The Square Pegs (38 page)

The peace that followed the successful Revolution was an uneasy one. While the thirteen states wrangled over ratification of the new constitution, their citizens suffered from a growing economic depression. In Massachusetts exports dropped 75 per cent. Not only was trade stagnant, but also the torn young government was buckling under war debts. One of the most immediate problems for the average man was the depreciation of state securities and federal currency.

It was in this monetary travail that the phrase “not worth a Continental” originated.

The legend on a federal bill gave promise of sound, solvent government: “Continental Currency. Twenty Dollars. This Bill entitles the Bearer to receive Twenty Spanish milled Dollars, or the Value thereof in Gold or Silver, according to the Resolutions of the Congress, held at Philadelphia, the 10th of May, 1775.” In less than a decade this scrip was hardly worth the paper it was printed on. With inflation it required five of these Continental twenty-dollar bills to purchase a single cheap calico dress, and bales of the currency to purchase goods or property of real value. Veterans of Valley Forge and Bunker Hill had been paid off in this now almost worthless money. Ordinary citizens had patriotically invested much of their earnings in now depreciated state bonds. Inhabitants of Newburyport were among the hardest hit. Many had invested in Massachusetts securities, which rapidly lost value until they were worth only “about two shillings and sixpence on the pound.”

This crisis inspired Timothy Dexter’s most decisive gamble. Gathering together all the hard cash he could lay his hands upon, his savings of years and his protesting wife’s assets, he began to buy up the seemingly worthless Continental currency and state securities. With good money, he bought bad. He gave one gold dollar for perhaps five or ten or twenty Continental dollars. In cash he was soon poor. In paper, and on paper, he was wealthy beyond his wildest fancies. Yet, what he had bargained for, and now possessed, was truly not worth a Continental. Why had this perspiring tanner, this frugal caretaker of six dependents, this solid and stable Informer of Deer, taken so mad a risk?

Most historians pay lip service to the judgment of Samuel Lorenzo Knapp, who had simply maintained that Dexter was a lucky fool. Knapp’s knowledge of Dexter was such that few who wrote after him dared to contradict him. For Samuel Knapp knew Dexter personally. As a matter of fact, Knapp was born in Newburyport shortly before the Continental o-amble. Though he had been educated at Dartmouth, had studied in France, and had practiced law in Boston, he spent much of his time in Newburyport. Once he even went to jail there for debt. It was in jail that Knapp seriously undertook a literary career. He wrote the first biography of Daniel Webster. He wrote lives of General Lafayette, De Witt Clinton, and Aaron Burr. Finally, in the very last year of his life, he put to paper the story of Timothy Dexter. His
Life of Timothy Dexter
appeared thirty years after its subject’s death. In it Knapp revealed that he had spoken to Dexter frequently and that his book was based on “memoranda made many years ago.” According to Knapp’s memoranda, Dexter, in his currency investments, had idiotically and blindly aped the investments of others, unaware that they had been motivated by philanthropy rather than profit.

“Two benevolent gentlemen in Boston, John Hancock, governor of the commonwealth at the time, who had formerly been president of the continental congress, and Thomas Russel, the most eminent merchant then in America, to keep up the public confidence and to oblige a friend would make purchases of these securities until the amount was considerable,” recorded Knapp. “This had the desired effect in some measure, and a few other purchasers were found, but hard money was so scarce that not much was done in this brokerage. Dexter, finding his great neighbors, Hancock and Russel, doing something in stocks, took all his own cash with what his wife had, and in imitation purchased likewise. He probably made better bargains than the magnates did. He bought in smaller quantities, and had better opportunities to make his purchases than they had. He felt he could live on his industry, and ventured all on the chance of these securities ever being paid.”

Not until 1887 did anyone challenge Knapp’s assertion that Dexter had blundered into his riches by “imitation” of “two benevolent gentlemen in Boston.” In that year William C. Todd, writing in the
New England Historical and Genealogical Register
, cast a stern eye on the “patriotism” of Hancock and Russell. He implied, though he did not state, that Hancock, Russell, and a number of other members of Congress were attempting to profiteer on inside information that the government would soon assume state debts, redeem state bonds, and stabilize wartime currency. Todd made it plain that Dexter had as much knowledge or foresight as Hancock and Russell and as much daring, in attempting to make “money out of the depreciated securities of the government and state.”

