HARRY N. SCHEIBER
Alfred Kelley and the Ohio
Business Elite, 1822-1859
In a rare moment of freedom from the
pressures of his work as an
Ohio canal commissioner and legislator,
Alfred Kelley wrote to his wife
in Cleveland, from his rooms at Columbus
in January 1825: "I think it
is not altogether vanity which induces
me to say that my services and
advice have been important in settling
the plan of operations and the
details of the canal system which have
produced so great unanimity in
the Legislature on the Canal bill &
revenue bill."1 Here was an under-
statement of the first order: for as his
wife well knew, those "services"
had consisted of three years of
unremitting labor as one of the two act-
ing commissioners responsible for
directing the surveys for the first
Ohio state canals-long months in the
field, traversing forests and
swamps, suffering from fever and
exhaustion, dealing endlessly with
local politicians, conducting a shrewd
campaign of publicity for the
project, and preparing a detailed plan
for presentation to the legislature.
Finally, in January 1825 had come the
culmination of these three years'
work. Alfred Kelley, Micajah T. Williams
(the other acting commis-
sioner), and their five colleagues on
the first Ohio Canal Commission
had at last obtained legislative
approval of the projects whose construc-
tion would open the canal era in the
West.
For all this, Alfred Kelley had received
a three-dollar-per-day salary
and reimbursement for expenses. There
was the respect of his con-
temporaries, which would shortly win him
an assignment to share with
Williams the direction of actual
construction in ensuing years. But there
was also a more personal satisfaction,
revealed in this same 1825 letter
Harry N. Scheiber is Professor of
History at the University of California, San Diego.
This article is a revision of a lecture
delivered last year at the Western Reserve Historical
Society, for the WRHS and the Ohio Canal
Sesquicentennial Commission, to com-
memorate the 150th anniversary of the
opening of the Ohio Canal's first segment of
line from Cleveland to Akron in July
1827.
1. Alfred Kelley to his wife, January
21, 1825, The Papers of Alfred Kelley, Ohio
Historical Society (hereafter cited as
Kelley Papers).
366 OHIO HISTORY
to his wife: "I hope, my dear wife,
that we shall both live to take many a
pleasant ride in the packet boats on the
Canals in Ohio-and would it
not pay you for many a solitary night to
take a trip from Lake Erie to the
Ohio River on a canal which your husband
had a large share in
making?"2
By the time he wrote these lines, Alfred
Kelley had already won his
reputation as a masterful promoter of
internal improvements, brilliantly
emulating in Ohio the role that DeWitt
Clinton had played in New York.
In the years that followed, he would go
beyond Clinton, however, by
mastering as well the challenge of canal
construction in the field. And
once his initial work on the first Ohio
canal project was done in 1833,
Kelley would pursue a much-celebrated
career in state politics, banking,
public finance, and railroad
development. No one in his day was more
intimately involved than Kelley in the
interrelated processes that
transformed both Ohio's state government
and the private business sec-
tor in the West.
Although he was a singular individual,
Kelley was also representative
of a more general tendency in the
society of his day. In contrast to the
strictly local orientation of the
antebellum merchant-capitalists, his
perspective was that of an entrepreneur
and public servant who had a
keen sense of the prospects and
opportunities in the western regional
economy as a whole.3 What
distinguished Alfred Kelley and a few co-
horts was a distinctive vision that
transcended local concerns and em-
braced a view of statewide and regional
possibilities, both in their
personal business ventures and in their
public activities. Further dis-
tinguishing such men as Kelley was a
willingness to devote their
energies to public institutions, both
voluntary and governmental-and
especially to state government, the
strength of which they correctly
understood to be of crucial importance
to economic development in
that era. The men in this group did not
fail to seize the main chance for
themselves; but they also devoted their
efforts to seizing opportunities
for the community by mobilizing its
government. And they backed their
commitment to active government by giving
their time and energies to
public service. In so doing, they gained
intimate knowledge of the re-
sources and geography of their state.
Moreover, they exploited the
opportunities in state service to form
contacts with highly placed politi-
cal leaders, commercial figures, and
leading financiers in other areas of
2. Ibid.
3. See Richard C. Wade, The Urban
Frontier: The Rise of Western Cities (Cambridge,
1959), on the merchant-capitalists of
the early West; also, Harry Stevens, "Bank Enter-
prisers in a Western Town,
1815-1822," Business History Review, XXIX (1955).
Alfred Kelley 367
their own state and region, as well as
in the East-contacts that they nur-
tured for their state's benefit and, not
infrequently, for their own.4
The leading Ohio figures whose careers
were of this type included
Thomas Worthington of Chillicothe;
Governor Ethan Allen Brown,
chief promoter of the canal idea in Ohio
between 1818 and 1822; and
Micajah T. Williams of Cincinnati, who
with Kelley was principally
responsible for overseeing construction
of the first Ohio canal and who
later became president of the Ohio Life
Insurance & Trust Company,
the state's largest banking firm. Also
prominent in this group were land
speculators, bankers and politicians
like Ebenezer Buckingham of
Zanesville, General Simon Perkins of
Warren and the Western Reserve,
Leonard Case of Cleveland, John H. James
of Urbana, Leicester King
of Warren, and Elisha Whittlesey of
Cleveland, best remembered for a
fascinating political career but also a
major figure of his day in banking,
land speculation, and town promotion.5
This listing is illustrative, of
course, and not comprehensive; and it
grew larger over time, as the
state economy and population expanded.
Sometimes arrayed prominently against
one another on major public
issues, especially during the Jacksonian
period of intense debate on key
economic issues and in the antislavery
fight, these men were still in a
real sense a cohesive elite group, with
many overlapping or interlocking
business interests. They were the
leaders who understood possibilities
that transcended localistic interests,
and they led Ohio from the era of
early western merchant-capitalism into a new phase of development
which, in a startlingly brief period of
time, brought the Transportation
Revolution to the West, urbanized Ohio
society, and gave the state a
leading role by the 1850s in the
nation's industrialization and agri-
cultural development.
It is in this context that Alfred Kelley
must be understood and ap-
praised. From this vantage point, his
career can suggest some important
4. Harry N. Scheiber,
"Entrepreneurship and Western Development: The Case of
Micajah T. Williams," Business
History Review, XXXVII (1963). Highly suggestive in
this regard is a study of Canadian
entrepreneurship in the canal era: Hugh G. J. Aitken,
The Welland Canal Company (Cambridge, 1954).
5. An invaluable series of brief
biographical studies of prominent early-nineteenth-
century Ohio business and political
figures is in Museum Echoes, XXXIII (1960), in-
cluding the study of Walter Marvin,
"Alfred Kelley," Ibid., 11-14. See also Harry Stevens,
The Early Jacksonian Party in Ohio (Durham, 1953); William T. Utter, The Frontier
State, 1803-1825 (Columbus, 1943); and Francis P. Weisenburger, The
Passing of the
Frontier, 1825-1850 (Columbus, 1944). A work offering valuable insight is
Harold E.
Davis, "Social and Economic Basis
of the Whig Party in Ohio, 1828-1840" (Ph.D. dis-
sertation, Western Reserve University,
1933), some main themes of which are presented
in Davis, "The Economic Basis of
Ohio Politics, 1820-40," Ohio Archeological and
Historical Quarterly, XLVII (October, 1938).
368 OHIO HISTORY
dimensions of the palpable human element
in the process of economic
and social change in his time. Kelley
was a New Englander to the core,
an embodiment of the work ethic, reputed
for his stern and aloof man-
ner. Born in Connecticut in 1789, he
moved with his family to New York
state when he was ten and then made his
own way to a new life in the
tiny Lake Shore town of Cleveland at the
age of twenty-one. A suc-
cessful law practice, service as
prosecuting attorney of Cuyahoga
County, and election as the youngest
member of the state house of
representatives had given Kelley
considerable public prominence even
before he first embarked on the canal
project in 1822.6
Kelley was one of the political leaders
who responded with enthu-
siasm when in 1818 Ethan Allen Brown
took the leadership in Ohio to
argue for the idea of a great Lake
Erie-Ohio River canal project. Al-
though Brown was inspired by New York
state's bold approval of the
Erie Canal, Ohio was then still a young
and relatively poor state with
public revenues and a tax base only a
fraction of the Empire State's.
The panic of 1819 and protracted hard
times soon discouraged even
the most ardent canal advocates. Failing
to obtain a land grant or other
aid from Congress, Brown admitted in
1820 that with "the aspect of
affairs among us rather gloomy, from the
depression of our agriculture,
we are compelled to view the
accomplishment, and even the commence-
ment of the Ohio Canal, as more remote
than our more sanguine wishes
had once imagined it to be. ..."7
Still, Brown, Kelley and other sup-
porters did not lose hope entirely. They
kept in close touch with Gov-
ernor Clinton and other leaders of the
canal enterprise in New York and
disseminated in Ohio optimistic reports
of progress in the financing and
construction of the Erie Canal line.
