The name Hamilton has perhaps never been more prominent, especially on Wall Street, thanks in large part to the acclaimed Broadway musical about the Founding Father who essentially created the nation’s financial system as the first secretary of the Treasury. Alexander Hamilton is undeniably a figure of global historical import, but even history buffs may be surprised to learn of another American of that name who also broke ground in the world of finance in centuries past, living a life that was far more complex and dramatic than is typically seen in textbooks.
Jeremiah Hamilton was America’s first black millionaire, accomplishing that feat around the time of the Civil War, when most among New York City’s population of African-Americans were treated as second-class citizens or worse. He made his fortune on Wall Street, through a canny knowledge—and skillful, perhaps illegal, manipulation—of the insurance and real-estate markets, as well as through services that are the forerunners to modern-day asset management and hedge funds.
At one point, he was a major shareholder in railroad companies—railroads he was not allowed to ride due to the color of his skin.
For a variety of reasons—including his own private tendencies and the biases of popular history, which have tended to minimize the contributions of minorities, particularly people this controversial and contradictory—the story of this Hamilton’s life is little known today. However, it provides great insight not just into the history of race relations in America but also into American finance as an industry. If you think Wall Street is cutthroat now, imagine what it was like nearly 200 years ago, when a lack of regulation and organization made it a veritable, and violent, free-for-all.
MarketWatch recently spoke with Shane White, the author of “Prince of Darkness,” the first-ever biography of Jeremiah Hamilton, which was recently optioned by the actor Don Cheadle, who, White reported, would be making it into a miniseries for HBO. He discussed what made Hamilton such a unique figure of his time, how Wall Street has changed since his era, and the ways it hasn’t.
MarketWatch: Jeremiah Hamilton occupies a unique place in American history, but I had never heard of him, and you write that most people haven’t. How did you first come across his story?
Shane White: I first saw the name when doing research for another book and was reading through old newspapers. There was a caption on a story about a $50,000 fraud that referred to “Nigger Hamilton.” I assumed it was referring to a white man, because the story involved Wall Street and because the amount of money was so large, the equivalent of $10 million today. I simply thought it was a derogatory name for a man who wasn’t respected. Even today you don’t have to go too far into hedge funds to find retrograde nicknames like that. Since the book came out, a few Indian-Americans have told me their white coworkers have given them similarly racist names.
When I went back and checked my archives I realized I had run into the same man some 15 years [earlier], running counterfeit coins down to Haiti. And I realized that, according to that story, whatever else he was, he was a black man.
I kept running across the name in old news, and became so intrigued that I started looking for him. I eventually had enough material for a book, although it’s an unusual book, as there’s so little information about him. This is a time when every goddamn Puritan kept a diary that recorded their thoughts on every passing cloud, and Hamilton did none of that. A couple of quotes in court records are the only direct quotes you can find.
MW: You mentioned a fraud case and make the case that Hamilton was pretty ruthless in building his fortune and in dealing with people.
S.W.: The case essentially alleged that a boat had been overinsured and then sunk. It appears Hamilton was involved in getting people to pretend they were someone involved with the boat, so that they could claim the insurance.
No one was convicted, but it looks like he had been involved, and it looks like he was probably guilty. However, the prosecution, to ensure they won, got a witness very drunk so they could teach him the lines they wanted to perform. Surprise, surprise — there was corruption on all sides back then.
Hamilton established himself with this kind of scam in the 1830s. This was a time when insurance companies were only just establishing themselves; part of the reason they form an industry association is so they could try and get rid of people like Hamilton. They started passing information amongst themselves about which captains had a habit of running ships aground, and they mutually decided not to insure those people.
MW: It seems remarkable, given the times, that he could’ve amassed the fortune he did.
S.W.: Hamilton was brilliant, very clever and farsighted. One of the whole points of Jim Crow and segregation was to keep the black population uneducated and in lousy working positions, denying them a chance to get ahead. It isn’t surprising that standing at the end of a broom didn’t appeal to a lot of people, which meant they had to get into numbers running or become con artists to make money. They were almost forced into it.
You have to remember that New York in the 1830s is really the free market unburdened by any regulation whatsoever, and the result is just horrible. People were getting ripped off and defrauded all the time. It was really dog-eat-dog, and that’s what appealed to me about Hamilton. A lot of trailblazing African-Americans, like Jackie Robinson, had someone standing over them, telling them to be meek and rein in their anger about the way they were treated. They had to behave in the most temperate fashion possible or risk the wrath of white people. But Hamilton isn’t like that. You hit him in the face, he adds 10% and hits you back. He’s so aggressive. He gets a reputation as the “Prince of Darkness,” for multiple reasons.
