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Tracking the Speculators

by Bob Arnebeck

Scholars have collected the writings of the gods of our city, but they have let the tomes of the devils collect dust. From 1790 to December 1800, Thomas Jefferson spent probably no more than 20 days in Georgetown and never spent a night in Washington City. Land speculators James Greenleaf, Robert Morris, and John Nicholson spent many a day, and Nicholson especially, not a few sleepless nights between Rock Creek and the Anacostia River. Yet their papers are scattered around the country and minimal efforts have been made by Washington institutions to copy and collect them for use in the city. (Since writing this years ago, Ken Bowling got the Library of Congress Manuscript Division to buy the microfilm copy of the Nicholson Papers.)

Understanding what the speculators did to the city is as crucial to understanding the city as studying what L'Enfant did or how the White House and Capitol were designed and built. In October 1791, the city's presidentially appointed commissioners and the original proprietors of the land that was designated as the federal city began dividing city squares along the lines outlined by a March 1791 agreement between the proprietors and president. The proprietors retained half the lots in each square, while the commissioners were to sell the other half to raise money for the city's development.

The first auction, from October 17 to 19, 1791, established $265 as the average price for a 40 by 100 feet lot in the city. That price made proprietors giddy - a few years before, a good price for land there was $50 an acre, and the price reassured the commissioners that eventually the sale of public lots could finance the public buildings. But that October, only 31 lots sold, and in subsequent auctions and private sales by the commissioners, while prices rose, few lots were sold. By 1793, $192,000 in seed money, given by the states of Virginia and Maryland in return for putting the capital on the Potomac, had been spent. To raise money to continue developing the city, the commissioners had to make a large sale.

James Greenleaf was in the city on September 18, 1793, for the ceremonial laying of the cornerstone of the Capitol. Significant as the event was, all knowing eyes were on the 28 year old Greenleaf for it was expected that what he promised to do would ensure the grandeur of the Capitol. James Greenleaf did have a Washington biographer. Allen C. Clark's articles are the best written about early Washington, but he was loath to call a man a scoundrel and so his 1901 book, Greenleaf and Law in the Federal City, is one of the curiosities of historical literature. He apparently had access to the most important manuscript collection in the city that pertains to development in the mid-1790's, Robert Morris's letterbooks at the Library of Congress, but he ignored its implications. On the large question of Greenleaf's culpability in the debacle in Washington real estate, Clark glossed over Morris's enraged indictments of Greenleaf and quoted a letter in which Morris blamed his own failure on the collapse of a London bank in 1793.

Clark did dig into Greenleaf's past but only to find flattering material. He traced his hero's Boston roots and followed him to Holland to flesh out particulars about Greenleaf's Dutch wife, Baroness Antonia Cornelia Elbertine Scholten van Aschat et Oud-Haarlem, and her noble family. He didn't look for the divorce papers Greenleaf filed in the United States. In them Greenleaf told a tale about how without having "practiced any of the arts of seduction," he and the Baroness von Scholten copulated. Upon returning to the United States he learned in a letter that she was pregnant. Friends persuaded him that the honorable thing to do was to return and marry a woman he didn't love. (He also had to return to facilitate some million dollar speculations by Dutch bankers who were using him as their agent.) Upon returning to Amsterdam he was told that she had miscarried but her family prevailed upon him to marry her anyway. After the marriage her chambermaid "unveiled to him the wicked plot." The pregnancy was a hoax. Amidst all this melodrama he did manage to have one son by her. Then after she tried to commit suicide, they separated.

