SVB’s parallel in early American history

The news cycle moves so fast, these days, that unless you have a personal interest in the collapse of the Silicon Valley Bank (SVB), which led the news a few weeks ago, you have already moved on to other ‘breaking news’ such as the indictment of former president Donald J. Trump.

My interest in the SVB is, as Yogi Berra would say, “Déjà vu all over again.”

One of the perks/drawbacks of being a student of American history is finding in it parallels to many current events.  For instance, a vice-president of the United States was once indicted for serious crimes.  His name was Aaron Burr and his crimes were murder and insurrection.  A story for another day.

Right now, the SVB disaster reminds me of what happened to the U. S.’s first quasi-national bank, the Bank of North America, chartered by Congress on January 2, 1782, and run by several Founders of the country including the financier of the Revolution, Robert Morris, and his longtime business partner, Thomas Willing.

The 1782 date is important because it is during the period that I call the American interregnum, the years between the Battle of Yorktown in 1781 (the end of major combat operations of the Revolutionary War) and the inauguration of George Washington as first president in 1789.  The country was not lawless, and had a Congress, but it and the entire national governmental structure was unworkable, imperfections that led to the Constitutional Convention and our democratic form of national governance.  In fact, the BoNA’s charterers had tried and failed to set it up in 1781 in a subscription that fell short because likely investors were still worried about the war’s outcome.

One of Morris’s arguments for the BoNA was that it would act as a clearinghouse for the national government’s income and outgo, and also as the prime lender to the national government.  He installed Willing, known as “Old Square Toes” for his conservative approach to money and life, as its president.  They immediately ran into trouble as the share price dropped below par.  To save it, the board engaged in deliberate deception.  Would-be “subscribers” — depositors — were shown piles of silver coins brought up from the bank’s vault to the main floor by a conveyor belt; what the subscribers didn’t know was that when the belt returned the silver down below, workers would hastily rearrange the coins and send them back up again.  Also, the bank sent out messengers with loan notes to be bought, and they were publicly bought but then surreptitiously returned to the bank.

The shenanigans worked.

Shortly the BoNA was solvent, able to loan the government $400,000 while paying its shareholders an 8 percent dividend.  No wonder that Jeremiah Wadsworth of Hartford became the biggest stockholder, owning even more shares than Morris or Willing.

Then the favored loans began, mostly to directors and their circles of family and friends.  The most flagrant director-borrower was James Wilson, a Scottish-born signer of the Declaration of Independence.  He took $100,000 to invest in the Illinois-Wabash Company, for which he was acting as legal counsel.  Several other directors did similar things, because the end of the Revolutionary War unleashed a rush for land in the west that could be bought wholesale, developed, and re-sold to investors who would retail it at a profit to individuals and groups seeking homesteads.

The land-speculation virus that enveloped America in the 1780s was not that much different from the tech frenzy of Silicon Valley two hundred years later.

In the 1780s, the land speculators soon learned that it took time — and additional money — to develop their new properties to the point of re-sale, and many got into serious trouble while waiting, Wilson and Morris included.  When Washington asked Morris, a close friend, to be the first secretary of the treasury, Morris had to decline because his finances were in such bad shape.  Shortly, he had to default on his debts and went to prison.  Wilson, once quite wealthy, died in debt.

The BoNA was eventually righted and continued on until its governmental-support functions were transferred to an actual national bank.  But the considerable damage done during its heyday has never been fully assessed.

 

Salisbury resident Tom Shachtman has written more than two dozen books and many television documentaries.

The views expressed here are not necessarily those of The Lakeville Journal and The Journal does not support or oppose candidates for public office.

Latest News

A new life for Barrington Hall

A new life for Barrington Hall

Dan Baker, left, and Daniel Latzman at Barrington Hall in Great Barrington.

Provided

Barrington Hall in Great Barrington has hosted generations of weddings, proms and community gatherings. When Dan Baker and Daniel Latzman took over the venue last summer, they stepped into that history with a plan not just to preserve it, but to reshape how the space serves the community today.

Barrington Hall is designed for gathering, for shared experience, for the simple act of being together. At a time when connection is often filtered through screens and distraction, their vision is grounded in something simple and increasingly rare: real human connection.

Keep ReadingShow less

Gail Rothschild’s threads of time

Gail Rothschild’s threads of time

Gail Rothschild with her painting “Dead Sea Linen III (73 x 58 inches, 2024, acrylic on canvas.

Natalia Zukerman

There is a moment, looking at a painting by Gail Rothschild, when you realize you are not looking at a painting so much as a map of time. Threads become brushstrokes; fragments become fields of color; something once held in the hand becomes something you stand in front of, both still and in a constant process of changing.

“Textiles connect people,” Rothschild said. “Textiles are something that we’re all intimately involved with, but we take it for granted.”

Keep ReadingShow less

Sherman Players celebrate a century of community theater

Sherman Players celebrate a century of community theater

Cast of “Laughter on the 23rd Floor” from left to right. Tara Vega, Steve Zerilli, Bob Cady (Standing) Seated at the table: Andrew Blanchard, Jon Barker, Colin McLoone, Chris Bird, Rebecca Annalise, Adam Battlestein

Provided

For a century, the Sherman Players have turned a former 19th-century church into a stage where neighbors become castmates, volunteers power productions and community is the main attraction. The company marks its 100th season with a lineup that blends classic works, new writing and homegrown talent.

New England has a long history of community theater and its role in strengthening civic life. The Sherman Players remain a vital example, mounting intimate, noncommercial productions that draw on local participation and speak to the current cultural moment.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

Reimagining opera for a new generation

Reimagining opera for a new generation

Stage director Geoffrey Larson signs autographs for some of the kids after a family performance.

Provided

For those curious about opera but unsure where to begin, the Mahaiwe Theater in Great Barrington will offer an accessible entry point with “Once Upon an Opera,” a free, family-friendly program on Sunday, April 12, at 2 p.m. The event is designed for opera newcomers and aficionados alike and will include selections from some of opera’s most beloved works.

Luca Antonucci, artistic coordinator, assistant conductor and chorus master for the Berkshire Opera Festival, said the idea first materialized three years ago.

Keep ReadingShow less
BSO charts future amid leadership transition and financial strain

Aerial view of The Shed at Tanglewood in Lenox, Massachusetts.

Provided

The Boston Symphony Orchestra is outlining its path forward following the announcement that music director Andris Nelsons will step down after the 2027 Tanglewood season, closing a 13-year tenure.

In a letter to supporters, the BSO’s Board of Trustees acknowledged that the news has been difficult for many in its community, while emphasizing gratitude for Nelsons’ leadership and plans to celebrate his final season.

Keep ReadingShow less
A tradition of lamb for Easter and Passover

Roasted lamb

Provided

Preparing lamb for the observance of Easter is a long-standing tradition in many cultures, symbolizing new life and purity. For Christians, Easter marks the end of Lenten fasting, allowing for a celebratory feast. A popular choice is roast lamb, often prepared with rosemary, garlic or lemon. It is traditional to serve mint sauce or mint jelly at the table.

The Hebrew Bible suggests that the last plague God inflicted on the Egyptians, to secure the Israelites’ release from slavery, was to kill the firstborn son in every Egyptian home. To differentiate the Israelites from the Egyptians, God instructed them to mark their doorposts with the blood of a lamb. Today, Jews, Christians and Muslims generally believe that God would have known who was Israelite and who was Egyptian without such a sign, but views of God’s omnipotence in the Abrahamic faiths have evolved over the millennia.

Keep ReadingShow less
google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.

google preferred source

Want more of our stories on Google? Click here to make us a Preferred Source.