DANIEL PRESTON
Thomas Kelsey,
Hardluck Entrepreneur
In the years following the close of the
War of 1812 a wave of economic
speculation swept through the West. The
Treaty of Ghent, which ended the
war, offered nothing in concrete terms
beyond a much desired peace. But if
the United States had not won the war
against the powerful British,
Americans could at least revel in the
knowledge that they had not lost it ei-
ther. They quickly forgot the many near-disasters
that the nation encountered
during the war and turned their minds to
more important business: No longer
fettered by a preoccupation with the
problems caused by the European wars,
Americans were now free to concentrate
on the great task of nation building.
The postwar optimism that accompanied
this change was particularly
strong in the West. Since the 1750s the
British, the French, the Spanish, the
Indians, and the Americans had been
engaged in a continuous struggle for con-
trol of the Mississippi Valley. The
defeat of the Indians in both the Old
Northwest and in the Gulf region and
Andrew Jackson's victory at New
Orleans confirmed American dominance
over this vast territory. This new
sense of security, combined with a
nationwide economic surge, created an aura
of prosperity and optimism. Immigration
into the West increased tremen-
dously, land prices rose, and businesses
expanded. Driven by a belief in a fu-
ture of unbounded growth, farmers and
townsmen alike speculated in land,
agricultural produce, bank stock,
transportation improvement projects, and
other sorts of business enterprise.1
Western journalist Timothy Flint, writ-
ing in 1832, described this phenomenon
in detail:
[The] flood of immigration of course
increased the amount of transport and gave
new impulse to enterprise of every sort.
Lands rose above their values, and specu-
lation in them became a raging epidemic.
Money, put in circulation by the sale of
lands, abounded in the country. Town
making, steam boat building,-in short, ev-
ery specie of speculation was carried on
to ruinous excess. Mercantile importa-
tions filled the country with foreign
goods. There were no reasonable foundations
Daniel Preston is editor of the James
Monroe Papers at the College of William and Mary. An
earlier version of this paper was
presented at the spring meeting of the Ohio Academy of
History at Columbus, Ohio, in April
1986.
1. Donald Hickey, The War of 1812:A
Forgotten Conflict (Urbana, 1989); Malcolm
Rohrbough, The Trans-Appalachian
Frontier: People, Societies, and Institutions, 1775-1850
(New York, 1978), 157-61.
128 OHIO
HISTORY
to the schemes and no limits to the
extravagance of the people. To give a more fa-
tal extension and efficacy to the mania
of speculation, banks were multiplied in all
the little towns and villages of the
west, whose spurious paper, not predicated on
banking principles nor based upon
capital, answered the turn of speculation, as
long as the excitement of confidence
lasted.2
The growing population and increasing
wealth of both the Western
Hemisphere and Europe created markets
for the agricultural produce of the
West, and thousands of farmers settled
in the fertile Mississippi Valley with
the intention of satisfying this demand.
These Americans moved west with
dreams not merely of establishing new
farms but of making their fortunes-
the farmer by the production and sale of
valuable farm commodities and the
speculator by the sale of land. And
along with the farmers and land specula-
tors came the merchants who settled in
Western towns, hoping to profit from
the sale of agricultural produce. These
urban pioneers strove to enrich them-
selves by establishing the mercantile
and financial institutions and transporta-
tion facilities necessary for the
exportation of the region's agricultural
bounty. While many of them prospered and
some even became wealthy, oth-
ers were not as fortunate.
In November 1810, twenty-one-year-old
Thomas Kelsey, a native of
Killingsworth, Connecticut, arrived in
Hamilton, Ohio. Hamilton (and its
sister town, Rossville) straddled the
banks of the Great Miami River twenty-
five miles north of Cincinnati. Although
only a village with a population of
326 in 1810, Hamilton had established a
flourishing trade with New Orleans.
Merchants shipped local
produce-primarily wheat, pork, and whiskey-down
the Miami River to the Ohio and on to
New Orleans. These same merchants
operated stores, selling merchandise
imported from Philadelphia and other
Eastern cities. Kelsey, who had been
trained in the art of shoemaking by his
father, entered the mercantile trade and
formed a partnership with Hamilton
merchant Willard Smith. Kelsey
apparently brought at least a moderate sum
of capital with him, for he became the
senior partner in the firm of Kelsey,
Smith, and Company.3
Like other merchants in the area, Kelsey
and Smith engaged in both the re-
2. Timothy Flint, The History and
Geography of the Mississippi Valley (Cincinnati, 1832),
179. R. Carlyle Buley, in his The Old
Northwest: Pioneer Period, 1815-1840, 2 vols.
(Bloomington, 1951), echoes Flint:
"In this state of inflation and apparent prosperity, fictitious
values were placed on everything, and
town booming, improvements, commerce, and land
speculation were naturally encouraged.
The western farmer, as well as the mechanic and the
merchant, shared in the profits"
(1: 124).
3. Edward A. Claypool, Azalea Clizbee,
and Earl L. Kelsey, A Genealogy of the
Descendants of William Kelsey (n.p., 1929)): 2: 216-17; Hamilton Intelligencer, 6
April 1824;
(Cincinnati) Liberty Hall, 21
November 1810. Background information on Hamilton's
economy is from Daniel Preston,
"Market and Mill Town: Hamilton, Ohio, 1795-1860" (Ph.D.
dissertation, University of Maryland,
1987).