They worked assiduously to forge a
coalition of interests sufficient to
overcome local jealousies-suspicion of
the general idea for an Ohio Canal
because it did not assure any com-
munity of a place on the route-so that
when the time was ripe, political
support could be mustered for the legislature
to act.8
6. Marvin, "Alfred Kelley,"
11-12; J. L. Bates, Alfred Kelley (Columbus, 1888); A. L.
Cummings, The Alfred Kelley House (Columbus,
1953); J. H. Kennedy, "Alfred Kelley,"
The Magazine of Western History, III, (1885-1886), 550-57. Steven Kurdziel has traced
Kelley's early land purchases at
Cleveland and determined that on June 12, 1814, he ob-
tained sixty acres of land at the
Cuyahoga River bend, near the mouth of the river at
Cleveland and known as The Flats; this
later became the location of the Ohio Canal
terminus. Cf. Kurdziel, "How Alfred
Kelley Built the Canal," The Cleveland Press,
June 16, 1977, sec. H, 8. In late 1825,
Kelley deeded about one third of his Flats land to
the state, as a donation in aid of the
canal project; that his remaining lands appreciated
greatly in value goes without saying.
7. Brown to Charles Haines, September
20, 1820, The Papers of Ethan Allen Brown,
Ohio Historical Society (hereafter cited
as Brown Papers).
8. Harry N. Scheiber, Ohio Canal Era:
A Case Study of Government and the
Economy, 1820-1861 (Athens, OH, 1969), 14-19.
Alfred Kelley
369
That time came in the winter of
1821-1822. Offering at least the hope
of something to nearly everyone, canal
advocates called for appointment
of a commission that would investigate
the engineering feasibility of
five alternate routes, each of which
would serve at least one of the
state's more populous and politically
powerful districts.9 The proposal
took specific form in an assembly
committee report written by
Micajah T. Williams. Declaring that an
Ohio canal would diffuse
"wealth, activity, and vigor"
throughout the Ohio economy, the
Williams Report argued in favor of a
state-financed, state-controlled
enterprise. Even if public resources
were not ultimately committed to
the project, at least scientific surveys
would inform the public of
realistic possibilities and specific
obstacles.10
The measure was finally adopted in
February 1822, and seven com-
missioners were appointed. The
legislature heeded localistic concerns
and regional rivalries, naming one
prominent politician-businessman
from each of the most populous districts
of the state. This wide geo-
graphic representation proved essential,
as Alfred Kelley wrote, "to
effect the object and get the bill
through."11 Hence, only a few days
after the bill had passed, the group
that became the planners of the first
Ohio canals went to work. Its members
were Ethan Allen Brown, just
elected to the U.S. Senate; Jeremiah
Morrow, farmer and politician of
Warren County; Thomas Worthington of
Chillicothe; Ebenezer Buck-
ingham of Zanesville; Benjamin Tappan of
Steubenville, a lawyer and
former judge; Isaac Minor of Madison
County, a champion of internal
improvements during his service in
Congress; and, representing the
Lake Shore region of the state, Alfred
Kelley. Micajah Williams joined
the Commission the next year.
From the start, Kelley played a key role
in the delicate political
proselytizing and coalition-building
that were no less essential than
the engineering surveys to the
commission's ultimate success. During
the next three years Kelley served with
Williams as acting commis-
sioner, responsible for the surveys
conducted in the northern, eastern,
and central portions of the state.12
Several features of Kelley's work during
the period of surveys, 1822-
1825, are of special importance to
identifying his "style" and peculiar
contributions. In the first place,
Kelley seems to have been equally
gifted in both conceiving the large
design and understanding the neces-
9. Ibid., 17.
10. Report of the Committee on Canals
(Columbus, 1822).
11. Kelley to Brown, February 3, 1822,
Brown Papers.
12. A detailed account of the surveys is
in Harry N. Scheiber, "The Ohio Canal
Movement, 1820-1825," Ohio
Historical Quarterly, XLIX (July, 1960), 231-56.
370 OHIO
HISTORY
sity for perfection and mastery of
detail. Doubtless he learned much
from working closely with experienced
senior engineers borrowed from
the Erie Canal staff to conduct some of
the critical running of levels and
gauging of water supplies in Ohio. But
he also went to New York, to
see for himself the technology being
employed there.13 Moreover, the
knowledge gained in New York, and also
what he learned at the side
of the senior New York engineer James
Geddes during the 1822 sur-
veys, proved essential to Kelley when he
later was left to do some of the
most difficult (and politically
sensitive) surveying of alternative lines
with a small crew of assistants.14 Meanwhile,
Kelley handled such de-
tails as ordering instruments from the
East, maintaining correspondence
on the question of available engineering
personnel, and obtaining from
the legislature a $1400 appropriation
for the State Library to obtain
"some useful books on
canaling."15 Few matters seem to have escaped
his notice.
A second important feature of Kelley's
work during 1822-1825 was
the breadth of perspective, the
comprehensiveness, with which he
viewed the transportation problems
facing the state. Thus he conducted
an impressive investigation of a
proposed canal at the Falls of the Ohio
in 1824 and so played a key role in
forwarding the project that became the
Louisville & Portland Canal.16
This scheme was of the highest impor-
tance to Cincinnati merchants and
political leaders, and Kelley's report
on the Falls Canal probably helped to
generate support in Cincinnati for
the Ohio Canal proposal as well. His
1824 report on the Falls project
also expressed Kelley's faith that
"every saving in the expense of trans-
porting the surplus produce of a country
to market . . . will be so much
added to the wealth of that
country"-a view of the necessity for public
investment that was at the core of
arguments for canal promotion.17 Al-
though Kelley had also become involved
at this time in pressing for
13. Williams to Brown, February 3, 1823,
Brown Papers; Williams to Benjamin
Tappan, February 22, 1823, The Papers of
Benjamin Tappan, Ohio Historical Society.
14. In mid-1823, for example, the
controversial surveying of the Sandusky district
and the proposed route to the south was
conducted by the acting commissioners without
a chief engineer. Williams to Brown,
August 2, 1823, Brown Papers.
15. Kelley to Brown, February 26, 1824,
Kelley Papers; also, Kelley to Worthington,
May 20, 1823, The Papers of Thomas
Worthington, Ohio Historical Society; Williams
to Kelley, June 11, 1824, The Papers of
the Canal Commission, Ohio Historical Society
(hereafter cited as Canal Commission
Papers).
16. See Paul Fatout, "Canal
Agitation at Ohio Falls," Indiana Magazine of History,
LVII (1961), 279-310.
17. Kelley quoted in Liberty Hall (Cincinnati),
February 3, 1824 (printing his report).
Following completion of his survey of
the Falls of the Ohio, with New York engineer
David Bates, Kelley lobbied in the
Kentucky legislature at Frankfort to promote a bill
to appropriate funds for the project as
a joint undertaking with Ohio and Indiana. Ben
Piatt to Brown, February 26, 1824, Brown
Papers.
Alfred Kelley 371 |
|
federal expenditures for improvement of Lake Erie harbor facilities, he maintained his faith in the capacity of the state governments for effec- tive independent action. As he wrote to Senator Brown in February 1824:
You have probably seen the report on the Falls of the Ohio. I have become . . .a perfect convert to the doctrine of its practicability & pecuniary profit & a warm advocate for the States [Ohio and Kentucky] undertaking the work. |
372 OHIO HISTORY
You have the subject of internal
improvements before Congress as I see.18
This is as it should be. But it ought not to lull us to
sleep. There is enough
for the States to do which will not fall
particularly within the province of the
General Government.19
It would be mistaken, however, to
interpret Kelley's faith in the active
state and his support for expanded
commitments as an undiscriminating
enthusiasm for all public works. On the
contrary, he was thoroughly
committed to a philosophy of systematic
state investment in carefully
planned priorities. He demanded close
analysis of costs and projected
benefits, and in his own reports of
surveys he provided careful esti-
mates. Although mindful of the need for equity
in providing public
improvements that would serve large
numbers and many regions of his
state, and not just a favored few, still
Kelley believed in extending pub-
lic commitments only after the public
works most likely to be produc-
tive of revenues and benefits had been
constructed first. Kelley's
philosophy was one of considered
planning.
The Canal Commission approached its task
during 1822-1825 with
this perspective, tempered by the vital
political consideration that no
program of canal construction could win
legislative support without
Cincinnati interests behind it. Critics
of Kelley and his colleagues,
mainly spokesmen for localities that
were to be bypassed by the canals,
charged that political considerations
and not systematic planning
actually dictated the choice of routes.
The Commissioners recom-
mended the Cleveland-Licking
Summit-Scioto Valley route of the Ohio
Canal, and they recommended the
simultaneous construction of the
Miami Canal from Cincinnati to Dayton.
