocks, financing by mutual endorsements, Bank of the United States credit expansion from December 1791 and the 34 percent reserve contraction between December 29 and March 9, refusal to renew nearly 25 percent of thirty-day loans, Duer stopping payments March 9, 1792 alongside the lawsuit over his prior Treasury Board accounts, securities falling more than 20 percent in weeks, Hamilton's response through the Sinking Fund Commission: $100,000 of open-market purchases authorized March 26, $150,000 more via the Bank of New York by April 16, the standing offer of up to $500,000, and normalization by April 16): Wikipedia, "Panic of 1792".
- The Scioto Company (1787 organization, the Compagnie du Scioto in Paris in 1789 under Joel Barlow with agent William Playfair, roughly 150,000 acres of worthless deeds sold to French buyers, the company holding only an arrangement with the Ohio Company, the 1790 collapse, the 218 emigrants of 1791 told on arrival that the company owned no land): Wikipedia, "Scioto Company".
- The Buttonwood Agreement (the March 1792 meeting at Corre's Hotel "to bring order to the securities business," the May 17, 1792 signing by twenty-four brokers, the quarter-percent commission floor and the quoted "give preference to each other" pledge, and the New York Stock Exchange's dating of its founding to it): Wikipedia, "Buttonwood Agreement". That article does not itself link the agreement to the panic; the timing juxtaposition here is exactly that, with both dates sourced.
- Details sometimes attached to Duer's story, the name of his prison and a mob assembling outside it, appear in none of the sources consulted and are omitted.
This post is informational, not financial advice. Historical institutions are mentioned as nominative fair use; no affiliation is implied.