Thomas Kelsey, Hardluck
Entrepreneur 129
tail trade and in the exporting
business. Most of the residents of southwest-
ern Ohio were cash poor; as a result,
trade depended on an extensive barter
system. Merchants purchased Eastern
goods on credit, sold them to their cus-
tomers on credit, took farm produce in
payment for debts, sold the produce in
New Orleans, and used the profits to pay
their Eastern creditors. Thus,
Kelsey and Smith advertised that they
would accept "beef, pork, wheat,
whiskey, flour, beeswax, butter, cheese,
merchantable fur, hemp, corn, and
live hogs" in exchange for their
store goods.4 When the rivers rose in the
spring, Hamilton merchants loaded the
accumulated produce onto flatboats and
took it to New Orleans. The Miami enters
the Ohio River downstream from
Cincinnati, thus enabling Hamilton
merchants to bypass their large neighbor
and deal directly with New Orleans.
Preparing a boatload of produce for the
New Orleans market was a complex
operation. "It was necessary for the mer-
chants to buy pork," merchant
Joseph Hough recalled, "to pack it-to buy
wheat-to buy barrels-contract for the
manufacture of the wheat into flour,
and then build flat bottomed
boats."5 Once the cargo was ready it was
shipped downriver. Many merchants
accompanied their goods on the journey
south. It is not known whether Kelsey
ever made the trip himself or con-
signed his goods to the care of a fellow
merchant. Given his adventurous
spirit it seems likely that he probably
went to New Orleans at least once.
The dispatch of produce to New Orleans
was only one part of the business.
Western merchants also had to import
merchandise from the East for their
stores. Joseph Hough, who operated a store
in Hamilton from 1806 until
1825, recorded that "we had to
travel on horseback from Hamilton to
Philadelphia a distance of six hundred
miles to purchase our goods." The
merchants procured the merchandise in
the East, hauled it by wagon over the
mountains to Pittsburgh, transferred it
to flatboats, and took it to Cincinnati.
At that point they again loaded their
wares onto wagons and carried them to
Hamilton. "We were generally
engaged three months," Hough noted, "in go-
ing east-in purchasing a stock of goods,
and getting them safely delivered to
Hamilton."6 The
storekeeper sold these goods for cash if he could get it. If
not, he traded them for products that
could be resold in the local market,
shipped to New Orleans, or used by the
trader's family. Kelsey regularly
made the journey east, buying extensive
stocks of "dry goods, groceries,
glass, iron, steel, castings, saddles,
shoes, and boots" in New York and
Philadelphia. During the summer of 1814
he made a side-trip to Connecticut
and married twenty-three-year-old Lydia
Cezanne.7
4. Liberty Hall, 21 November
1810.
5. "A Brief Account of Mr. Hough's
Life Written by Himself in 1852," Cincinnati
Historical Society Bulletin, 24 (October 1966), 308-09.
6. Ibid., pp. 306-08.
7. Liberty Hall, 16 June 1812; Descendants of William Kelsey, 2:
216-17.
130 OHIO HISTORY
Business arrangements in Hamilton were
in a constant state of flux.
Merchants formed, reorganized, and
dissolved partnerships as circumstance and
whim dictated. The firm of Kelsey, Smith
and Company went into business
in November 1810; in early 1813 it
reorganized under the name of Kelsey and
Smith. Fifteen months later Kelsey
bought out Willard Smith's share of the
company for $6,000, and both merchants
went into business by themselves.
Kelsey must have been a capable
merchant, for according to his obituary, he
made a "handsome fortune" from
the export trade.8
In 1815 the postwar speculative boom hit
the West. Kelsey, like other
Westerners, could not resist the siren
song of speculation. His first venture
beyond the mercantile trade was rather
modest. In early 1815 Ebenezer
Ramsey, a doctor newly arrived from
Philadelphia, opened a practice in a
building owned by Kelsey. In December of
that year Kelsey, Ramsey, and
Kelsey's younger brother Frederick
opened the Miami Union Distillery.
Whiskey was a major export from
Hamilton, and other merchants owned dis-
tilleries as adjuncts to their
mercantile business. Although there was some
risk involved, an investment in a
distillery was hardly a reckless undertaking.
The managing firm, working under the
name of Ramsey, Kelsey and
Company, operated a store as well as the
distillery. Ramsey sold out to his
partners in September 1816, and the two
Kelseys continued the business un-
der the title F. Kelsey and Company.
Thomas Kelsey's other mercantile
business remained a separate enterprise.9
After that, Kelsey's ambition got the
better of him and his troubles began.
The Miami River, which served as the
primary conduit of trade at Hamilton,
paradoxically posed a barrier to trade.
Hamilton was located at a ford on the
river, but the always swift current and
sometimes high water made this cross-
ing difficult, especially for wagons
transporting produce or store goods. Two
ferries operated between Hamilton and
Rossville, but they proved to be inade-
quate for the volume of traffic crossing
the river. In January 1815 a group of
merchants, dissatisfied with the ferries,
organized the Miami Bridge Company
to build a covered two-lane toll bridge.
The company's charter called for a
capital stock of $30,000, with shares
priced at fifty dollars each; it required a
down payment of five dollars per share
and a biannual payment of five dollars
until the shares were paid in full. Most
of the merchants and farmers who
subscribed to the capital fund did so
with the intention of financing the con-
struction of the much-needed bridge.