There’s a story where he’s in the middle of a legal feud with two white men. They have him arrested at 11 p.m., knowing he wouldn’t be able to post bail until the next morning, and he spends a very uncomfortable night in jail. Then, two weeks later, he has them dragged out of bed at 5 a.m. and gets the bail set so high that they’re unable to get out for several days. He made it abundantly clear he was going to play hardball. Anyone who thought they could roll him over, for whatever reason, was quickly disabused of that notion.
Cornelius Vanderbilt, one of the wealthiest men in American history, has been quoted as saying that the only man he ever respected in a Wall Street battle was Hamilton. I really think Hamilton could’ve been another Vanderbilt, had the playing field been anything close to level. He had the talent to go a lot further than he did, had things been equal. At one point, the New York Stock Exchange resolved that anyone who bought or sold shares to Hamilton would be expelled from its membership. Apparently this was because Hamilton said something disrespectful to another member. Now, I’m sure that he deserved some of his mistreatment, because he was almost assuredly behaving illegally or ruthlessly, but I’m also sure that whites were doing the same without similar penalties. Beyond Hamilton, the insurance industry had a “black ban” for a while, and the New York Stock Exchange tried to.
MW: So mistreatment was common.
S.W.: New York was in a funny place at the time, because it was so tied to the South. There was serious talk about the city succeeding so it could continue trading with the South. New York was a stop on the Underground Railroad, but it wasn’t a destination. It was well-known for not being safe for runaway slaves. It wasn’t safe for people like Hamilton, but he wanted to be there because that was where he could make money.
Blacks were very visible in New York, and there was a lot of crossover. Tap dancing was invented around this time, and it became a craze in both white and black society. A lot of ideas were being passed back and forth. But it was also very violent, a real cultural convulsion to slavery ending. If there was a black man with a white woman, that was a provocation to a riot.
But that’s what makes Hamilton so fascinating. When he was 30, he got a 14-year-old white girl pregnant. But he doesn’t disappear—it becomes a 40-year marriage! They have 10 children! He broke all the stereotypes. He walks down the street and he’s not even a second-class citizen, but then in his day job he’s a master of the universe.
A man like him is constantly waiting for violence, and it eventually arrived in July 1863, during the draft riots. That was probably New York’s worst week ever, in terms of race relations. There’s a mob that bursts into the street chanting “68! 68!”—Hamilton’s address was 68 E. 29th St. They burst into his basement, find his wife, and say, “We want your husband. We’re going to string him up from the lamppost.” Now, he wasn’t an idiot; he jumped the back fence and disappeared.
MW: Do you have any idea how the rest of the city’s black population viewed him?
S.W.: Hamilton had nothing to do with other blacks. I’m sure he regarded himself as a separate category.
There’s a restaurant in New York that actually still exists, Delmonico’s. Hamilton desegregated it, just ignoring how whites were the only people allowed in. He was able to do that because in addition to having money, he also had a lot of chutzpah.
There were a few other notable black businessmen at the time, and the way Hamilton differs from them is telling. A man named Thomas Downing owned a popular oyster restaurant where a lot of rich and influential white people ate. He didn’t allow blacks into his establishment, but he otherwise tried to fight segregation, writing checks for civil-rights causes. He was caught between his own views and what his business demanded. Hamilton wasn’t like that. He had nothing to do with other African-Americans, and, while he took in some charity cases, they were all white. He had servants, but they were Irish. He lived in a white world, with a white wife, white friends and a white business. He had as little contact with the African-American population as any other rich white guy on Wall Street did.
MW: How do you see Hamilton as a reflection on what Wall Street is currently like?
S.W.: There’s a lot about his conduct that seems familiar. Hamilton operated pools of money, where people would give him money and he would invest it for them. It was kind of a forerunner to hedge funds. He used their money ruthlessly—if he made a profit, he would keep it, and if he made a loss he would spread that loss around. He only gave away enough of his profits that he could keep getting clients.
Beyond him, there was a form of gambling called “insuring the lottery.” The lottery was banned in New York in 1843, so people would gamble on what the numbers would be in Delaware, New Jersey and Maryland. It took a few hours for the numbers to come, so some people—call them entrepreneurs, capitalists or crooks—spent $6,000 to have people stand on hillsides and flash a symbol of what the numbers were. They were able to get the numbers in 20 minutes doing this, and then they made even more money selling both fake numbers and the correct numbers. When I learned about this I thought about the Michael Lewis book “Flash Boys,” which is about how trading firms would spend all this money so they could execute a trade a microsecond faster. Wall Street has always been ruthless.