“The Dexter … of Knapp’s Life and of common belief, the fool who made his money by senseless speculations that always turned out well, is a fiction,” Todd contended. “The real Dexter, with all of his folly, acquired his property as other people do by prudence, industry and business sagacity, which gave him a fortune for that period.” Todd readily admitted that Dexter was “a vain, uneducated, weak, coarse, drunken, cunning man, low in his tastes and habits, constantly striving for foolish display and attention.” But he reiterated that Dexter, for all his foolishness, was possessed of a “business shrewdness, to which, and not to luck, he owed his success.”

When Dexter at last possessed his huge hoarding of paper currency, he waited nervously for news that it might be redeemed at par. It was a suspenseful and painful interlude, inasmuch as Dexter was constantly scolded by his wife and chided by his neighbors for his stupidity. In this harrowing period Dexter had eyes and ears for only one name and one man. His entire future was staked on the political talents and persuasiveness of brilliant, handsome, young Alexander Hamilton, Washington’s first secretary of the Treasury.

Hamilton, who championed big government, big industry, big cities, and big banks, was strongly opposed by Washington’s secretary of State, Thomas Jefferson, who visualized America as a more temperate agrarian nation. Timothy Dexter’s hopes rode on Hamilton’s vast funding plan, which Jefferson’s Southern friends disliked. Hamilton advocated a Bank of the United States to issue paper money and to keep it stable, and he wanted the $18,000,000 in bonds that had been printed and sold by the various states and the $52,000,000 worth of bonds that had been issued by the federal government to be funded at full face value. Fie insisted that this was a matter of honor and good business. The House of Representatives voted the measure down.

Undiscouraged by the rebuff, Hamilton met Jefferson over dinner and proposed a horse trade. If Jefferson would encourage Virginia legislators to back the assumption bill, Hamilton would find New York legislators to support the establishment of the national capital on the Potomac River, a step that Jefferson much desired. Jefferson agreed to the deal, to his subsequent regret. In a short time Hamilton’s assumption bill was pushed through Congress. Hamilton’s friends and colleagues, as well as speculators, made $40,000,000 profit by cashing in the securities and currency that had so recently been called trash. And overnight Timothy Dexter, of Newburyport, was a wealthy man.

His first reaction to sudden riches was a belief that they made him the equal of all other men with money, no matter what their ancestry or station. He felt that he belonged in the dazzling world of the Hancocks and Russells. It is thought that he tried to enter Boston society, but without success. Next he attempted to mingle with the older families of Salem, and again was snubbed. Finally, he returned to Newburyport, fully confident that he would be accepted in its better social circles. There were, indeed, people worth cultivating in the seaport town. John Quincy Adams, after he became president, often recalled his days as a law student in Newburyport and always thought its society better than that of Washington.

“Most of the leading families were but one generation removed from the plough or the forecastle,” Samuel Eliot Morison has pointed out, “but they had acquired wealth before the Revolution, and conducted social matters with the grace and dignity of an old regime… . We read of weekly balls and routs, of wedding coaches drawn by six white horses with liveried footmen, in this town of less than eight thousand inhabitants.” This was the society Dexter longed to join. True, he had made his thousands
after
the Revolution, and by means which many of his fellows resented, but nevertheless he was rich. However, mere riches were not enough. His social superiors neither answered his cordial invitations nor offered invitations of their own. Once more Dexter was ignored.

This time he decided to fight back. Gold evidently was not enough. One needed tradition and roots. But could these be bought? Dexter thought that they could. It was still a period of depression, and real estate was cheap. One of the very best houses in Newburyport, in all New England in fact, the large brick mansion on State Street owned by the famous Nathaniel Tracy, was on the market at a price far below its value. Dexter snatched at the bargain. Within two days the great Tracy was out and the appalling Dexter was in and all Newburyport society was struck speechless.

