Topics » Business & Economy   Nov. 19, 2010

The Devils of American Finance - Past and Present

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1792: America's First Financial Scam Artist

William Duer was America’s first major financial scam artist. A merchant who supplied George Washington with war supplies, he became assistant secretary of the Treasury, but left government to speculate, mostly in the stock of America's first banks. He prospered, largely (it seems) on the basis of inside information.

Friend Alexander Hamilton wrote of Duer: "'There must be a line of separation between honest Men & knaves, between respectable Stockholders and dealers in the funds, and mere unprincipled Gamblers."

In 1792, a credit crunch hit. Duer, highly leveraged to get the biggest bang for his bucks, found creditors calling. He couldn't pay, helping trigger a panic. Duer was saved from a frenzied mob shouting, “We will have Mr. Duer, he has gotten our money!” only by being locked up in jail. He would spend the rest of his life in debtor’s prison.