A judge in Rhode Island, which had the most liberal divorce laws in the United States, swallowed all of that and granted him a divorce. Those inured to Greenleaf's modus operandi didn't believe a word. Lawyers in Philadelphia, at the behest of Robert Morris, got a measure of revenge on Greenleaf. When he sued to be released from the Prune Street debtors' prison in Philadelphia, his enemies argued that since Rhode Island granted him a divorce, he could not be a citizen of Pennsylvania and thus could not avail himself of the state insolvency laws. Like all out-of-state debtors he had to stay in prison for at least six months for the delectation of in-state creditors. It requires little digging in the historical record to trace Greenleaf's seduction of George Washington. Returning to America in 1793 and fortified with a considerable fortune gained by trading on American debt notes with the aid of funds from Dutch banks, Greenleaf agreed to bankroll the mercantile house of Tobias Lear. The New Hampshireman subscribed totally to Washington's vision of the Potomac as the major commercial outlet in North America and was retiring as the president's private secretary to make his fortune in the new capital. Lear drafted a letter Washington sent to the commissioners encouraging them to allow Greenleaf to speculate heavily in Washington lots.

Greenleaf was also mindful of ways to the president's heart. In preparation for retirement, Washington was trying to sell his extensive western land holdings. Greenleaf opened negotiations with him. Although prone to strike a bargain in a day or two, Greenleaf took his time with Washington, for good reason. The president expected to get good prices for his land. On August 26, 1793, he told his agent in Virginia that "nothing short of a very high price" would induce him to sell lead near Great Falls, Virginia. He offered Greenleaf 9,744 acres along the Ohio and 23,216 acres along the Kanawha for one pound ($2.66) an acre. There is no record of the course of the negotiation with Greenleaf except that by May 1794 Greenleaf had lost interest, but by then he had gotten most everything he wanted in the federal city.

Evidence of Greenleaf's seduction of the city commissioners has lain unnoticed in Philadelphia in the papers of the North American Land Company at the Historical Society of Pennsylvania. That company, a mechanism to market 6 million acres on the eastern slopes of the Appalachians, became the most enduring expression of Greenleaf's, Morris's and Nicholson's ill-fated speculations. The company they founded was still kicking, albeit worthless, into the second half of the 19th century. Among the papers are copies made from some of Greenleaf's letter and account books not found elsewhere.

Although the three city commissioners were technically equal, Thomas Johnson was dominant. He managed that solely by force of personality. Both of his colleagues, Daniel Carroll of Rock Creek and David Stuart of Alexandria, lived closer to the city. Carroll was part of a politically powerful family, had signed the Constitution, and served in the First Federal Congress. By virtue of marrying the widow of Martha Washington's son, Stuart was part of the Washington family. But Stuart was by nature retiring, and when matters reached a crisis, Carroll confessed to having a bad case of nerves. Johnson had a long record of decisiveness. In the Continental Congress he nominated Washington as commanding general. He was the wartime governor of Maryland. When Washington had to step down as president of the Potowac Navigation Company, Johnson, who had been pushing the development of the Potomac as long as Washington, stepped into the breach. In deference to Johnson, his colleagues on the commission let crises hang fire until Johnson rode to town from Frederick County, Maryland. In late 1791, while riding circuit for his other job, associate justice of the Supreme Court, he missed most of the monthly meetings of the commission. A week after he arrived for the January 1792 meeting, the commissioners fired L'Enfant's crew of workers. Johnson did his best to see that L'Enfant was sacked soon after. He was also the major antagonist in the dismissals of surveyor Andrew Ellicott and his men, as well as the firing of Samuel Blodget, the first superintendent of the city. One wanting to do business in the federal city crossed Johnson at peril.

In September 1793, when Greenleaf opened negotiations with the commissioners for the purchase of 3,000 Washington lots, the speculator bought 15,000 acres of Johnson's Frederick County, Maryland, holdings for $13,300, and continued negotiations for a scheme to mutually develop that county. Led by Johnson, the commissioners let Greenleaf buy 3,000 Washington lots, to average 5,265 square feet per lot, for $66 each with seven years in which to pay, despite the fact that the commissioners had heretofore been doing anything they could to support a price of $300 a lot payable within three years. In turn Greenleaf agreed to build 10 brick houses a year for the next 7 years and also to loan the commissioners $2,660 a month. George Washington wrote glowingly of the deal (only after Greenleaf's negotiations for his western land fell through did he recollect seminal suspicions that Greenleaf got too advantageous terms).