Thomas Kelsey, an original incorpora-
tor, envisioned a different goal and in
January 1817 made an attempt to take
8. (Cincinnati) Western Spy, 27
February 1813, 14 May 1814, 29 December 1815;
Indenture between Thomas Kelsey and
Willard Smith, 7 May 1814, Thomas Kelsey File,
Cincinnati Historical Society; Hamilton
Intelligencer, 20 September 1824.
9. Miami Intelligencer, 6 April
1815, 15 December 1815, 19 January 1816; Hamilton
Philanthropist, 13 September 1816.
Thomas Kelsey, Hardluck
Entrepreneur
131
control of the company. His plan was to
finance construction of the bridge
by issuing notes of credit (a form of
paper money) and lending them out at in-
terest rather than by the sale of stock.
This would, in effect, convert the
bridge company into a bank. Other
subscribers to the company, alarmed at
the threat this proposal presented to
the successful construction and operation
of the bridge, took action to block
Kelsey's attempted takeover. They called a
meeting of shareholders and reorganized
the company, demanding that shares
be paid in full at the time of purchase
and limiting the amount of stock that
any one person could own to forty
shares. This effectively stopped Kelsey's
effort to divert the bridge company from
its original purpose.l0
Undaunted by this rebuff, Kelsey
immediately indulged in another specula-
tive scheme. In April 1817 Kelsey, his
brother Frederick, and his brother-in-
law Henry Cezanne launched the Hamilton
and Rossville Manufacturing
Company.11 The great demand
for Miami Valley produce brought prosperity
to Hamilton and the surrounding area,
but farmers and merchants alike were
frustrated by the constrictions of the
barter system, the lack of local lending
institutions, and their inability to
influence the market for their produce.
Two early efforts to remedy this
problem-the Farmers' and Mechanics'
Exporting Company of Hamilton, created
in 1810, and the Butler County
Exporting Company, established in
1816-were stillborn.
The first of these two endeavors
proposed to "provide a market for the pro-
duce and manufacture of the country, and
secure to the farmers and mechanics
safe, speedy and effective
returns." The prospectus stated that the association
would buy produce from local farmers and
resell it in New Orleans. By com-
bining their resources, the members
would have more capital and could thus
offer better and more stable prices for
agricultural products. At the same
time, the company would gain control of
regional exports and hopefully reap
a substantial profit from its sale. The
articles of association for the company
called for the sale of one thousand
shares of stock at $500 per share paid in
twenty installments. This kind of money
was not available on the Ohio fron-
tier of 1810, and the company never
moved beyond the planning stages. Six
years later the Butler County Exporting
Company embarked on a similar en-
terprise aimed at the "devising and
carrying into effect measures necessary for
the transportation of our produce from
this [place] to New Orleans."
Although the second endeavor proposed
the more practical sale of five thou-
10. James McBride, "History of the
Town of Hamilton, Butler County, Ohio, From Its First
Settlement Until the Year 18--," 3
vols., unpublished manuscript, James McBride Papers,
Cincinnati Historical Society, 1:
164-65.
11. Frederick Kelsey (b. 1792) and Henry
Cezanne (b. 1796) were just two of the family
members who joined Kelsey in Ohio.
According to one source, Lydia Kelsey's father, James
Cezanne (b. 1735?) lived in Hamilton,
but this may have been her younger brother, who was
also named James (b. 1794). Descendants
of William Kelsey, 2: 64, 216-17; Alvan Talcott and
Jacquelyn Ricker, eds., Families of
Early Guilford, Connecticut (Baltimore, 1984), 163.
132 OHIO HISTORY
sand shares of stock at fifty dollars
each, it also failed to commence actual op-
erations. The Hamilton and Rossville
Manufacturing Company, in its turn,
pursued the same goals but on a more
grandiose and complex scale. Like his
predecessors, Kelsey proposed to
initiate a high-volume business for the pur-
chase and resale of the region's
agricultural produce. But he also proposed
that the company would engage in other
types of business as well.12
Despite its name, manufacturing never
played a significant part in the com-
pany's short history. According to its
articles of association, the company
intended to manufacture cotton and
woolen yarn and cloth, paper, potash, and
whiskey, and to "carry on any
manufactory by the operation of steam." The
enterprise was heavily burdened with
other problems, however, and the
Hamilton and Rossville Manufacturing
Company never became the grand en-
terprise that Kelsey envisioned. The
company manufactured whiskey, oper-
ated a store, and engaged in the New
Orleans trade. For all their rhetoric, the
Kelseys were, for the most part, simply
continuing their old business under a
new name. The company's inability to
expand its operations resulted from
the failure of a key component of the
venture: the creation of a bank.
Kelsey's intention was to sell stock in
the company and to issue paper money
backed by the capital generated by the
sale of stock. The company would dis-
tribute its currency through loans and
through the purchase of agricultural
produce. Profits from the sale of this
produce would then be used to under-
write a new issue of paper money and to
finance the operation of the manufac-
turing part of the business. The
company's charter authorized it to raise an
operating fund of $100,000, but the five
initial subscribers to the company
pledged only $16,750. The company's
actual capital consisted primarily of
the distillery and Kelsey's stock of
store goods which the brothers had pledged
as payment on their subscription, valued
together at about $15,000. The two
previous exporting companies never sold
enough stock to go into actual oper-
ation, but Kelsey did not let such a
minor consideration stop him. The own-
ers set up shop, "had a flashy sign
put up over the door lettered 'Office of the
Hamilton and Rossville Manufacturing
Company"' and issued a large run of
paper money to finance the business.13
Kelsey's attempt to subvert the original
intentions of the bridge company
and a general unease among Westerners
about paper money caused
"considerable anxiety" among
the residents of Hamilton. Following a public
meeting on December 24, 1817, a citizens
committee visited Kelsey to de-
termine "the amount of stock of the
said company, the amount of stock paid
12. Western Spy, 13 October 1810,
12 January 1816; Miami Intelligencer, 19 October 1815,
2 November 1815.
13. Articles of Association of the
Hamilton and Rossville Manufacturing Company, 22 April
1817, McBride Papers, private letters,
vol. 18; McBride, "History of the Town of Hamilton," 1:
156-57.