Thus in December 1824 a Nor-
walk man charged Kelley directly with
sacrificing the north-central
region's interest to Cleveland's:
"My private opinion . . . is that you
are as honest as other people but I
really think . . . local interest un-
questionably has some influence upon you
. . . We understand that
the commissioners are determined to
report in favor of the Cuyahoga
route and this we attribute to you
altogether & we do therefore most
cordially hate you. .. ."20 Later,
the Sandusky Clarion condemned the
choice of the Ohio Canal route as one
that was "located nearly parallel
with . . . the Ohio River,"
designed by Kelley to assure that Cleve-
land would be the northern terminus. The
Clarion denounced the com-
18. Congress at that time was
considering proposals for land grants in aid of transpor-
tation in western states and also what
became the 1824 Survey Act, authorizing the Army
Engineers to conduct surveys of projects
of national importance.
19. Kelley to Brown, February 23, 1824,
Brown Papers. On the Cleveland harbor im-
provement proposal, see Kenneth F.
Davison, "Forgotten Ohioan: Elisha Whittlesey"
(Ph.D. dissertation, Western Reserve
University, 1953).
20. James Williams to Kelley, December
27, 1824, Canal Commission Papers.
Alfred Kelley
373
missioners as a "band of
speculators, intent upon aggrandizing them-
selves at the expense of the
public." That Kelley and other officials had
used their knowledge of the proposed
canal routes to enrich themselves
in land speculation would be a charge
heard repeatedly in later years.21
Despite these accusations, the archives
of the Canal Commission
and Kelley's private correspondence
contain no suggestion of impro-
priety. Although Kelley and other
commissioners initially hoped to
locate a canal line from Cincinnati to a
Lake Erie terminus in the north-
eastern part of the state,22 he
gave considerable effort in 1822 to surveys
designed to locate a route between
Sandusky and the Scioto Valley.
Kelley admitted privately to Brown:
"I much fear the difficulties which pre-
sent themselves to the construction of a
canal over the Sandusky &
Scioto summit . . . will prevent a
combination of interest sufficient to
make one on any route."23 Moreover,
in 1824, as the commission's work
came close to a conclusion, Kelley
approved still another survey of the
Sandusky-Scioto route by an experienced
New York engineer.24 Unless
one is willing to assume that Kelley
somehow persuaded both the chief
engineer and his fellow commissioners to
find that route insufficiently
supplied with water (as they did, in
rejecting that alternative), the
charges made so often against Kelley by
his enemies in Sandusky and
north-central Ohio must be rejected as
unfounded.
The Ohio legislature's adoption of the
commission's plan for the
Cleveland-Portsmouth Ohio Canal route,
as well as for the Miami Canal
project, opened a new phase in Alfred
Kelley's career. With Williams,
Kelley served for the next eight years
as one of the two acting commis-
sioners in charge of the actual
construction of these first state canals.
The bill that authorized these works did
not actually designate Cleve-
land as the northern terminus; and on
this subject, the archives do sug-
gest some evidence of dissembling on the
part of the commission. For in
the first few weeks of the newly
reconstituted commission's life, Kelley
successfully solicited donations of land
to the state from the private
owners on alternative routes in the
Cuyahoga and Black river valleys,
on the northernmost segment of the Ohio
Canal. Benjamin Tappan, one
of the commissioners, wrote to Kelley in
February 1825: "I think that
as soon as you have got the people of
Cleveland & the Cuyahoga valley
21. Clarion, January 22, April
30, 1825. That Kelley did benefit from the Cleveland
canal location is indisputable. See
footnote 6.
22. Kelley to Brown, May 31, 1822, Brown
Papers.
23. Kelley to Brown, August 13, 1822, Ibid.
24. [Kelley] to James Geddes, June 30,
1824, Canal Commission Papers. Micajah
Williams, the other acting commissioner,
concurred in Kelley's and the chief engineer's
later, final finding that the
Scioto-Sandusky line was impracticable. Williams to Brown,
January 24, 1824, Brown Papers.
374 OHIO HISTORY
to give all they will give, that the
line of canal from the Portage summit
to Cleveland should be determined on,
that the work may be com-
menced on that part early as possible
this season."25 The commission
did in fact obtain a considerable number
of donations; and in May the
Cleveland-Cuyahoga route was formally
selected by the board.26
All responsibilities except for bond
issues (handled by a separate
board) were in the hands of the Canal
Commission, but the commis-
sioners devolved their powers to a
remarkable degree upon Alfred
Kelley and Micajah Williams.27
In their capacity as acting commis-
sioners, the two men had charge of
locating the lines, adopting speci-
fications, awarding contracts to the
scores of private entrepreneurs
(both professional contractors and local
people) who conducted the
actual construction, and supervising the
engineers and surveyors who
comprised the state officialdom under
the Canal Commission. In addi-
tion, the acting commissioners had to
perform the delicate task of
negotiating for purchase of land and
supplies needed for the right-of-
way and for construction.
Williams and Kelley had successfully
brought the first canals nearly
to completion by 1833. Their record was
free of any proven corruption,
or, indeed, even serious charges of
malfeasance of any sort-a remark-
able fact, given the complexity and
extent of the project. The commis-
sioners had to surmount recurrent labor
shortages, the failure of con-
tractors who abandoned their contracts
and, perhaps most difficult of all,
constant pressure on the commission to
press work forward on every
segment of the lines simultaneously in
order to quiet local jealousies. In
addition to the technical skill they
demonstrated in engineering mat-
ters, the acting commissioners insured
their success by firm adherence
to a program of systematic priorities in
building the works by stages.
This strategy led to early completion of
the Akron-Cleveland portion
of the Ohio Canal in July 1827. And this
initial success-this demon-
stration of the project's feasibility
and the commission's competence-
unquestionably attracted the attention
of eastern investors, thus assur-
ing the successful sale of Ohio state
bonds sufficient to finance
completion of the works.28
Of less immediate, but nevertheless
great significance, was the crea-
tion by the acting commissioners of an
effective state bureaucracy. In
the early nineteenth century, American
state governments had only a
handful of administrative officials; but
with inauguration of the first
25. Tappan to Kelley, February 7, 1824,
Canal Commission Papers.
26. Columbus Gazette, May 12,
1825.
27. Scheiber, Ohio Canal Era, chapter
3, passim.
28. Ibid., 48-54.
Alfred Kelley 375
canal enterprises they began a process
of administrative development
that involved the growth of bureaucratic
organization and the employ-
ment of technical personnel in
significant numbers. In the history of
Ohio's state government, this path was
blazed by Kelley and Williams.29
Invariably following their
recommendations, the commission mapped
the bureaucratic organization and
specified the delegation of powers.
Novelty and necessity made innovators of
the acting commissioners: as
they faced each organizational and
technical problem, the solutions for-
mulated became part of the fund of
collective experience. Kelley's
style was one of constant and detailed
personal involvement, whether it
was seeking out sources of lime for lock
construction, identifying poten-
tial millsites on the line, dealing with
individual contractors' complaints,
mediating differences of opinion among
the engineers, or oversight and
checking of each job, he tended to do it
himself.30
The junior engineers and surveyors did
not always appreciate the
close, often heavy-handed supervision
they received on the northern
Ohio Canal line. For example, one
dissident young engineer was dis-
appointed in 1829 when his colleagues,
working under Kelley's direc-
tion, failed to take "energetic and
decisive measures" in seeking
redress from the canal board for what
he, at least, regarded as griev-
ances stemming from Kelley's style of
management. Such tensions
were undoubtedly not much helped by the
failure of the commision to
raise salaries for the staff engineers;
the board ruled that not only was
their pay already adequate, but also
that they had, as one reported,
"acquired our experience at the
expense of the state" so that "the state
had a claim upon our services."31 Still, while such
resentments occa-
sionally surfaced, it is clear from the
commission's correspondence that
29. Idem., "Entrepreneurship
and Western Development," 345ff.
30. Kelley's mastery of details and his
extraordinary personal involvement in all
aspects of the work are evident in his
business and personal correspondence throughout
this period (especially in the Canal
Commission Papers, and his correspondence with
Ethan Allen Brown, Brown Papers). There
was no exaggeration in his claim, for exam-
ple, made in reply to charges in 1826
that he had interfered with the political campaign
of that year and "turned over"
votes: "The fact is, I have been out of the District, attend-
ing to my official duties, much the
greater part of the time since the candidates for
congress were announced; part of which
time I have been confined by sickness, and the
remainder of it, extremely pressed with
business." (Cleveland Herald, October 6, 1826.)
His devotion to the project was
legendary. Thus a politician urging him to be a candidate
for the Senate that winter pleaded:
".... don't let that second wife of yours (the Canal)
answer the question for you!" (R.
Harper to Kelley, December 11, 1826, Canal Commis-
sion Papers.) On several occasions,
Kelley was separated from his family for three months
or more at a time. (Kelley to his wife,
December 28, 1828, Kelley Papers.)