Greenleaf's gambit was to solidify his fortune through investments in American real estate, which he thought would be attractive to Dutch banks. Time was of the essence because Dutch investors then were then rather partial to American lands. So Greenleaf was naturally attracted to Washington lots because they could be bought easily and by the thousands. But to merely invest in and develop Washington lots on funds advanced by Dutch banks would do no more than provide an income that might grow into a fortune. The rising young men of the 1790s were in a hurry to make a fortune. So Greenleaf entered the market in American back lands in hopes that a million acres or so bought for 40 cents an acre could be sold to European investors for much much more.

Robert Morris and John Nicholson, two of the most prominent financiers in the United States, had been pursuing the same goal, and when Greenleaf came to America in 1793, they thought they were well on their way toward establishing a monopoly position which eventually would accrue them enough capital to wipe out their debts caused by a bank failure in London. To pull it off, they thought, they needed only one thing: cash to pay the down payment and taxes on 6 million acres from Pennsylvania to Georgia that they had options to buy. Morris and Nicholson saw in Greenleaf, who boasted openly of an instant million dollar line of credit in Amsterdam, a source of cash. By joining forces with Morris and Nicholson, Greenleaf saw that he could save time because they had already sifted through the offerings of the legion of men who flocked to Philadelphia peddling far off lands.

In December 1793, the partnership was formed. The partnership papers are in the North American Land Company Papers. Greenleaf would mortgage Washington lots to obtain a loan which could be used to buy American back lands. So cocky were the three speculators that they spent the money to be loaned before the loan was negotiated and subscribed. Morris and Nicholson plunged into Georgia, South Carolina, and Virginia lands (much of it worthless even today) and taking lessons from those two avowed monopolists, Greenleaf set out to establish a controlling position in Washington lots. In December 1793, the commissioners let him buy another 3,000 Washington lots, thus doubling his holdings of publicly owned lots. As for those owned by the proprietors, Greenleaf had already bought out Notley Young, an original proprietor who owned most of Southwest Washington. He returned and bought out Benjamin Stoddert and Uriah Forrest who had been buying what land and lots they could just east of Georgetown where they were major landholders and who were planning developments to connect the President's House with Georgetown.

As it turned out, Greenleaf had no line of credit in Holland. Most major banks refused to support his loan. Two banks agreed to package it, which meant no more than that individual Dutch investors could go to their brokers' offices and buy into Greenleaf's loan. The banks packaging the loan offered no assurances. The kindest way to describe the dismal failure of the loan, which Robert Morris retailed to all his dunning creditors, was that Dutchman would have eagerly invested had not the French armies invaded Holland. Historians have accepted that version. Washington real estate went flat because of the war in Europe. Perhaps the matter should be left at that because then it could be said that war was the only war in history that retarded the growth of Washington, D.C. But since Baltimore and New York were booming because of the war, it's fairer to say only that the war was the first excuse to cover up mismanagement and cupidity on the part of those charged with developing the city.

While he was in funds Greenleaf did organize a considerable building campaign. Physical evidence of it still remains in southwest Washington. But the birth certificates of what are called the Law Mansion and Wheat Row lie buried in the North American Land Company papers in Philadelphia. There are copies of Greenleaf's contracts with his factotum, Nathaniel Appleton, and his architects James Simmons, who evidently designed the Law mansion, Joseph Clark, who designed and built Wheat Row, and William Lovering, who designed and built houses along N Street between 6th and 41 Streets SW. In his biography Allen C. Clark pays gentleman Greenleaf the highest compliment of supposing that he himself might have been the architect of the six buildings that once graced Pennsylvania Avenue west of 21st Street. The North American Land Company papers reveal that Georgetown speculator Benjamin Stoddert commissioned John Henderson to build the buildings and then sold the contract to Greenleaf who kept Henderson at work. Greenleaf in turn sold the buildings to Isaac Polock with a stipulation that they be finished, and then he sold that contract to Morris and Nicholson. These contracts need to be studied and the architectural histories of Washington corrected.