Thomas Kelsey, Hardluck
Entrepreneur 133
in, the amount of notes issued, and
whether or not there is any probability of
their being able to redeem the
same." The committee reported unfavorably on
the company's prospects, and on December
27 thirty-four businessmen pub-
lished a statement announcing that they
deemed it "improper for the citizens
of this place to aid in the circulation
of the notes, or bills of credit, of the
Hamilton and Rossville Manufacturing
Company." The proprietors re-
sponded that they could and would redeem
the notes, but few people believed
it. Confidence in the company was so low
that Kelsey never attempted to
circulate his banknotes in southwestern
Ohio.14
Kelsey used his money to purchase
produce and merchandise in eastern
Ohio, Pittsburgh, and along the Wabash
River in Illinois and Indiana, but res-
idents of those areas stopped accepting
it when they learned of the money's
weakness. He also used the money to
purchase goods from various Indian
tribes. According to one story, a group
of Indians visiting Hamilton to re-
deem their bank notes created a
"great excitement" when they learned that the
currency was worthless and
"required careful watching to prevent them from
carrying out their threats" against
Kelsey.15 The lack of confidence in the
company eventually undermined the
venture. Late in the summer of 1818 the
sheriff seized the company's property to
satisfy its creditors. Henry Cezanne,
the chief clerk for the company and one
of the stockholders, was arrested in
1819 for a debt of $13,000 accrued by
the company and was subsequently re-
leased under the provisions of the
state's insolvent debtor law. Thomas
Kelsey, who had unsuccessfully filed for
protection under the insolvent debtor
law in 1818, was arrested in 1820; he
listed his debts as $11,427 and his as-
sets as 1,245 shares of worthless stock
in the Hamilton and Rossville
Manufacturing Company. He again sought
relief through the insolvent
debtor law, and this time was
successful. Frederick Kelsey, who was also li-
able for the debts of the company,
disappeared. This marked the end of the
undertaking. In 1822 Cezanne's
court-appointed trustee reported that, despite
several attempts, he had been unable to
sell the stock owned by Cezanne "for
any sum whatever" and that the
company should be considered "entirely de-
funct and utterly extinct, and any
claims thereon altogether desperate."16
For all the controversy that it caused,
there was nothing new about
Kelsey's back-handed attempt to form a
bank. Nor was there any question
that Hamilton needed a bank. For
merchants and businessmen in towns like
Hamilton the need for banks was obvious.
The haphazard system of barter,
14. Miami Herald, 26 December
1817, 2 January 1818, 20 May 1818.
15. Bert S. Bartlow et al., eds. Centennial
History of Butler County, Ohio (n.p., 1905), 262.
16. McBride, "History of the Town
of Hamilton," 1: 157; Court of Common Pleas Record, 5:
503, 6: 134-36, 209-10, 347-48,
Archives, Butler County Court House, Hamilton, Ohio;
Western Spy, 28 February 1818; Hamilton Gazette, 29 May 1820;
Report of James Heaton,
trustee for Henry Cezanne, 6 August
1822, Court Papers, Box 8, Archives, Butler County Court
House.
134 OHIO HISTORY
personal loans, and Eastern credit that
developed in frontier Ohio was seen as
an impediment to trade, and merchants
desired a more reliable means of fi-
nancing their transactions. The first
attempts to form a lending institution in
Hamilton came with the creation of the
Farmers' and Mechanics' Exporting
Company of Hamilton in 1810 and the
Butler County Exporting Company in
1816. Modeled on the Miami Exporting
Company in Cincinnati, the com-
panies were ostensibly formed to garner
profits from the export of regional
produce. But the charters awarded by the
Ohio legislature allowed incorpo-
rated companies to issue notes of
credit; that is, they could function as banks.
The Miami Exporting Company, which had
been organized in 1803, com-
pletely abandoned any pretext of being
an exporting company in 1807 and for
the rest of its existence operated
solely as a bank. The prospectuses for the
Farmers' and Mechanics' Exporting
Company and for the Butler County
Exporting Company said nothing about
banking, but there is no reason to
doubt that they intended to follow a
course similar to that of the Cincinnati
company. The Hamilton and Rossville
Manufacturing Company-whose
charter likewise contained no mention of
banking-was simply an audacious
third attempt to follow the example of
the successful Miami Exporting
Company. 17
The first bank to go into actual
operation in Hamilton was the Bank of
Hamilton, chartered in 1818. The
trustees and officers of this enterprise had
none of Kelsey's flamboyant and reckless
style. They carefully controlled the
amount of paper money issued by the bank
and were satisfied to see a modest
profit returned to the shareholders.
Eighteen-eighteen, however, was not a
good year to start a bank; when the
economy collapsed the following year, the
Bank of Hamilton struggled to survive.