31. Francis Cleveland to R. Howe,
September 18, 1828, manuscript in possession of
Mrs. Clayton Stanford; also, Cleveland
to Howe, September 18, 1828, Ibid. The author
is grateful to Mrs. Stanford for
permitting him to use these materials.
376 OHIO
HISTORY
Kelley's junior colleagues fully
recognized his thorough dedication to
the project and his technical
competence. He was not a man, however,
who allowed any wish for his colleagues'
affection to stand in the way of
what he believed was necessary for the
success of the canal project.
Williams-more sensitive than Kelley to
the need for developing a
bureaucracy capable of carrying the
work-finally urged him to stay
away from the lines occasionally.
"You have superintending engineers
on the line," he wrote, "who
are mostly of your own selection. ... To
these it is proper to commit its charge.
. . . The state will soon be
under the necessity of confiding the
entire charge and responsibility of
the two canals to these very men."32
This appeal, significantly enough,
was timed to coincide with adoption by
the board of a highly detailed
order setting down rules for the
superintending engineers on the lines,
issued on January 30, 1832.33
In what became a losing fight, Kelley
and Williams attempted to
professionalize the canal service. In
effect, they hoped to remove the
strong political element in the Canal
Commission's structure-an
element expressed in the informal system
of geographic representation.
Thus, in their 1832 report, issued as
the first canals were being com-
pleted, they explicitly recommended to
the legislature that the canal
commission should be abolished and
replaced by a new board of three
full-time, well-paid professional
engineers.34 But their recommendation
went unheeded. Both political
partisanship and the principal of geo-
graphic representation continued to
prevail in the appointment of com-
missioners, then and later.35
Interestingly, Williams and Kelley were
following divergent political
paths during the period of canal
construction. Williams was an early
and ardent champion of Andrew Jackson,
while Kelley was allied with
Clay and eventually with the organized
Whig opposition. Yet there was
no trace of partisanship in the
decisions of either man on canal
matters.36
One of the leading characteristics of
Jacksonian-Democratic style
and preferences, however, one that drew
Kelley into the Whig party in
the ensuing years, was already evident
in the early Jackson period: the
32. Williams to Kelley, February 19,
1832, Canal Commission Papers.
33. Canal Commission Minutes
(manuscripts), Ohio Department of Public Works,
Archival Records, Vol. I, 139-40.
34. Scheiber, Ohio Canal Era, 164-65.
35. Ibid., 165ff.
36. See Kelley to Williams, September
27, 1832, The Papers of Micajah T. Williams,
Ohio Historical Society (hereafter cited
as Williams Papers). On Williams' role in the
early Ohio Democracy, see Stevens, Early
Jackson Party; Kelley's role in the Whig leader-
ship is a prominent theme in
Weisenburger, Passing of the Frontier.
Alfred Kelley 377
Ohio Democrats tended to oppose
systematic establishment of prior-
ities, gave little deference to planning
proposals from the commissioners
in canal policy, and showed little
interest in the professionalization of
the canal board.37 And
similarly, in the national arena, the Jacksonians
had little appeal for Kelley because of
their comparable preference for
decentralization of power and their lack
of creative, vigorous direction
in leading the economy through
purposeful governmental intervention.
Kelley strongly believed in centralized
direction and carefully designed
intervention in both national and state
banking operations. His faith in
systematic marshalling of public
resources was evident in his 1828 view
of a proposal for a government land
grant to Kenyon College. Thus he
wrote to Elisha Whittlesey, urging him
to support the grant: "I have
long believed that liberal donations to
a few good schools is preferable
to distributing the same sum in small
parcels among a great number".38
On the same sort of premise, Kelley
consistently adhered to a policy of
advocating caution in the expansion of
Ohio's public works system.
Kelley's faith in prudent, incremental
expansion of the public works
was evident throughout the first
construction period to 1832. Thus he
supported the project for a Pennsylvania
& Ohio Canal, then being pro-
moted as a chartered company by his
close friend Simon Perkins and
others in the Western Reserve. But
diplomatically and effectively,
Kelley fended off demands that the work
be built with state funds before
the first canal lines had been
completed.39 Similarly, when pressure
gathered in western Ohio for
construction of the Miami Canal's exten-
sion northward from Dayton, Kelley was
not conspicuously sympath-
etic; he supported the board's vote to
go ahead with the extension only
after new revenues had been derived from
a federal land grant for the
project.40
Withal, Kelley deemed "mean and
contemptible" the often-expressed
doctrine that every county and hamlet in
Ohio must have state patron-
age in the form of transport
improvement, else they were justified in
withholding their support for projects
that benefited other districts.41
He assumed a more diplomatic posture,
however, when confronted with
37. Scheiber, Ohio Canal Era, 167.
38. Kelley to Whittlesey, January 11,
1828, The Papers of Elisha Whittlesey, Western
Reserve Historical Society (hereafter
cited as Whittlesey Papers).
39. Kelley urged Philadelphia promoters
and financiers to support the project; see
Kelley to Thos. Biddle and Benjamin
Chew, June 14, 1832 (copy), Canal Commission
Papers.
40. Votes of the board, in Canal
Commission Minutes, passim. There is no public
record of Kelley's openly opposing the
scheme. In later years, Kelley remained dubious
of the advisability of pushing the Miami
Extension project beyond the immediate re-
sources of the state. (Kelley to
Williams, July 21, 1835, Williams Papers.)
41. Kelley to (?), March 11, 1825, Canal
Commission Papers.
378 OHIO HISTORY
demands for support of new state
projects from close friends and asso-
ciates. Thus, in trying to bring General
Perkins around to a position of
forthright support for the first canal
project in 1825, at a time when
Perkins seemed more interested in the
need for funding the Mahoning
(later the Pennsylvania & Ohio)
canal route, Kelley urged the need for
unity and self-sacrifice in the short
run. In the long run, after all, "Even
Trumbull County may . . . ask aid to
make some interesting improve-
ment."42
Criticism of Kelley inspired by his
opposition to indiscriminate prolif-
eration of state commitments was more
than matched by partisan
political criticism from Kelley's
political enemies in the Democratic
party; his prominence in the Whig party
made him a frequent target of
political invective. Thus, after
resigning his commissionership in 1833,
Kelley returned to the state
legislature; and in the 1836 campaign the
Democratic press, opposing his candidacy
to represent Franklin County,
charged that he had profiteered on the
canals and was now "engaged
in no business but BANKING, SPECULATING,
and building a
PALACE in the City of Columbus."43
Kelley offered a revealing reply,
declaring that the wages he had received
from the state as acting
commissioner, "after defraying my
personal and travelling expenses,
and supporting a small family on the
most economical arrangement
which I could make, did not leave me an
average sum of $100 per
annum, as a compensation for my labour
and responsibility. This, I
believe, all will admit, is 'fattening'
at a slow rate."44 Referring to the
many donations of property he had
successfully solicited for the state
in 1825 and subsequent years, "most
if not all of which I might have
retained for myself with perfect
integrity," as he averred, Kelley now
offered to accept from the state all
that property. In return he would
reimburse the state for his twelve
years' salary, pay the original cost
of such property plus interest, and in
addition turn over all the land he
had himself bought since 1822 and whose
value was affected by the
location of the canal lines.45 The
offer found no takers!
A measure of the value of Kelley's
services is obtained from a special
resolution of the general assembly in
1832. On grounds that Kelley's
health had been "seriously impaired
by his constant attention . . . to
his arduous duties as acting commissioner,"
Kelley would be given a
six-month paid leave of absence if he
required it. "By his faithful and
42. Kelley to Perkins, March 13, 1825,
The Papers of Simon Perkins, Western Reserve
Historical Society (hereafter cited as
Perkins Papers).
43. Columbus Western Hemisphere &
Ohio Monitor, October 5, 1836.
44. Kelley, in Ibid., March 5,
1836.
45. Ibid.
Alfred Kelley 379
laborious attention to the interests of
the State," the legislation de-
clared, "he has saved to the
Treasury many thousands of dollars."
The lawmakers thought they should do no
less, "as a tribute of respect
to a faithful public servant, and to aid
in prolonging a life hitherto so
eminently useful to the state."46
Such a recognition and praise must have
been hard-won indeed for a
man who was legendary for his impatience
with those who opposed his
views or failed to meet the same high
standards of diligence as he
applied to himself. Yet his friend
Perkins reported to him in March
1830, after an attack on Kelley in the
legislature had been discredited,
that Kelley was "now the most popular man in the State."47
In later
years, there was a mellowing even among
his opponents. Thus in 1846,
when Kelley decided to retire from the
state senate, the editor of a
staunch Whig newspaper commented on
reasons for his failure to attain
a more conventional popularity:
Mr. Kelley has been the best public
servant the State ever had.-For his ser-
vices posterity will do him justice.
As a mere politician, the repulsiveness
of his manners and the pertinacity
with which he persevered in carrying out
his individual views has placed him
far behind many who possess but a small
share of his talent and public spirit.