Some tracings of the soul of Greenleaf's operations can be found in the William Cranch Papers. Cranch served as a judge in the District of Columbia for more than 40 years. On that account alone some effort should be made in Washington to obtain copies of his papers which in the main are divided between the Massachusetts and Cincinnati historical societies and the New York Public Library. Of these collections, the library's holdings tell the most about Washington in the 1790s. Cranch, who married Greenleaf's sister, Nancy, came to the city in 1794 to supervise Greenleaf's operations. Greenleaf ran a rather top-heavy operation, in part because he felt sorry for Frenchmen fleeing revolutions in France and Haiti. Noah Webster, another Greenleaf brother-in-law, characterized that fawnng retinue as "a bunch of rogues and whores." Cranch who worked with Greenleaf's French assistants thought better of them. One emigre, who called himself Mr. Henry, lived in a house on Capitol Hill, and during the winter of 1794, seems to have done nothing but send letters to Cranch, asking him every question imaginable about the building going on at Greenleaf's Point. The New York Public Library has a generous share of Cranch's replies which reveal such information as the cost per quare foot to build houses, problems facing road and bridge builders and stratagems for helping Greenleaf renegotiate onerous contractual obligations. Unfortunately the Cranch papers do not provide a complete picture of the first private housing development in the city because not long after Cranch answered Mr. Henry's questions, Greenleaf ran out of money.

Greenleaf's failure engendered two sets of records: a legal file bordering on the incomprehensible and a letter file which lays bare the bitter reality of Washington life in the 1790s. The rather thick files of the commissioners' papers at the National Archives do not answer as many questions because by that time, the commissioners had resolved to bother with no more than the public buildings. Which is not to say that Greenleaf, Morris, and Nicholson do not loom large in the commissioners' papers.

By 1799 the commissioners had early exhausted the patience of Congress and the legislature of Maryland from which they had received loans to finance the construction of the President's House and Capitol. The commissioners had to sell at least $50,000 worth of lots to lend any credibility to the original premise that sales of lots could finance the public buildings. Fortified with the opinion of the attorney general, they endeavored to sell lots originally sold to Greenleaf that had never been paid for. But Greenleaf had "sold" them to Morris and Nicholson who in turn had used them to secure loans at the local Bank of Columbia from Georgetowners like Uriah Forrest. At the same time, to satisfy Philadelphia creditors, Greenleaf, Morris, and Nicholson assigned all their claims on Washington property to a committee of those creditors called the trustees of the aggregate fund. The trustees contested the right of the commissioners to sell the property. And then with typical cunning, after assigning his rights to the trustees, Greenleaf went to court to re-establish his ownership of many lots. Consequently a perspective buyer faced a situation in which the commissioners, the trustees of the aggregate fund, Greenleaf, Georgetown creditors of Morris and Nicholson, and the Bank of Columbia, not to mention the sheriff, for various causes of indebtedness on the part of Greenleaf, Morris and Nicholson, might contest and win possession of the lots the commissioners were trying to sell. As late as the 1840's such lots sold for no more than 9/10th of a cent per square foot, or about $47 for a lot.

In the late 1790s public auctions presented the spectacle of speculators buying lots they already thought they owned. For example, Uriah Forrest held hundreds of lots as security for Morris and Nicholson notes that he had endorsed at the Bank of Columbia. Morris was in a Philadelphia debtors' prison. When one Georgetown creditor begging for relief came to visit, Morris had burst into tears. Nicholson was home, keeping in his "castle" where by the sanctity of English legal tradition, he was out of the reach of creditors. It would seem easy enough for Forrest to have the bank foreclose on Morris and Nicholson and for him to take the lots held as security. But Morris and Nicholson only had an equitable interest in the lots and the commissioners claimed the right to reclaim and resell them.

The public auction forced Forrest to buy the lots he held as security. If he didn't, the bank would ask for more security from him for the Morris and Nicholson notes he had endorsed, and Forrest had little to offer. The attorney general did give him one break. The commissioners could only take $80, the original price Greenleaf paid for the lots, and the rest of the purchase price went to whoever held the equitable rights to the lots, i.e. Forrest. This was a ruinous process for the city because it kept new money away. 0n the verge of bankruptcy himself, Forrest was unable to pay the $80 per lot the commissioners desperately needed.