It operated on a small, conservative
scale, but the many bankruptcies in
Hamilton and the generally poor state of
the economy eventually took their
toll-the bank was forced to close in 1824
and did not reopen until 1835.18
The officers of the Bank of Hamilton
were all major stockholders in the
Miami Bridge Company. John Reily, John
Sutherland, and Joseph Hough,
all founders of the Bank of Hamilton,
were likewise leaders of the committee
that questioned the value of the
banknotes issued by the Hamilton and
Rossville Manufacturing Company. There
is, therefore, some likelihood that
opposition to Thomas Kelsey's various
banking schemes was the result of an
effort by a group of powerful merchants
and attorneys to suppress an incipient
banking rival. Sutherland was a rival of
Kelsey in a number of enterprises,
and James McBride, another founder of
the bank, was an inveterate foe of all
of Kelsey's undertakings. Even so, the
fear was probably not so much of a
rival banking house as it was of an
ill-founded venture that seemed doomed to
17. Alvin Harlow, The Serene
Cincinnatians (New York, 1950), 30.
18. Preston, "Market and Mill
Town," 96-97.
Thomas Kelsey, Hardluck Entrepreneur 135 |
failure and threatened to damage others as it collapsed. Kelsey's detractors did not oppose the creation of a bank; rather, they questioned Kelsey's ability to create a solvent and reliable institution. For the merchants of Hamilton the question was not whether there should be a bank or even how many banks there should be, but rather, would Kelsey's bank be a dependable one. Kelsey's attempt to establish a manufacturing company may have been poorly executed, but it was hardly ill-conceived. Like his foray into banking, Kelsey's venture into manufacturing reflected clearly the needs of his town. The rapidly growing population of the Ohio Valley created a great demand for manufactured goods, and Western entrepreneurs believed that they could pro- duce goods locally and sell them cheaper than merchandise imported from the East. Indeed, the high cost of shipping acted as a protective tariff of sorts and enabled Western manufacturers to establish themselves in business despite the competition of the more entrenched Eastern producers. By 1820 Pittsburgh and Cincinnati were well on their way to becoming important manufacturing centers, and smaller, more isolated manufactories were scattered about the Ohio Valley. The food-processing industries (milling, distilling, pork pack- ing), which comprised an important segment of the export trade, flourished in Hamilton, as did craft manufacturing. Leather working, for example, occu- pied an important place in Hamilton's economy: shoe shops, tanyards, and saddleries were among the most extensive of the crafts shops in town, and they certainly were the largest employers. Furniture makers also conducted an |
136 OHIO HISTORY
extensive trade, manufacturing a variety
of products and selling them
throughout the Ohio and Mississippi
valleys.19 Kelsey and other like-minded
Hamiltonians recognized the value of
local manufacturing and hoped to move
beyond agricultural processing and
craft-shop production. In 1822 the
Hamilton Intelligencer complained that although there were numerous grist
mills in the Hamilton area, the editors
had to go "twenty-five miles to the
Little Miami" for paper, and
residents needed to travel nearly as far for "a bar-
rel of flaxseed oil." The article
went on to suggest that "a paper mill and an
oil mill might be erected in this place
to much advantage, both to the public,
and the individuals who might embark in
the manufacture of those useful arti-
cles."20 Again, it was
the specific plan and not the general goal that caused
alarm. The impreciseness of Kelsey's
proposal to "manufacture cotton and
woolen yarn and cotton and woolen cloth
or goods and for the purpose of
making paper, of manufacturing pot ashes
and pearl ashes, and of manufactur-
ing ardent spirits from domestic and
foreign materials by the operation of
steam and to carry on any manufactory by
the operation of steam" raised
doubts that he would accomplish any of
these valuable undertakings.21
Kelsey's ventures into distilling,
manufacturing, and banking seriously
damaged his mercantile business. These
activities put a severe strain on his
financial resources, which were already
stretched to the limit by excessive
purchases of Eastern goods. In 1819 his
affairs hit bottom. The Panic of
1819, which struck very hard in Ohio,
compounded his problems. Western
prosperity in the postwar years was
built largely on credit transactions: farm
produce, finished goods, and land were
all bought and sold on credit. Credit
purchases of land in the public domain
were particularly a problem-in 1818
Western land buyers owed the national
government $21 million. When eco-
nomic difficulties in the East forced
lenders to tighten credit, the constriction
of the currency supply devastated the
West.22 Merchants whose businesses
were on a more solid footing than
Kelsey's went bankrupt. "Our country is
like to suffer very much from the state
of our currency," wrote attorney John
Woods. "Our richest and ablest
merchants are failing and thousands, who
were twelve months ago in affluence, are
trembling on the verge of utter
ruin."23 Kelsey, reeling
from the failure of the Hamilton and Rossville
Manufacturing Company, found himself
pursued by the Eastern merchants to
whom he was heavily indebted. Lawsuits
began in January 1818 and contin-
19. Ibid., 108-09,210-12.
20. Hamilton Intelligencer, 30
December 1822.
21. Articles of Association of the
Hamilton and Rossville Manufacturing Company.
22. William L. Barney, The Passage of
the Republic: An Interdisciplinary History of
Nineteenth-Century America (Lexington, Mass., 1987), 130-31.
23. Quoted in Roy C. Woods and Alta H.
Heiser, The History of the Woods Family (Ann
Arbor, 1936), 175-77.