The State . . . can ill afford to lose
his services.48
Kelley's long period of work with the
state had not only given him
political prominence and a
seldom-matched record of constructive
achievement as a public administrator;
it had also armed him with a
valuable fund of skills and personal
contacts. Involvement in the first
canal project gave him an intimate
knowledge of the entire state-the
terrain and geographic peculiarities of
its many distinct regions, the
advantages and disadvantages of each
district's resources and loca-
tion.49 As a consequence, his
sense of the totality of the state economy
46. Ohio, General Assembly, House of
Representatives, House Journal 1831-32
(Columbus, 1832), 447.
47. Perkins to Kelley, March 16, 1830,
Canal Commission Papers.
48. Editorial, Toledo Blade, July
31, 1846.
49. Indicative of Kelley's special
qualifications in this regard is the fact that he pre-
pared the first comprehensive
topographical map of Ohio, "with a view of preserving
from loss the various items of
information in relation to the Geography and Topography
of the State which had been collected
during the progress of the surveys and examinations
relative to the Canal." This map,
he noted with some poignancy, "was mostly compiled
by employing part of that time generally
occupied by sleep, and those intervals of busi-
ness which are usually devoted to
exercise, relaxation, or amusement...." (Kelley to
M. T. Williams and Benjamin Tappa [Oct.
2, 1826] Kelley Papers.) His letter stated
that he had arranged for its publication
by Horton Howard of Delaware, with the con-
sent of the commissioners. He was in
1826 embarrassed by the fact that the general as-
sembly had claimed copyright and wished
to publish it as a legislative document.
380 OHIO HISTORY
and its relationship to western regional
development must have been
nearly unique. He was in constant touch
with land speculators, town-
site promoters, and manufacturers with
whom he corresponded during the
course of canal construction. Moreover,
once the first canals had opened
in 1827, Kelley (with Williams) had been
principally responsible for
establishing rates of toll on the lines.
Myriad special interests jockeyed
for advantage in canal tolls. Responding
both to the state's need to
maximize revenues and to these
special-interest pressures, Kelley and
the commission had adopted, in effect, a
tolls structure that served to
allocate markets for many vital
products-both those produced in Ohio
and those "imported" from New
York and the New Orleans river
route.50 Such market
allocation was entirely consistent, of course, with
Kelley's own commitment to centralized
direction and systematic gov-
ernmental intervention in the economy.
Also invaluable to Kelley's private
career was the relationship of his
work as canal commissioner to Ohio's
banking community. He early
perceived that it would be advantageous
to Ohio bankers to pay con-
tractors and laborers in their bank
notes. Although the disbursing sys-
tem, through the state's banks in which
deposits of funds borrowed in
the East were placed, was controlled by
the fund commissioners. Kelley
had regular correspondence and meetings
with the bank officers in-
volved.51 While he was not
directly responsible for canal finance, Kelley
was kept well-informed concerning the
fund board's intricate relation-
ship to eastern bankers; and he
cooperated closely with Ohio bankers in
the effort, through canal disbursements,
to give "more extensive circu-
lation [to] their Paper."52 Besides,
his prominent role in the Ohio project
gave him an opportunity to correspond
with and advise numerous
eastern financiers on the subject of
western investments.53
Thus Kelley emerged in the mid-1830s as
a leading figure in Ohio
banking. In 1831, Kelley joined Simon
Perkins, Leonard Case, John W.
Allen (mayor of Cleveland) and others in
forming the directorate of the
revived Commercial Bank of Lake Erie at
Cleveland. This group pro-
vided the in-state, Ohio direction for
an eastern family, the Dwights
of Massachusetts, who put up most of the
capital and selected the
bank's treasurer, Truman P. Handy, who
had worked in a Dwight
50. Scheiber, Ohio Canal Era, chapter
10.
51. See Scheiber, "Public Canal
Finance and State Banking in Ohio, 1825-1837,"
Indiana Magazine of History, LXV (June, 1969), 119-32.
52. Ebenezer Buckingham to Brown,
October 18, 1825, The Papers of the Board of the
Canal Fund Commissioners, Ohio State
Archives.
53. For example, see text and footnote
39.
Alfred Kelley 381
bank in New York State.54 The
interpenetration of state and private
concerns, and also the impact of such
linkages between Ohio and east-
ern interests upon the modus operandi
of Ohio's emergent business
elite, were to be dramatically
illustrated by this fusion of the Dwight
interests and Western Reserve
enterpreneurship. The Commercial Bank
was quickly selected as a depository and
disbursing agent for the canal
fund, following an application through
Alfred Kelley to the fund
board.55 With aid of the
Dwight investments and other eastern credits,
the bank played a central role in
real-estate mortgages and the extension
of mercantile credit in Cleveland while
the city's canal trade increased.
And in later years, Kelley, Handy, and
the Dwights were all to become
deeply involved in Cleveland's railroad
projects-the Dwights again as
investors and shapers of large strategy,
the Cleveland people as in-state
directors and managing officers.
Meanwhile, in the mid-1830s, Kelley was
purchasing real estate,
both at Columbus and at Cleveland; and
he became a leading figure in
the direction of the Franklin Bank of
Columbus, which had been a dis-
bursing agent and depository for the
fund board.56 So too had Simon
Perkins' Western Reserve Bank at Warren,
at a time when Perkins
served as a fund commissioner.
Similarly, the Lancaster Bank, in which
Samuel Maccracken (another fund
commissioner) held a large interest,
disbursed canal funds. Later, the
Franklin Bank would extend a
$500,000 loan to the state fund board
when in 1843 depression condi-
tions made it difficult to issue bonds
in the East or abroad. Although
this loan brought considerable gain to
the bank, the relationship was a
reciprocal one; its funds were crucial
to continuation of the enlarged
canal program.57
Such enterpreneurial activity by leading
figures in the state canal
enterprise reached a new level with the
formation of the Ohio Life
Insurance & Trust Company in 1834.58
At the time of its incorporation,
the Trust Company became the most
heavily capitalized bank in the
state. Like the Commercial Bank of Lake
Erie, but on a much grander
scale, it fused the interest of a major
eastern investment group-in this
instance, the Bronson-Olcott-Albany
Regency interest in New York
State-with the funds, managerial skill,
and political influence of nota-
54. Scheiber, "The Commercial Bank
of Lake Erie, 1831-1843," Business History
Review, XL (Spring 1966), 57-65.
55. Truman P. Handy to Henry Brown, June 1, 1833, Commercial Bank of Lake
Erie
Letterbooks, Western Reserve Historical
Society.
56. Kelley to Williams, April 29, 1833,
October 24, 1839, Williams Papers.
57. Scheiber, Ohio Canal Era, 150.
58. The history of the Trust Company is
considered in Scheiber, "Entrepreneurship
and Western Development," passim.
382 OHIO HISTORY
ble Ohio business leaders. Without the
support of the Ohio group, the
charter could not likely have been
obtained from the legislature; for it
came under severe attack as a
"moneyed monster," a local version of
the Bank of the United States.
Significantly, its principal Ohio organizer
and first president was Micajah T.
Williams. Since leaving the canal
service, Williams had been
Surveyor-General for Ohio, Indiana, and
Michigan Territory; his contacts with
the eastern financiers had been
formed both through his canal experience
and through their interest in
western land speculation. Williams
reached out effectively to build a
board of directors that would represent
statewide business as effectively
as the Commercial Bank's board
represented Western Reserve busi-
nessmen. Not surprisingly, he secured
the commitment of Alfred
Kelley, with whom he shared an interest
in the Franklin Bank as well
as long years of the closest
colleagueship in the canal enterprise; Elisha
Whittlesey of Cleveland, closely
connected with both Kelley and Per-
kins in politics and business; and the
three commissioners of the canal
fund board, Perkins, Daniel Kilgore (also
a banker) and Samuel
Maccracken.59 Augmented by
other prominent directors, the Trust
Company's board was virtually a roster
of the state's business notables
-an institutionalization, in effect, of
their elite relationships.
In the years that followed, the Trust
Company was to be a major
supplier of funds to the state in canal
finance, becoming the principal
Ohio underwriter of bond issues. The
character of Williams's presi-
dency-especially his connection with an
unsavory "wildcat bank" in
Michigan and his private dealings as an
exchange banker in a Cleveland
partnership-led Kelley to conclude in
1841 that Williams's "arrange-
ments" had become "extremely
injurious to the interests and reputation
of the Company." Insisting that
their friendship remained unbroken,
Kelley nevertheless called upon him to
resign.60 But until this breach
opened, Kelley's leading role in the
Trust Company tightened still
further the intricate web of
interlocking interests that impinged on state
canal finance; for Kelley reentered
state service in 1841 as a canal fund
commissioner, and perforce he then found
himself concerned both as a
state officer and as a Trust Company
stockholder in financial dealings of
a highly sensitive nature.61
The intimate relationship of state canal
finance and private banking
59. Ibid. The principal eastern stockholders included Prime, Ward
& King and John
Ward & Co., both major investment
houses that had been underwriters of canal-bond
issues. (Arthur Bronson to Lewis Cass,
June 2, 1834, The Papers of Lewis Cass, Clements
Library, University of Michigan.)