To appreciate the dumfounded silence with which this move was met, one must know the man who had been replaced by a half-literate leather-dresser. Nathaniel Tracy, two years younger than Dexter, had been born to wealth, had been graduated from Harvard at the age of twenty, and had returned to Newburyport to become a merchant as his father had been before him. Forming a partnership with the clever and genteel Jonathan Jackson, young Tracy had employed a fleet of sailing ships for exporting and importing. With the revolt against the British at its height in 1775, Tracy applied to the General Court of Massachusetts for license to convert his merchant ships into privateers. The British were caught unprepared by this legalized piracy, and Tracy’s flotilla captured 120 English vessels and almost $4,000,000 worth of cargo. The profits were staggering. Tracy built the magnificent square brick-house on State Street, furnished the interior with carved banisters, gilded mirrors, liveried Negro servants, and a fully stocked wine cellar. He entertained with dignity and elegance. “He was,” remarked a neighbor, “a gentleman of polished manners and fine taste.” But the day of reckoning came soon.

George III commanded his finest frigates and heavy-gunned vessels to the colonial war. The Yankee privateers were swept from the seas. Of the 24 privateers owned by Tracy and Jackson, 23 fell into enemy hands. Of the no merchant ships they owned, 97 were captured or destroyed by the British. At least $3,000,000 in cargoes was lost. And though Tracy had lent his embattled government $160,000, and had sold the Army clothing and supplies on credit, he could obtain none of his investment back at war’s end. Soon he could no longer support the house. He retired to a rented farm in the country, while Timothy Dexter moved into State Street and a new era was ushered in for Newburyport.

With quiet desperation, Dexter tried to emulate Tracy. He spared no expense in furnishing the house. He attired himself in the manner befitting a gentleman of means. He rode through town in a splendid coach drawn by two horses. He rode through town and he rode back again. There was no one of importance to see. No one of importance came to see him. He discovered Tracy’s wine cellar, stocked it with the choicest European imports, as well as with the locally made Laird’s ale and porter and the best whiskeys and rum produced by Newburyport’s many distilleries. Amid his bottles he languished in high spirits, and when he emerged he was a new man. No longer would he try to be Tracy. Henceforth he would be himself and one day, yet, he would make his neighbors “hang there heads Doun Like A Dogg.”

Hides and tannin were things of the past. He aspired higher. Salem land records still give evidence of Timothy Dexter’s rise. The earliest conveyances identify him as a “leather dresser.” Later, he is a “trader,” then a “merchant,” and finally, at retirement, a “gentleman.” After his acquisition of the brick house, Dexter directed his energies toward the world of commerce. In 1790 he built the 171-ton brig Mehitabel, and two years later the 153-ton
Congress
. He exported goods to Europe and the Indies, West and East, and his wealth multiplied and his fame grew. But the Dexter legend was not created by the profits he made. It was created, rather, out of the means he employed to make these profits.

Timothy Dexter sent coals to Newcastle. He sent warming pans and woolen mittens to the semitropical West Indies. He sent English Bibles, opium, and live cats to foreign lands, and glutted his warehouse with whalebone. And, most incredibly, on each of these transactions he made a profit. He boasted, afterwards, that on the whalebone alone he had earned “one tun and halfe of silver on hand and over …”

How could anyone not go bankrupt on such merchandising eccentricity? It might be instructive to know the dizzying details as set down, quite frankly, by the master himself in
A Pickle for the Knowing Ones
.

“How Did Dexter Make His Money ye says bying whale bone for staing for ships in grosing three houndred & 40 tons—bort all in boston salum and all in Noue york under Cover oppenly told them for my ships they all laffed so I had at my oan pris I had four Counning men for Rounners thay found the home as I told them to act the fool … all that time the Creaters more or less laffing it spread very fast here is the Rub in fifty days they smelt a Rat found where it was gone to Nouebry Port spekkelaters swarmed like hell houns to be short with it I made seventy five per sent …”

In less Chaucerian prose, Dexter had employed cunning runners or agents, men who would act naive, to purchase 340 tons of whalebone in Boston, Salem, and New York to be used for “stay stuff” on his ships. Those who sold the excessive quantity of whalebone laughed at the idiocy of the purchase. Dexter had the last laugh. He made 75 per cent profit on his investment.