Thomas Kelsey, Hardluck
Entrepreneur
137
ued through the spring of 1822. In all,
Kelsey was defendant in some twenty-
five suits trying to recover over
$50,000 worth of debts, including three suits
by the federal government to recover
delinquent excise taxes on whiskey dis-
tilled by Kelsey and his associates. The
ever-optimistic Kelsey argued that
these setbacks were the result of bad
luck and that if his creditors would allow
him to continue in business he could
recoup his losses and pay his debts.
His plea fell on deaf ears, however, as
judgment after judgment went against
him.24
Many of the Westerners who suffered
losses in the Panic of 1819 had en-
gaged heavily in land speculation. This
was one form of speculation to
which Kelsey remained immune. Other
merchants in Hamilton invested in
local farm land or in parcels of the
public lands. Kelsey, however, owned
only nine lots in Hamilton and
Rossville, most of them business property.
For him, the road to wealth was not
through land but through banking and
mercantile activities.25
Having failed in business, Kelsey turned
to a new profession. He supported
himself in his old trade of shoemaking
and began to study law with a local at-
torney; in April 1822 he was admitted to
the bar. By all accounts he was a
fairly creditable lawyer.26 But
neither the losses suffered in his earlier re-
verses nor the advent of a new career
stymied Kelsey's urge for speculation.
In 1822 he once again headed a venture
that applied to the state legislature for
a charter, this time for a steamboat
company.
The need for improved water
transportation lay heavy upon the minds of the
residents of the Miami Valley. Like all
Western rivers, the Miami was a
fickle stream: in the summer it almost
dried up, and in the early spring it was
a raging torrent that frequently
inundated the town. Although the river had no
falls, the drop from source to mouth was
significant, resulting in an ex-
tremely swift current-particularly at
Hamilton and below. Travel up the
Miami was almost impossible at any time
of the year, and travel downstream
could also be difficult, even when the
river was at the proper stage for naviga-
tion. Boats had to contend with
sandbars, shoals, eddies, snags, and mill
dams, an impediment as hazardous as any
natural obstruction. Flatboats were
well made and efficient, but they were
not impervious to the hazards of navi-
gation. Boats frequently hung up on
obstructions, and collision with a sub-
merged log could send a flatboat to the
bottom of the river. Many New
Orleans-bound boats never made it as far
as the Ohio River. "We are sorry to
witness so many accidents and disasters
in the exportation of our produce
24. Thomas Kelsey to Joseph Hough, 8 May
1822, Kelsey File, Cincinnati Historical Society.
The numerous suits against Kelsey can be
found in Court of Commons Pleas Record, vols. 4-7.
25. Miami Herald, 30 September
1818, 30 November 1818; Hamilton Intelligencer, 17
February 1823, 23 August 1824.
26. Hamilton Intelligencer, 15
April 1822, 6 April 1824, 20 September 1824.
138 OHIO HISTORY
down this river," wrote the editor
of The Volunteer, a Hamilton newspaper.
"We will readily acknowledge our
error and criminal negligence when they
will have cost us more property and
lives than would have removed the evils
at first."27
These dangers to navigation, combined
with restrictions placed on com-
merce by seasonal fluctuations of the
water level, prompted the inhabitants of
the Miami Valley to consider various
methods of improving the river for nav-
igation. In 1811 and 1812, at the urging
of local residents, the state assem-
bly passed laws regulating the
construction of mill dams on the Miami; in
early 1816 the state legislature created
the Miami Navigation Board and in-
vested it with the authority to remove
any mill dams that obstructed traffic on
the river. This legislation did very
little to alleviate the problem, however.
The following January the Hamilton
Philanthropist published a proposal for
the establishment of a private company
to build a system of locks and canals
along the river, but nothing came of it.
In 1824 a group of citizens from
Dayton requested the state legislature
to fund the improvement of navigation
on the Miami. In a letter published in
the Hamilton newspaper the
Daytonians called upon the inhabitants
of Hamilton to support their petition
for state aid to enlarge the channel of
the river and to construct locks around
mill dams and other obstructions.28
An essential improvement to navigation
recommended by the Dayton pro-
moters was the deepening of the Miami
River "to admit steam boats of rea-
sonable draft and burthen to navigate
the river for the greater part of the
year."29 Steamboats had
been running successfully for several years on the
larger rivers in the West, and residents
along the smaller rivers dreamed of the
day when steamboats would dock at their
towns. By 1817 or 1818 it was be-
coming clear that flatboats, with their
limited cargo space, were inadequate for
the task of carrying the increasing
volume of wheat, pork, whiskey, and other
produce being shipped down the Miami
River. Merchants and farmers up and
down the valley began to search for an
improved means of water transporta-
tion. A steamboat, with its larger
carrying capacity and the ability to return
upstream after transferring its cargo to
New Orleans-bound steamers at the
mouth of the Miami, offered a more
efficient alternative.
Kelsey's efforts to build a steamboat
commenced just as the Hamilton and
Rossville Manufacturing Company was
beginning to collapse. Indeed,
Kelsey envisioned steam navigation as
part of this enterprise, for the bank-
notes issued by the company depicted a
steamboat plying the waters of the
27. The Volunteer, 14 April 1823.
28. Hamilton Philanthropist, 3
May 1816, 10 January 1817; Hamilton Intelligencer, 25 May
1824; Carl M. Becker and Leland Johnson,
"History at the Bar: Navigability of the Great
Miami River," The Journal of
Transport History, 12 (September 1991), 154-55, 162-63.