60. Kelley to Whittlesey, December 22,
1841, Whittlesey Papers.
61. See Scheiber, Ohio Canal Era, 146ff.
Alfred Kelley
383
interests confronted Alfred Kelley at
least once with a hard dilemma.
This happened in the winter of
1839-1840, when the Trust Company
held $1 million in Ohio state bonds
amidst depression conditions in the
commercial and money markets. In the
fall of 1839, the Trust Company
had been forced to suspend specie
payments; and this action risked loss
of the charter, which had specified a
maximum period during which sus-
pension might be maintained. Unable to
market the state bonds it held,
amounting to some $800,000 worth in
December, the Trust Company
thus faced a possibly fatal crisis. For
Kelley, at least, the alternatives be-
fore the board must have posed a cruel
choice. To raise cash quickly and
resume specie payments, the company must
throw its state bonds on
the market. This risked driving down the
price of Ohio bonds and
seriously damaging the fund board's
efforts to sell additional state
issues. But if the company failed to
pursue this strategy, it could lose
its charter. Kelley believed that,
because of the company's vast mort-
gage loans and many outstanding
commercial loans, loss of the charter
would "hazard . . . general
distress throughout the state."62 And so
Kelley concurred in the Trust Company
board's decision to throw the
bonds on the market in the East "at
whatever sacrifice."63
In this instance, fate was kind: the
money market absorbed the sales,
as other banks, both in Ohio and in
England, supported the price of
Ohio state bonds by purchasing new
issues early in 1840.64 The Trust
Company survived, and the state fiscal
crisis was averted.
However, Alfred Kelley had not
experienced his last hard dilemma
associated with state financing. Early
in 1841, he accepted appointment
as a canal fund commissioner at the very
moment when Ohio state
finances were in an authentic crisis
stemming from the legislature's
over-expansion of the canal system in
the mid-1830s. The Miami Canal
was being extended to Toledo; the Wabash
& Erie was authorized; con-
struction of numerous branch lines,
including a major project on the
Muskingum, had gained approval. In
contrast to Kelley's prudent
construction policy of the 1820s, the
program now called for extensive
work on all the projects
simultaneously-even though the initial engi-
neering estimates were for $4 million of
new construction, equal
62. Kelley to Williams, October 24,
1839, Williams Papers. Indicative of the extent
to which the Trust Company's operations
might affect the Ohio economy was the following
summary of its assets in 1840: $2
million invested in Ohio mortgages; considerable
holdings of city of Cincinnati and Ohio
state bonds, and also of bank stock held as
collateral on private loans; direct
holdings of stock in two banks; and an unspecified
amount of mortgages and bonds held on
protested notes. (Williams to Simon Perkins,
June 6, 1840, Perkins Papers.)
63. Kelley to Simon Perkins, December
12, 1839, Ibid.
64. Scheiber, Ohio Canal Era, 147-49.
384 OHIO HISTORY |
|
in amount to the entire project that Kelley and Williams had directed. (Actual total costs ran to nearly $10 million by the time the works were completed in 1845.) The continuing, serious business depression on both sides of the Atlantic made it unlikely that the fund board could meet payments owed to contractors.65 The crisis was also the result of the so-called "Loan Law" of March 1837, which provided for the issue of state bonds to finance subscriptions, on a matching basis, to any rail- road, canal, or turnpike corporation that met certain minimum qualifi- cations. By the time Kelley had joined the fund board in 1841, over a million dollars had been committed to canal and railroad corporations while another $1.9 million had been given as stock subscriptions to turnpike corporations.66 Kelley had long been staunchly opposed to the new profligacy (as he viewed it) represented by the expanded canal program and the Loan Law subscriptions.67 Soon after becoming a fund commissioner, Kelley and his colleagues on the board put a sudden stop to new commitments of funds under this law; and he supported legislation enacted in 1842 that gave formal statutory sanction to this policy, effectively making
65. Gustavus Swan to Joseph Lake, November 20, 1840, Board of Canal Fund Com- missioners Letterbooks, Ohio State Archives (hereafter cited as BFC Letters). 66. Scheiber, Ohio Canal Era, 130-33. 67. Columbus Western Hemisphere & Ohio Monitor, March 1, 1837. |
Alfred Kelley 385
the Loan Law a dead letter.68
This change in policy alone could not,
however, stem the tide of fiscal crisis for the state. In 1841 and
1842, the fund board adopted desperate
expedients, including issuance
of $300,000 in bonds as security to the
Ohio Life & Trust for $200,000
loan, without authorization to do so; a
grant of tacit permission to Ohio
banks making loans, to issue
"illegal money" (small notes outlawed by
the state's current banking
legislation); and, finally, some individual
risk-taking by the fund board members,
who signed personal guarantees
of canal fund obligations.69 The fund
board even drew advances from
the general tax funds in the State
Treasury-and faced charges of illegal
procedure and fraud, from the Auditor,
for having done so-in order to
help meet interest payments due the
holders of Ohio bonds in January
1842.70
The January payment averted what had
seemed a certain default and
serious harm to the credit standing of
the state. Even the federal gov-
ernment was having difficulty meeting
its fiscal needs, and other Ameri-
can canal states were either defaulting
or repudiating their debts; in-
vestor confidence was thus at a low ebb.
But at the time, Ohio's public
works were near enough completion that
the commissioners could
realistically hope (if the state's
credit were maintained) to raise the
funds necessary for payment of
contractors. Defending the fund board's
expediential and irregular measures of
that time, Kelley in 1845 re-
called that while in New York trying to
raise funds he met at the Bank
of Commerce with an agent for foreign
holders of Ohio bonds. Knowing
how close the board had come to
defaulting in January, the agent asked
Kelley whether the July interest could
be paid. Then a bargain was
struck. Kelley offered to insure at a 1
percent rate any amount of the
interest, offering as collateral his
personal real-estate holdings in New
York and Ohio. The agent immediately
wrote a check for $100, and
Kelley gave his personal note
guaranteeing $10,000 of the July
interest.71
Again in February 1843, Kelley used his
network of business asso-
ciates to bolster investor confidence in
the canal fund's solvency. Thus
68. Kelley to acting commissioners,
April 16, 1841; Kelley to C. Goddard, April 21,
1841; A. S. Chew to turnpike company
presidents, August 11, 1841; Kelley to James
Worthington, July 5, 1842, all in BFC
Letters.
69. Samuel Maccracken (President,
Lancaster Bank) to Kelley, October 1, 1841, and
reply, October 12, 1841, Ibid., Ohio
Executive Documents, 1845-46 (Columbus, 1846),
Part II, 770.
70. Fund Commissioners to John Brough,
October 28, 1842, BFC Letters; and reply,
November 2, 1842, Auditor's Letterbook
(marked "Canal Land Reports, . . . 1841-54").
Auditor of State Archives, Columbus.
71. Executive Documents, 1845-46, Part
II, 772-73.
386 OHIO HISTORY
he sent a letter to Elisha Whittlesey,
who was then in touch with eastern
investors and the foreign bondholders,
asserting his faith that the state
"will not fail, even
temporarily." Kelley concluded by offering "to re-
ceive as cash the certificates of
domestic debt in payment for any prop-
erty I have for sale, at their par
value, believing the income will be
certain and regular as a means of providing
for the wants of my family
should I be removed from them by
Death."72 Since the state's bonds
were selling well below par value at the
time, Kelley's offer to accept
the securities at par involved a very
considerable personal risk.
Finally, Kelley's role in the travails
of state finance in 1842-1843
included controversial personal
negotiations with Baring Brothers, the
British merchant bankers. In the
desperate attempt to raise loans to
cover the July 1842 and January 1843
interest payments, Kelley went to
England for the fund board in spring of
1842. It was an inauspicious
time for such a mission. The general
economic collapse, the defaults by
other states on their bonds, and the
diplomatic crisis between Great
Britain and the United States over the
Maine boundary, all militated
against Kelley's chances.73 But
favoring Kelley was the complex inter-
relationship of Ohio Life & Trust
and the Barings-for the British firm
had cooperated closely with the Trust
Company in marketing Ohio
bonds in the European market. In
addition, the Barings had a direct
stake in maintaining Ohio's credit
standing, as they still held some of
the state's bonds on their own account.74
Kelley did succeed in his mis-
sion, obtaining a sale to the Barings of
$400,000 in Ohio bonds. The
sale, however, yielded only 60 cents on
the dollar, an all-time low.75
Kelley's efforts won him little
appreciation from the Whig-dominated
fund board's partisan enemies. In
addition to Auditor John Brough's
charges that he had sold out the state's
interests, Kelley became the
target of a sharp attack by the
Democratic newspapers. Typical was
an editorial in the St. Mary's Sentinel,
charging that the sale for 60
percent of par value to the Barings was
"a fair specimen of coon [Whig]
financiering." In this manner, the Sentinel
declared, "the coons protect
Ohio industry . . . [and] take money out
of the pockets of the people
of Ohio, and put it into the pockets of
their friends, the British lords
and capitalists."76
As the Democratic partisans charged,
Kelley and his Whig colleagues
72. Kelley to Elisha Whittlesey,
February 28, 1843, Whittlesey Papers.