The adverb "desperately" is not used gratuitously. Johnson's successor on the commission, Gustavus Scott, had conspired with Forrest to wrest lots from the desperate Morris and Nicholson. His strategy had been to buy up at about 15 cents on the dollar the notes of Morris and Nicholson, which at that confused time in financial markets provided the men of the 1790s with the thrill and risk that junk bonds did in the 1980s. By 1799 much of Scott's personal fortune was tied up in worthless paper. But banks and even the State of Maryland had insisted on personal security from Scott and the other commissioners as a condition for loans to the city. If the city did not raise money, then Scott might have to personally advance sums that, of course, he did not have. This tormented man with seven growing children gained peace in a painful death on Christmas Day 1800 just as Congress finally convened in the city and cast its eyes on the mess the commissioners had made.

At this distance such a welter of claims is easy to dismiss as a pox of a litigious age. But the Nicholson Papers put a human face on it all. Nicholson was the Mozart of American finance. Like the composer who could hold conversations and write masterworks at the same time, Nicholson could hold off creditors in pleasant badinage while he wrote business letters to the many men who fed off his empire - or thought they did. His letters were masterworks of their kind. Most were short allegros in bright sturdy C major, intermixed with ironic vivacios in sharper keys. In his letterbooks at the Historical Society of Pennsylvania, one finds perhaps 40 sonatas to Morris. Much money will be wasted celebrating the decade long bicentennial of the District of Columbia. No money could be better spent than in publishing the complete correspondence of Nicholson and Morris. No artifact of history would seem so contemporary and explain more about the birth of the city.

Nicholson and Morris, opposites in politics, grew to love each other when the younger man, Nicholson, used his position as comptroller of the state of Pennsylvania to corner the market in state bonds and lands, and graciously invited Morris to participate in the plunder. In 1794 Nicholson survived impeachment but resigned anyway to really amass a fortune. At the crisis point in their affairs, Greenleaf offered to buy out Morris's and Nicholson's Washington holdings or sell his to them. The weary Morris wanted to sell. Nicholson persuaded him to buy, and even when facing imprisonment for debt, kept insisting that what they owned in Washington was worth $10 million. He was a soothing correspondent:

"I've gotten now in the habit of drinking porter water and sugar at night," he wrote to Morris from Washington on November 16, 1796. "It has a pleasing affect. After I went to bed last night I did net awake til 6 in the morning. I have been able to do more business than when I have sleepless nights." And then he settled down to the business of trying to raise money on lots, from loans, by bullying the commissioners and seducing the naive who wanted a piece of the action.

The letters sent to Nicholson, save those from the avuncular Morris, are like folk songs. Unlike no other great man of his age, Nicholson had a common touch. Except when writing to his own plantation overseer, George Washington always wrote to some gentleman who would then tell others what to do. Nicholson carried on a direct, on-going correspondence with his contractors. Thanks to that becoming democracy, there remain pages of letters from the men who actually did the work in Washington City in the mid 1790s. There are some 70 pages of letters from the architect William Lovering, some 400 pages of letters from the builder William Prentiss, some 120 pages from the storekeeper Lewis Deblois, and 200 pages from the tavern keeper William Tunnicliff, including a diary kept by Tunnicliff in 1797.

Admittedly most of the correspondence consists of little more than primal screams for money, but much of the reality of the city is there, too. Deblois, trying to start up operations for Nicholson in the city, wrote on March 9, 1795: "Now my dear sir, my people talk of raising their wages, the business will not afford it, & I would not consent to it had I cash to pay what I borrowed & what is due to them. I must either submit to them & promise to pay higher wages than the business will afford (which promise I can never make good without your assistance,) or give up any further business, for they are daily taking goods out of my shop, and when they know I have taken ten dollars in shop they are like hawks after their prey, ready to devour me for it...."

Deblois managed to build a large tavern at 9th and Pennsylvania Southeast. After an acrimonious dispute with Nicholson over accounts, Deblois broke off their relationship.