29. Hamilton Intelligencer, 25
May 1824.
Thomas Kelsey, Hardluck
Entrepreneur
139
Miami River between Hamilton and
Rossville. In September 1819 Kelsey
formed a partnership with steamboat
inventor Daniel French, the designer of a
type of steam vessel called a sectional
boat that supposedly could navigate in
shallow water. Under the terms of their
agreement French was to supervise
the construction of the vessel, named
the "Sea Serpent," and Kelsey was to
manage the business. Construction began
almost immediately, but Kelsey's
financial difficulties impeded work on
the boat. He invested what money he
had in the project, borrowed from
others, and used his earnings as a shoe-
maker to pay back wages owed to his
workmen. French, perhaps wary of the
dangers of an association with Kelsey,
sold his share in the boat to Joseph
Hough in October 1820. Allan Caulkins, a
boat builder, also became a part-
ner and assumed French's duties for
construction of the vessel. By then,
however, the depression was at full
force, and even a merchant as prominent
and as prosperous as Hough could not
raise the money necessary to finish the
boat. Kelsey, the driving force behind
the project, went to jail for his debts,
and work on the boat came to a halt. In
1822, after a two-year hiatus, Kelsey
and Hough concluded that the only way to
finance construction of the boat
was to establish a joint-stock company.
Kelsey, besmirched by his other
failures, was no longer in a position to
take the lead in the enterprise.
Accordingly, Hough, along with former
steamboat captain Israel Gregg and
Hamilton physician Daniel Millikin,
petitioned the state legislature in
December 1822 for articles of
incorporation for "The Ohio Steam Boat
Company."30
Kelsey's proposal to build a steamboat
that could navigate in the shallow
waters of the Miami River had
considerable appeal. Merchants such as
Joseph Hough who had opposed Kelsey's
earlier speculations saw great merit
in the plan. By 1822, however, Kelsey's
reputation was enough to sink any
plan with which he was associated, no
matter how meritorious the enterprise
or how reputable his associates. Kelsey
tried to stay in the background, but
his leadership in the venture was well
known. His earlier misadventures as a
merchant, his attempt to take over the
bridge company and, more particularly,
his recent involvement in the Hamilton
and Rossville Manufacturing
Company tainted the project. When the
proposal to incorporate the steam-
boat company was announced, many
Hamiltonians suspected that this was
another scheme to enrich Thomas Kelsey
at the expense of the community.
Although other members of the company
were respected citizens, Kelsey's
30. Articles of agreement between Daniel
French and Thomas Kelsey, 23 September 1819,
Kelsey File, Cincinnati Historical
Society; Allen Caulkins power of attorney to Thomas Kelsey,
24 May 1820, Deed Book, Recorder's
Office, Butler County Court House; The Volunteer, 1
September, 15 September, 22 September, 6
October 1823, 16 March, 20 April, 4 May, 11 May,
18 May, 25 May, 1 June, 8 June 1824; Hamilton
Intelligencer, 15 September 1823, 18 May, 6
April, 8 June 1824. The banknote is in
the John Jay Rowe Collection at the Cincinnati
Historical Society. A design of the
sectional boat has not been found.
140 OHIO HISTORY
reputation was so poor that the
integrity of the enterprise was immediately
questioned. David Higgins, one of
Hamilton's representatives in the state as-
sembly, blocked the bill of
incorporation. The town divided on the issue, and
the controversy raged until June 1824.
Opponents and defenders of the
steamboat plan attacked each other in
the newspapers, vilifying their adver-
saries and questioning their motives.31
Supporters of the company claimed that
Kelsey's alleged transgressions in
the past had no bearing on the case.
James Shield, a state legislator from
Butler County who supported the company,
wrote:
To facilitate the exportation of our
surplus produce, particularly at such times as
the low state of our waters render it
very difficult or almost impossible to export in
boats of the usual size and
construction, was the the inducement with the represen-
tatives of this county to vote for
incorporation of the company, out of their funds
to construct sectional boats, wherewith
to navigate our shallow waters.32
Opponents of the plan refused to believe
that Kelsey could have honest mo-
tives and suspected that the company was
an underhanded effort to establish a
bank. Their fear was that Kelsey and his
associates would take subscriptions
for the stock, issue paper money
supposedly based on the capital, and then
abandon work on the boat. "Under
their charter (if it had been granted)," wrote
one of the company's critics,
they could have issued bills of credit,
and would probably have cut much such a
dash as the famous "Hamilton and
Rossville Manufacturing Company" did, or as
the honest Bank of Hamilton
itself, which two institutions, have already injured,
ruined and broken many people, and has
also been the means and cause of more
strife, litigation, quarrels and misery
than will be settled or atoned for in ten years
yet to come.33
By the summer of 1824 the controversy
had all but ended. It became clear
that Kelsey and his associates were not
going to receive the articles of incor-
poration or raise enough money to finish
the boat. Furthermore, construction
had begun on the Miami Canal, a waterway
that would make navigation of
the Miami River obsolete. The unfinished
steamboat, "which non-descript
lately graced the boat yard at
Hamilton," was no longer an issue.34
The Ohio Steam Boat Company was the last
of Thomas Kelsey's projects,
for he died in September 1824. His death
was as tragic as his entrepreneurial
career. During the summer of 1824 both
Kelsey and his wife contracted bil-
31. The Volunteer, 1 September,
15 September, 22 September, 6 October 1823, 16 March,
20 April, 4 May, 11 May, 18 May, 25 May,
1 June, 8 June 1824; Hamilton Intelligencer, 18
May, 6 April, 8 June 1824.
