A Bank for Modest-income Workers

  • Prosperity
  • 1819

Born in 1758, Thomas Eddy was a paragon of entrepreneurial ingenuity in both business and philanthropy. The scrappy Quaker founded the first mutual insurance company in New York City, helped devise the Erie Canal, pioneered prison reform (see 1825 entry), and much more. But most observers agree his greatest philanthropic achievement was the founding of the Savings Bank of New York. Eddy admired similar institutions in Boston and Philadelphia, which helped the working poor by providing a safe place to deposit small savings, and by paying interest that helped the poor accumulate wealth. Historian Kathleen McCarthy notes that the bank “was designed as a philanthropic venture in its techniques, as well as its aims.” Directors like Eddy volunteered their time; no paid staff were engaged. And profits were channeled to pay interest to depositors rather than dividends to investors.

When the state legislature resisted incorporating the proposed bank, the Society for the Prevention of Pauperism, an earlier Eddy endeavor, launched the Bank as its own project. Just a half-decade after opening, it was serving 9,000 depositors who had entrusted it with $1.4 million in funds. The bank further helped working Americans by investing much of its capital in the Erie Canal, which, as McCarthy put it, “provided the backbone for the market revolution by helping to speed the movement of money and goods across the hinterland.”