Andrew Dexter Jr. | |
|---|---|
 1808 portrait byGilbert Stuart | |
| Born | Andrew Dexter Jr. (1779-03-28)March 28, 1779 |
| Died | November 2, 1837(1837-11-02) (aged 58) |
| Alma mater | Brown University |
| Occupation(s) | Attorney Businessman Land speculator |
| Years active | 1798-1837 |
| Known for | Commission of one of the first large-scale financial frauds in the United States |
| Notable work | Exchange Coffee House,Boston,Massachusetts |
| Spouse | Charlotte Morton (1787-1819) (m. 1808-1819, her death) |
| Children | 3 |
| Parent(s) | Andrew Dexter (1751-1811) Mary (Newton) Dexter (1757-1825) |
| Relatives | Samuel Dexter (uncle) Simon Newton Dexter (brother) Perez Morton (father-in-law) |
Andrew Dexter Jr. (March 28, 1779 – November 2, 1837), was an Americanlawyer,financier, andspeculator. He is known for committing one of the first major financial frauds in theUnited States, and for being the founder ofMontgomery, Alabama.
A graduate ofBrown University, Dexter was admitted to the bar and briefly practiced law before turning to business and financial speculation. Around 1805 he conceived the idea of a large office building with public meeting space, and began construction of theExchange Coffee House inBoston. Dexter resorted to printing massive quantities of worthless bank notes to pay for construction and operation of the building; when his fraud was uncovered, he lost control of the venture and fled the country to escape his creditors. He later returned fromCanada, and lived inNew York while he worked to repair his finances and settle his debts.
Following the death of his father, Dexter inherited a claim in theYazoo lands. At the 1817 Yazoo lands auction, he purchased several hundred acres along theAlabama River, and settled a town he called New Philadelphia. When Alabama joined the Union in 1819, Dexter's town was renamedMontgomery. He lived there and continued trying to achieve success in business and land speculation, but his circumstances continued to rise and fall with turns in the economy. He died inMobile, Alabama in 1837, and was again near poverty as the result of setbacks caused by thePanic of 1837. Dexter was buried in Mobile, but the exact location of his gravesite is not known.
The son of Mary (Newton) Dexter and Andrew Dexter Sr., a successful merchant and one of the first cloth manufacturers in America, the younger Dexter was born inBrookfield, Massachusetts, on March 28, 1779.[1] He was raised inProvidence, Rhode Island and graduated fromBrown University in 1798.[2][3] He thenstudied law in the office of his uncleSamuel Dexter, wasadmitted to the bar, and became an attorney inBoston.[2][3]
In the early 1800s Dexter left the law to become involved in business and finance.[4] In 1807 he began construction of theExchange Coffee House.[5] At seven stories, the tallest building in Boston at the time, the site was planned as a location for business offices, reading rooms, conference rooms and dining rooms to facilitate public meetings and the transaction of business.[5] In Dexter's concept, the Exchange Coffee House would also provide a service by helping establish the relative value of the bank notes of the various financial institutions in and around Boston.[6]
At the time, banks transacted business by issuing paper notes that could be redeemed for their value in gold or silver.[5] Banks, merchants, businessmen and workers generally exchanged the notes between each other at a discount to facilitate commercial transactions, and the discounts varied widely depending on each bank's reputation, its distance from the locality where business was being conducted, and other factors.[5] Traders in bank notes in the Boston area set the local discount rate by conducting business in outdoor meetings on several city streets.[5] Dexter intended for the bank note traders to formalize their business by providing them indoor space at the Coffee House.[5]
To finance the construction of the Exchange Coffee House, Dexter took advantage of this unregulated system by starting or gaining control of banks located far from Boston, including ruralRhode Island,Western Massachusetts,New Hampshire,Maine andMichigan, and issuing bank notes that far exceeded the banks' gold and silver deposits.[5] His intent was to circulate in Boston bank notes from locations so far away that no one would ever attempt to redeem them.[5] This meant that he could issue bank notes in unlimited quantities, as long as no one suspected there was not sufficientspecie to back them.[7]
In 1807PresidentThomas Jefferson implemented anembargo againstGreat Britain andFrance as a protest against violations of American neutrality during theNapoleonic Wars.[5] Business in the United States slowed as a result, and holders of bank notes began to redeem them for specie.[8] In addition, the traders in bank notes whom Dexter hoped to entice into the Exchange Coffee House to conduct their business preferred to continue working outdoors, so he did not realize the increased customer traffic and rents he anticipated.[9]
Becoming suspicious of Dexter's machinations, in 1808 a group of Boston merchants led byNathan Appleton took their story to the press.[5] As a result, shopkeepers began to refuse the bills issued by Dexter's banks, meaning he could no longer pay suppliers and workmen.[5] Appleton and his allies then paid individuals called "runners" to travel throughout the country, turning in to the issuing institutions the bank notes the Boston merchants had accepted as payment for goods and services and demanding payment in specie.[5] When the banks proved unable to redeem their paper currency, they collapsed.[10] By 1809 the extent of Dexter's fraud became widely known, and his wife and he fled toNova Scotia to avoid prosecution.[11]
Ownership of the Exchange Coffee House passed on to other investors, and it remained open and partially occupied until it was destroyed in an 1818 fire.[12]
Dexter later relocated toAthens, New York, where he lived with his father and brother, who assisted him in usingNew York's lenientbankruptcy laws to partially satisfy his creditors and rebuild his finances.[13]
Dexter's father died in 1811 and Dexter inherited his father's claims to purchase at a discount lands inGeorgia and what is nowAlabama (part of theYazoo lands).[14] At the 1817 auctions inMilledgeville, Georgia, which followed the end of theWar of 1812, Dexter bought several hundred acres on the east bank of theAlabama River near aCreek Indian trading post, where he founded a town called New Philadelphia.[15] When Alabama entered the union in 1819 Dexter's town was renamed Montgomery.[16]
Charlotte Dexter, Andrew's wife, died in 1819 just weeks after their arrival in Alabama, probably fromyellow fever.[17] Dexter sometimes raised their three children, and sometimes left them in the care of relatives. He engaged in farming, buying and selling land, and other ventures, including land speculation inTexas andMexico.[5] His fortunes waxed and waned as the economy rose and fell. At the time of his death he was once again near poverty, his fortunes reduced during thePanic of 1837.[18]
Dexter died of yellow fever inMobile, Alabama, on November 2, 1837.[19] He is known to have been buried in Mobile, but the exact location is not known and attempts to locate it have been unsuccessful.[20][21][22]
Andrew Dexter Jr. was the nephew ofSamuel Dexter, the brother ofSimon Newton Dexter, and the son in law ofPerez Morton and poetSarah Wentworth Morton.[23][24] His son Andrew Alfred Dexter (1809–1853), who was born in Nova Scotia while Andrew Dexter Jr. lived there to avoid his creditors, was the founder ofAiken, South Carolina.[25]
Media related toAndrew Dexter at Wikimedia Commons