73. See Reginald C. McGrane, Foreign
Bondholders and American State Debts (New
York, 1935), passim.
74. Ralph W. Hidy, The House of
Baring in American Trade and Finance (Cam-
bridge, 1949), passim, esp.
260-93.
75. BFC to Barings, June 29, 1842, BFC
Letters.
76. Sentinel, September 27, 1843.
Alfred Kelley
387
had in fact sold state bonds, not only
to the Barings but also to various
Ohio banks in which they themselves held
stock or were officers, at
varying discounts well below par.77
But these critics had little to say
about the other side of the case: simply
stated, there was no other source
of funds available; the bankers and
British capitalists bought at dis-
count prices because there was an
authentic risk of default.
In the scramble to salvage the state's
finances, the commissioners
had drawn upon the good will and
confidence that derived from long-
time business and political associations
within the elite network that
populated Ohio's bank directorates and
the membership of the fund
board. In the absence of this congruence
of state officialdom and private
business notables, it is doubtful that
the state's credit could have been
saved or its program of public works
completed. When the record was
finally laid before the state
legislature, the conservative Democrats and
the Whigs joined forces to uphold
retroactively all the measures adopted
by Kelley and the fund board. By this
time, in 1843-1844, surging canal
revenues, business recovery, and a
stabilization of Ohio's state debt all
served to ease the fiscal situation as
well.
Alfred Kelley's depression-era
embroilment in state banking, politics,
and finance doubtless did much to
inspire his subsequent role in the
reform of the Ohio banking system. After
leaving the canal fund board
in 1843, he was elected to the state
senate the following year and there
turned immediately to the banking issue.
On January 7, 1845, Kelley
introduced legislation to incorporate a
State Bank of Ohio and a group
of new "independent" banks.
The conception was twofold. On the one
hand, there would be centralized
direction of the bank and its branches,
under a Board of Control; the
establishment of the branches would
serve to provide banking capital in
areas of the state that lacked it,
while strong centralized control would
help to attract private investment
capital for the bank. On the other hand,
there would be strict regula-
tion, with the bank and its branches required
to maintain circulation
on a specie-paying basis, and with note
issues limited in relation to
capital. The "independent"
banks of the state, moreover, would be re-
quired to participate in a centralized
Safety Fund (a form of deposit
insurance); and limits were set on
interest rates and on the size of loans
to any individual or firm.78
Enacted in 1845, the Kelley Law
reflected well its author's belief in
77. Especially the Wooster Bank,
controlled by Joseph Lake, Kelley's predecessor as
fund commissioner, and the Ohio Life
& Trust. See Sentinel, February 28, 1844. Cf.
Scheiber, Ohio Canal Era, 152.
78. Weisenburger, Passing of the
Frontier, 420-24.
388 OHIO HISTORY
strongly centralized, purposefully
directed state intervention. It left
ample room for private investment and
entrepreneurship, but it placed
Ohio banking on a sound new footing by
incorporating the best experi-
ence of other states. In a sense, the
Kelley Act provided for a community
of business interests operating under
public scrutiny and designed to
avoid the sorts of conflict-of-interest
and mismanagement that he had
seen develop in the Life Insurance &
Trust Company under his friend
Micajah Williams. Moreover, Kelley's
concern to extend banking facil-
ities to "neglected" regions
of the state represented an extension of his
vision of economic development through
internal improvements.
Instead of random or irresponsible
expansion, as had happened with
transport under the 1837 Loan Law,
Kelley designed a system for ex-
pansion of banking facilities on a
systematic and selective basis. And,
as he predicted in early 1845, the
Kelley Law provided well for "the
wants of commercial and manufacturing
operations, and at the same
time [held] out proper inducements to
those who have money to invest
in banking institutions."79
Kelley's skill as a framer of
legislation was more than matched by his
work on the floor of the assembly. As a
Cincinnati editor later re-
called, "Amendment after amendment
was introduced, many of which
would have marred if not destroyed the
success of the system." But
Kelley managed either to render them
"harmless" through further
amendments, or else, "waiving the
proposition for a time, [to] introduce
them under some less exceptionable
form ... ."80
The substance of the Bank Law indicated,
moreover, that this one-
time champion of state intervention had
shifted ground. Now, instead
of calling for a massive state
investment in banking, comparable to the
canal program of 1825, Kelley sought to
provide the strongest possible
legal framework for private investment,
with the state exercising its
chartering and police powers to assure
probity and to provide systematic
coordination of private enterpreneurial
activities. One can only specu-
late as to whether Kelley might ideally
have preferred to set forth a
banking plan that called for direct
state investment, with public man-
agement. If he did harbor such a
preference, however, such a proposal
would probably have gained little public
support, given disillusionment
that followed the state's close brush
with fiscal disaster in the early
1840s.
If Kelley was no longer a champion of
the activist state in the 1840s,
still he remained concerned to provide
state govwrnment with a sound
79. Quoted in Ibid., 422.
80. Cincinnati Gazette, clipped
in Toledo Blade, January 27, 1849.
Alfred Kelley 389
system of taxation. Thus he served in
1845 as the driving force behind
a comprehensive investigation of the
revenue system. This study led to
substantial revisions in Ohio tax law,
which in their broad features
endured for over a century.81 This was
to be the last of Alfred Kelley's
great contributions to public policy in
Ohio, for in the remaining years
of his life, though he did return to the
state senate in 1855-1857, he
dedicated himself largely to his private
affairs and to the development
of the state's railroads.
By turning his energies to railroad
development, Kelley once again
assumed a central, creative role in
providing Ohio with transportation
facilities-just as he had done in the
canal era. Now, however, his work
was chiefly in the private corporate
sector. He brought to railroad plan-
ning, finance, and management a unique
fund of knowledge and experi-
ence as the result of his canal
activities. His proven ability to manage a
complex, large-scale organization was
not the least of Kelley's advan-
tages; for in the scope and extent of
their operations, as well as numbers
of personnel employed, the antebellum
railroads were without precedent
in the annals of American business.82
And it was through the transfer
of men such as Alfred Kelley from public
enterprise to private railroad
engineering and management that the
early major railroad firms were
able to tap the reservoir of talent and
experience that the active state
had produced. It was an entrepreneurial
asset of no small importance.
Kelley's commitment to railroad
enterprise began in earnest in 1847,
when he was persuaded by the promoters
of two faltering railroad proj-
ects-the Columbus & Xenia and the
Cleveland, Columbus, & Cincinnati
-to accept the presidencies of the two
lines.83 The timing proved auspi-
cious, for at precisely this moment,
Ohio's economy surged ahead, car-
ried forward by the national revival
from the depression of the early
1840s. Ohio's wheat producers were
prospering as the result of excep-
tional harvests and massive European
demand associated with the Irish
potato famine and the repeal of the
English Corn Laws. The newly com-
pleted state canals could scarcely
accommodate the sudden rise in traffic
81. Weisenburger, Passing of the
Frontier, 425-30.
82. See, e.g., Stephen Salsbury, The
Stale, the Investor, and the Railroad: The Bos-
ton & Albany, 1825-1867 (Cambridge, 1967); Alfred D. Chandler, Jr., The
Railroads:
The Nation's First Big Business (New York, 1965); Thomas Cochran, Railroad Leaders,
1845-1890: The Business Mind in
Action (Cambridge, 1953).
83. Marvin, "Alfred Kelley,"
13. Kelley's first formal association with railroads was
his appearance in 1836 as a commissioner
of the newly chartered Muskingum & Co-
lumbus Railroad, planned for a route
linking Zanesville and Columbus. Like many of
the railroads chartered in this period,
however, the venture came to nothing. Walter
Rumsey Marvin, "Columbus and the
Railroads of Central Ohio before the Civil War"
(Ph.D. dissertation, The Ohio State
University, 1953), 46-47.
