Affable Failures: Alexander MacAulay, Kin-networks and the Eighteenth-Century Bubble Market (Part 3)

…continued from Wednesday, September 7th…

In 1790, the legislatures of Virginia and North Carolina authorised a canal to be constructed through the Great Dismal Swamp, and for a company to be formed to dig it. Shares in the Dismal Swamp Canal Company were set at $250 and a shareholder would obtain rights to charge tolls. The largest shareholder in the Canal Company after the state of Virginia was Alexander MacAulay. In 1791, he bought 10 shares, by far the most of any individual. Shortly thereafter, he was invited to take up shares of the Dismal Swamp Company, a separate and much older organisation, as he had developed business relationship with several of the partners. He was therefore deeply entrenched in the Swamp, and its future was his. Unfortunately, its future was less than bright. In 1793, a lack of progress on the canal caused share prices to fall 60%.

Theoretically, this should not have affected his retail business. Unfortunately his attempts at diversification suffered from two major flaws. The first was that he had invested far beyond his means. As early as 1785 he had been asking for large loans from Jerdone. Yet, despite living and trading on borrowed funds, he had invested $3000 in the Dismal Swamp and Dismal Swamp Canal Companies. The second flaw in his diversification was that, in truth, it wasn’t particularly diverse. If successful, the canal would transform Norfolk to the hub of commerce for the south, redirecting trade from North Carolina and other Virginian trading centres. As MacAulay ran his shipping ventures from Norfolk, nothing could have been more advantageous. His large number of shares would assure him a hefty portion of the tolls and his shipping business would receive a significant boost in traffic. Again, he had seen the potential for huge economic growth and was able to charm his family and the members of the Dismal Swamp Companies into supporting him. And again, the bubble burst.

Anyone who had studied the history of the Dismal Swamp Company, formed thirty years prior, would have known it was based on dreams. George Washington, a founding member, had lost patience in the 1790s and sold his share. As for MacAulay, by 1795 he was hopelessly in debt. The Dismal Swamp had produced nothing of value and the wars between Britain and France had decimated his retail business. Yet, the perpetually optimistic MacAulay still hoped for a better future. He felt that if he could just get a good number of shipments bought and sold in 1795, he would be out of debt entirely. In the end, however, the financial strain was too much for him. He began speaking fatalistically about his death and hoped only that he should have enough money to leave his wife and young children.

Sadly, his debts only grew in subsequent years. In 1795, he borrowed $2000 from the books of the Dismal Swamp Company and took out a further $8000 the following year. He had done so, against company bylaws, in order to cover losses in his retail business. In 1795, he had lost his case in the Circuit Court over bad bills of exchange, which had been protested because of the loss of his brig Helen, run aground in a hurricane, and the loss of another to British privateers. By 1797, his time seemed to be running out. In November, he knew he would not overcome his debts and he left his entire estate in the hands of trustees, namely Jerdone and the managers of the Dismal Swamp Company. As these men were friends and family, he hoped they would not leave his widow completely destitute. Thus, with a writ of execution threatening to auction off his property to repay his debts, MacAulay succumbed to death.

Yet, even in death, MacAulay’s family network, forged through charm and affection, served his interests well. The estate in peril, Jerdone and the remaining partners of the Dismal Swamp Company attempted to preserve the plantation in Yorktown, if nothing else, from the auction block. Though almost all her husband’s assets were quickly taken at well below market price, her brother and mother were able to maintain for her the Yorktown plantation and the majority of her slaves and household goods. One other light shone for Elizabeth. Out of friendship, or perhaps gentlemanly pity, his partners felt they should buy out Macaulay’s interest in the Swamp Companies. Elizabeth was delighted and felt she had finally made an advantageous sale. Unfortunately, ten years later, the indecisive partners were still discussing the matter. Nonetheless, Jerdone continued to take particular care of his sister, niece and nephews, funding their education and trying to protect them from the tumultuous life their father had led. That is, of course, until Sandy ran away to join Bolivar’s army. But that’s a story for another day.

So, in the end, what does MacAulay offer to historians?

He stands as an example and a point of entry to understanding the independent merchants of Virginia in the last quarter of the eighteenth century. While large firms left, he stayed and attempted to maintain Virginia’s role in Atlantic trade, and expand it into the new western lands. He attempted to be part of a new class of merchants; one that was independent of the large British firms yet maintained the South’s direct commerce with Britain, rather than the Northern ports. Most important, he was an affable failure, who, through his expanding family connection, managed to survive two market bubbles and, despite his death, protect his young family from a third.

Note: A fuller account of MacAulay is currently being prepared for publication. If you have any questions or comments, please feel free to contact me at m.beals@warwick.ac.uk or via twitter at @mhbeals.

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