Financial History Issue 133 (Spring 2020) | Page 19

Manhattan Company Reservoir on Chambers Street, 1825. Manual of the Corporation of the City of New York, 1855.
bill: “An act for supplying the city of New-
York with pure and wholesome water.”
Instead of the typical debate and full vote,
Burr arranged for Fairlie’s bill to go to a
special committee of three, who approved
it the next morning. The bill moved to the
State Senate, and on March 30, Burr met
with his friend Thomas Morris to help get
the bill passed through a similar commit-
tee process. The bill officially became law
on April 2, 1799.
Burr’s Bank
The company the State Legislature autho-
rized was not what the city had agreed
to, and it was unlike any other company
in America. The Manhattan Company
would be capitalized at $2 million—dou-
ble what Hamilton had proposed—and
only a small fraction of its shares would
be available to the city. The number of
elected directors increased from six to 12,
diminishing the power of the city officials.
This “water company” was not required to
repair streets after laying pipe, it could set
rates for service as it saw fit and it was not
obliged to provide free water for firefight-
ing. Furthermore, it was granted a per-
petual charter if it succeeded in delivering
fresh water for the citizens of New York
within 10 years. What made this company
most unique, however, was a small clause
in the ninth paragraph of the charter:
And it be further enacted, That it shall
and may be lawful for the said com-
pany to employ all such surplus capital
as may belong or accrue to the said
company in the purchase of public or
other stock, or in any monied transac-
tions or operations not inconsistent
with the constitution and laws of this
state or of the United States, for the
sole benefit of the said company.
This clause allowed the company to
invest its surplus capital and engage in
lawful financial transactions of its choos-
ing. Shortly after the water company’s
founding, it opened an office of discount
and deposit to direct the use of the compa-
ny’s surplus capital and perform banking
functions, including taking deposits and
lending money. Ultimately, the company
used only $100,000 of the authorized $2
million for the water system. The rest was
diverted to start what would become the
Bank of the Manhattan Company, which
opened at 40 Wall Street in September
1799. In effect, it provided Burr with a
Republican bank to rival Hamilton’s Fed-
eralist Bank of New York.
The Manhattan Company
The Manhattan Company wasted no time
in getting started. Its charter was delivered
to the Common Council on April 10, 1799,
a week after the bill was signed into law,
and the company convened its first meet-
ing the next day. Officers decided against
Dr. Browne’s costly Bronx River plan,
which had already been approved by the
city. Instead, because it would be fastest
(and cheapest), the Board voted to use the
already-polluted Collect Pond as the water
supply. The Manhattan Company existed
because of the outcry for clean water in the
face of epidemics and fires, but it did not
prioritize and, thereby, did not ultimately
fulfill its purpose of providing fresh water.
The company used ground wells within
the city, rather than bringing water from
the Bronx. It placed ground wells in
unsanitary locations and risked mixing
sewage with fresh water. It built a water-
works next to the Collect Pond and used
horses to work the pumps until they were
replaced by a steam engine in 1803. The
100,000-gallon reservoir the company
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