390 OHIO HISTORY
volume; and with the easing of crisis
conditions in the American and
European money markets, investors both
large and small showed a new
interest in American railroad
equity-stock and bonds.84 Finally, and
not least important, plans were taking
shape for the formation of inte-
grated east-west railroad systems
between the Atlantic Coast and the
Midwest, and Ohio lay squarely athwart
these routes. Thus public en-
thusiasm in Ohio for railroads reached a
historic high point. Not only did
the legislature grant liberal charters
freely, but it also authorized with
equal liberality the issue of county and
municipal bonds (on approval of
local voters in referenda) to finance
aid to railroad companies. The pub-
lic purse was again open for the
promotion of transportation, but this
time on a highly localized basis.85
Amidst the expansion that helped build a
3,000-mile railroad net-
work in Ohio by the late 1850s Kelley
embarked on his new work as
railroad president. When he took command
of the CC&C line, Kelley
confronted a problem of seeming
indifference toward the project on the
part of Columbus's citizenry, who had
subscribed only a small part of
the funding needed and as yet had not
approved municipal bond aid.
Moving vigorously, Kelley soon turned
the situation around, obtaining
both private stock subscriptions and a
vote in favor of aid from the
Columbus voters. As Cleveland and other local
governments had al-
ready extended aid, it remained to raise
additional capital in the East.86
Able to demonstrate strong interest,
now, both in Cleveland and Co-
lumbus, Kelley obtained a large
subscription from the Dwight family of
Massachusetts and New York.87 That
the Dwights should have become
his allies is no surprise, for here he
drew on his connections in Cleveland
banking; the Dwights had been the
principal investors in the Commer-
cial Bank of Lake Erie, and Truman P.
Handy-the man whom Henry
Dwight had sent to Cleveland to be
treasurer of the Commercial Bank-
was also involved in the CC&C
Railroad's promotion.88
Kelley set the now-well-funded
enterprise quickly in motion by ar-
ranging for its construction on highly
favorable terms. The $1,250,000
line was let on contract for its entire
length at once, the contractor
accepting one fourth of the contract sum
in stock.89 Meanwhile, in 1850
84. Scheiber, Ohio Canal Era, 270-94.
85. Ibid.; Robert L. Black, The
Little Miami Railroad (Cincinnati, 1941); Alfred D.
Chandler, Jr., "Patterns of
American Railroad Finance, 1830-1850," Business History
Review, XXVII (September, 1954); Arthur M. Johnson and Barry E.
Supple, Boston
Capitalists and Western Railroads (Cambridge, 1967).
86. Marvin, "Columbus and the
Railroads," 168-90.
87. Ibid., 193.
88. Scheiber, "The Commercial Bank
of Lake Erie," 47-52.
89. Marvin, "Columbus and the
Railroads," 189-90.
Alfred Keller 391
Kelley set out for New York, England,
and Montreal, where (armed
with a guarantee signed by George Bliss)
he successfully obtained iron
rails on credit terms for the line. From
New York, he wrote to his wife:
I find my friends here, and at
Cleveland, as I hear, highly gratified at the result
of my trip to England. And I have no
doubt I could easily get-more easily than
get rid of-divers commissions to buy rails for other companies.
Indeed you can
hardly realize your poor husband['s]
growing popularity as a financial manager
for R.R. Companies. Are you not
delighted with the prospect that I shall not
be soon out of business, if I choose to
accept it for little or no compensation?90
The line was quickly built, and in 1851
it opened for its full length. It
became so successful, moreover, that its
earnings generated funds
sufficient for it to aid in fiancing of
several other major Ohio lines
with which it connected; in fact, the
CC&C became a major source of
funding for some of the state's most
important new lines. This process
of intercompany investment, and the
consequent community of corpo-
rate interests that emerged, set the
stage for several mergers and joint
operating agreements in the mid-1850s.
Largely designed by Kelley,
these mergers and other initiates
force-fed the transformation of
Ohio's railroads from a congeries of
individual short lines to a set of
genuine systems.91
While seeing the CC&C project to
completion, Kelley was also busy
promoting the Columbus & Xenia line,
designed to connect with the
Little Miami and provide an extension of
the Cleveland-Columbus line
to southeastern Ohio and Cincinnati.
This project too was languishing
when Kelley assumed the presidency. But
again he used substantial local-
government bond aid as leverage with
which to raise private subscrip-
tions in Ohio and the East. The $1
million line was built in 1850 and
soon carried traffic at a rising rate,
generating substantial profits in the
early fifties.92 For this
line too, Kelley personally arranged the pur-
chase of rails in England.93 Moreover,
he took personal charge of nego-
tiations with the Little Miami directors,
which assured close operating
relationships between the two lines.94
In 1851 Kelley also became president of
the Cleveland, Painesville,
90. Kelley to his wife, May 30, 1850,
Kelley Papers. On Dwight and Bliss in the
Michigan Central promotion, see Johnson
and Supple, Boston Capitalists, 94-95.
91. Scheiber, Ohio Canal Era, 289-94.
See also Randolph C. Downes, History of
Lake Shore Ohio (3 vols., New York, 1952), I, passim.
92. Marvin, "Columbus and the
Railroads," 139ff.
93. Alfred Kelley to his wife, July 2,
1849, Kelley Papers (dating marked on letter;
verified by reference to date of
construction in Ohio).
94. J. Ridgway, Jr., to Erasmus Gest,
October 28, 1847, The Papers of Erasmus Gest,
Ohio Historical Society.
392 OHIO HISTORY
& Ashtabula Railroad, which had been
incorporated in 1848 and planned
for construction eastward along the Lake
Shore. This road, destined to
be Ohio's link with the main lines then
building westward from New
York and Philadelphia, was struggling
when Kelley took control.
President of the CP&A until 1854,
Kelley oversaw its construction; and
he forged an agreement for its joint
operation with the CC&C.95 At the
time that he finally withdrew from
active involvement in railroad affairs
in 1854, Kelley could justly claim to
have been as much the architect of
Cleveland's modern railroad lines as he
had been the designer of his
state's canal system thirty years
earlier.
There is apparently no record from that
time until his death in 1859
of Kelley's private reaction to the
decline of traffic and revenues on the
Ohio canals, or to the strong movement
to abandon the state works in
the 1850s, largely in consequence of his
and other promoters' achieve-
ments in creating a new privately
controlled transport system with a
more advanced technology. The ironies
could not possibly have escaped
him; but one can surmise, I think, from
the spirit that infused all his
labors from 1822 to the 1850s, that
Kelley found exhiliration as well as
some nostalgia in the consequences of
growth and material progress.
Like many other members of that business
elite in Ohio who played
so instrumental a role in shaping the contours
of material progress,
both through state intervention and
private enterprise, Kelley made the
transition successfully as the Ohio
economy underwent rapid change.
He gave leadership many definitions,
consonant not only with changing
technology but also with the changing
economic goals and aspirations
of the society. His career gave
continuity to the infrastructure of politi-
cal and economic power, and he proved
remarkably flexible and skilled
in adapting himself to rapid economic
development. The activities of
Alfred Kelley over four decades of
hectic change in the Ohio economy
and the state's government serve well to
indicate how the western
business elite functioned in relation
both to public service and to the
transformation of economic institutions.
95. William G. Rose, Cleveland, The
Making of a City (Cleveland, 1950), 211; Mar-
vin, "Columbus and the
Railroads," 206.
HARRY N. SCHEIBER
Alfred Kelley and the Ohio
Business Elite, 1822-1859
In a rare moment of freedom from the
pressures of his work as an
Ohio canal commissioner and legislator,
Alfred Kelley wrote to his wife
in Cleveland, from his rooms at Columbus
in January 1825: "I think it
is not altogether vanity which induces
me to say that my services and
advice have been important in settling
the plan of operations and the
details of the canal system which have
produced so great unanimity in
the Legislature on the Canal bill &
revenue bill."1 Here was an under-
statement of the first order: for as his
wife well knew, those "services"
had consisted of three years of
unremitting labor as one of the two act-
ing commissioners responsible for
directing the surveys for the first
Ohio state canals-long months in the
field, traversing forests and
swamps, suffering from fever and
exhaustion, dealing endlessly with
local politicians, conducting a shrewd
campaign of publicity for the
project, and preparing a detailed plan
for presentation to the legislature.
Finally, in January 1825 had come the
culmination of these three years'
work. Alfred Kelley, Micajah T. Williams
(the other acting commis-
sioner), and their five colleagues on
the first Ohio Canal Commission
had at last obtained legislative
approval of the projects whose construc-
tion would open the canal era in the
West.
For all this, Alfred Kelley had received
a three-dollar-per-day salary
and reimbursement for expenses. There
was the respect of his con-
temporaries, which would shortly win him
an assignment to share with
Williams the direction of actual
construction in ensuing years. But there
was also a more personal satisfaction,
revealed in this same 1825 letter
Harry N. Scheiber is Professor of
History at the University of California, San Diego.
This article is a revision of a lecture
delivered last year at the Western Reserve Historical
Society, for the WRHS and the Ohio Canal
Sesquicentennial Commission, to com-
memorate the 150th anniversary of the
opening of the Ohio Canal's first segment of
line from Cleveland to Akron in July
1827.
1. Alfred Kelley to his wife, January
21, 1825, The Papers of Alfred Kelley, Ohio
Historical Society (hereafter cited as
Kelley Papers).