32. The Volunteer, 22 September
1823.
33. Ibid., 1 September 1823.
34. Ibid.; Hamilton Intelligencer, 20
September 1824.
Thomas Kelsey, Hardluck
Entrepreneur 141
ious fever. Lydia died on September 13
and Thomas on September 18; she
was 33, and he 35. They were survived by
four children, including a month-
old daughter. The Hamilton
Intelligencer, a local newspaper which had sup-
ported the steamboat company, published
a sympathetic obituary. Kelsey's
funeral, according to the Intelligencer,
attracted a "numerous and respectable
concourse of people."35
At first glance Thomas Kelsey appears to
has been a renegade speculator, an
ambitious and unscrupulous young man
whose ambitions exceeded his means
and who frequently placed his own
desires ahead of the good of the commu-
nity. Much of this is true, for he was
overly ambitious and reckless in his
business ventures. Many of his neighbors
saw him as unreliable, others
thought him a scoundrel. But a
considerable number of people in Hamilton
did not share this view. Kelsey seems to
have been generally popular among
his neighbors during the early years of
his career, and despite the alarm caused
by his attempt to take over the bridge
company and by the establishment of
the Hamilton and Rossville Manufacturing
Company, he managed to retain
much of that good will. He studied law
with Thomas Blair (a prominent at-
torney who had been a critic of the
Hamilton and Rossville Manufacturing
Company), gained admittance to the
county bar, and mustered considerable
support for his steamboat plan. His
partners in the steamboat company were
among the most outstanding citizens of
the town. Furthermore, his death and
that of his wife generated genuine
mourning. Kelsey's short life was steeped
in controversy, but he was not some
troublesome visionary. On the contrary,
he stood directly in the mainstream of
Western progressiveness. It was not
Kelsey's proposals for advances in
banking, manufacturing, and transportation
that aroused the distrust of the people
of Hamilton; rather, it was the flimsy
basis on which he built his plans that
scared them. The people of Hamilton
may have balked at Kelsey's methods, but
many of his fellow citizens-like
Westerners in other towns-shared his
desire for better control of the agricul-
tural export trade, for an expansion of
banking facilities, for an increase in
Western manufacturing, and for better
transportation. They must have ad-
mired Kelsey's progressive thinking-his
efforts to introduce steam technol-
ogy in both manufacturing and
transportation and his early attempt to estab-
lish a banking institution when one did
not exist. Nor could they be overly
critical of his penchant for
speculation, for as Timothy Flint noted, the mania
for speculation raged throughout the
West. Kelsey was not the only
Hamilton merchant to speculate, and he
was not the only one to fail. The
residents of Hamilton could hardly
condemn Thomas Kelsey, for his goals
were the same as theirs. Kelsey's
problem was not that he speculated, but
that he was not very good at it.
35. Hamilton Intelligencer, 20
September 1824; Descendants of William Kelsey, 2: 216-17.
DANIEL PRESTON
Thomas Kelsey,
Hardluck Entrepreneur
In the years following the close of the
War of 1812 a wave of economic
speculation swept through the West. The
Treaty of Ghent, which ended the
war, offered nothing in concrete terms
beyond a much desired peace. But if
the United States had not won the war
against the powerful British,
Americans could at least revel in the
knowledge that they had not lost it ei-
ther. They quickly forgot the many near-disasters
that the nation encountered
during the war and turned their minds to
more important business: No longer
fettered by a preoccupation with the
problems caused by the European wars,
Americans were now free to concentrate
on the great task of nation building.
The postwar optimism that accompanied
this change was particularly
strong in the West. Since the 1750s the
British, the French, the Spanish, the
Indians, and the Americans had been
engaged in a continuous struggle for con-
trol of the Mississippi Valley. The
defeat of the Indians in both the Old
Northwest and in the Gulf region and
Andrew Jackson's victory at New
Orleans confirmed American dominance
over this vast territory. This new
sense of security, combined with a
nationwide economic surge, created an aura
of prosperity and optimism. Immigration
into the West increased tremen-
dously, land prices rose, and businesses
expanded. Driven by a belief in a fu-
ture of unbounded growth, farmers and
townsmen alike speculated in land,
agricultural produce, bank stock,
transportation improvement projects, and
other sorts of business enterprise.1
Western journalist Timothy Flint, writ-
ing in 1832, described this phenomenon
in detail:
[The] flood of immigration of course
increased the amount of transport and gave
new impulse to enterprise of every sort.
Lands rose above their values, and specu-
lation in them became a raging epidemic.
Money, put in circulation by the sale of
lands, abounded in the country. Town
making, steam boat building,-in short, ev-
ery specie of speculation was carried on
to ruinous excess. Mercantile importa-
tions filled the country with foreign
goods. There were no reasonable foundations
Daniel Preston is editor of the James
Monroe Papers at the College of William and Mary. An
earlier version of this paper was
presented at the spring meeting of the Ohio Academy of
History at Columbus, Ohio, in April
1986.
1. Donald Hickey, The War of 1812:A
Forgotten Conflict (Urbana, 1989); Malcolm
Rohrbough, The Trans-Appalachian
Frontier: People, Societies, and Institutions, 1775-1850
(New York, 1978), 157-61.