Nicholson tapped an Englishman, William Tunnicliff, to run the tavern and manage his affairs in the city. Nicholson warned that Tunnicliff's predecessors had failed because they didn't communicate enough with him. So Tunnicliff began sending up a diary to his boss:"February 26 [17971 - Sunday, Consulted with P. Miller abt. the quantity of bread your Workmen would take pr. Week, we find upon the lowest calculation to amt. to 50 Dollr. pr. week! this sum must consequently be reimbursed to the Baker at least every fortnight, his funds you know will not admit of any longer delay & to stop this supply would be cruel indeed, the last stoppage was severely felt by many, for on the Monday after you left the Baker found the familys waiting. Tea things set & ready to begin their Breakfast's when lo their was no bread to be had as usual, with Tears & the most pitious requests both Husband, Wife & Children all have joined in begging for bread, how can this be denied and how can I proceed long in this supply without I hear from you to effect it."

Bread, of course, was all they were getting from Nicholson. To be fair to the speculators it must be pointed out that they did get things started. They just got precious little finished. Greenleaf boasted of spending upwards of $140,000 on 16 brick houses on Greenleaf's Point in Southwest Washington. Yet only three of the houses were finished. Deblois did finish that tavern for Nicholson, but another half dozen houses were begun on Nicholson's account, not counting his share of the twenty buildings at South Capitol and N Streets, that were unfinished ruins when Congress came to the city. Only three were ever finished. The speculators refused to take responsibility for what they had begun. The four houses on 4th Street Southwest known as Wheat Row are touted by some as architectural gems. Greenleaf was so shocked at their puny size and expense that he refused to pay the builder, Joseph Clark. It was a convenient bit of outrage because when it came time to pay Clark, Greenleaf was running out of funds. Greenleaf, Morris and Nicholson all tried to avoid paying contractors by challenging accounts. As a result most buildings, Wheat Row included, were not finished by the speculators. Contractors were demoralized, workers unpaid, and all work in the city including that on the public buildings was plagued by cheap materials and shoddy workmanship.

The speculators drove Joseph Clark insane. Clark's wife retaliated with a stinging letter to Morris and Nicholson that remains in the Nicholson papers. She wrote from Baltimore where she lived "without money, property, or credit, with an helpless husband, whose intellect you have deranged, by your vile treatment." He had been "insulted and threatened with his life by a hired banditti." The "hired french fellow, a mutilated aristocrat, a french poltroon, miscreant ruffian" even insulted her. She vented her spleen on Greenleaf's Point, which she called "Baneful Point" with its "numerous miscreant junto of gipsies, french poltroons, dolts, delvers, magicians, soothsayers, quacks, bankrupts, puffs, speculators, monopolizers, extortioners, traitors, petit foggy lawyers, ham brickmakers, and apostate waggon makers."

Her diatribe adds poignancy to one of the frequently encountered cardboard characters in Washington history. Her husband, Joseph Clark, by virtue of his being the Grand Master of the Maryland Masonic Lodge, gave the main speech at the laying of the cornerstone of the Capitol in 1793. His hollow pieties at the ceremony are in print. Perhaps the last letter he wrote, his cri de coeur to Nicholson, remains neglected in the Nicholson papers. He pleaded that he had not cheated the speculators, because if he had "I should be afraid to go to sleep lest my offended God would in that situation with his justice scourge me - and I should be afraid to show my face in the streets lest my offended and injured fellow creatures would retaliate......"

By the late 1960s there was scant memory of Nicholson's role in the city. In Constance M. Green's Washington: Village and Capital, he turned up as James Nicholson. In 1800 Nicholson died in debtor's prison in Philadelphia. The state of Pennsylvania seized his papers. For years they sat uncared for in the state capitol where dozens, perhaps hundreds, of the letters he had received from the famous men of his generation, including Morris, were stolen and sold on the autograph market. Greenleaf continued to be active in the city throughout his litigious life, which ended in Washington in 1843. His papers which chronicle 50 years of Washington life remain scattered in libraries across the country. Much of the early history of the city still waits to be collected.