Thomas Eddy was one of New York City’s leading financiers, who led some of the most innovative philanthropic efforts of the early 19th century. He founded the first mutual insurance company in New York City and was among the first commissioners of the Erie Canal. But Eddy was far better known for his charitable work. He led the efforts to reform penal laws, complete the construction of the New York Hospital, and founded the New York Savings Bank, a spectacularly successful charitable bank that was specifically designed to serve the working poor.
Born in 1758 to Quaker immigrants from Ireland, Eddy grew up in and around Philadelphia. During the Revolutionary War, Eddy sided with the Loyalists, and remained engaged in commerce as hostilities flared around him. When he turned 21, he moved to New York City, where he and his brothers set up a merchant house. The business prospered for a while, and Thomas opened a satellite office in Philadelphia. Eddy won a lucrative contract for transporting remittance money (charging 4 percent on all contracts) from the British headquarters in New York to the troops who were taken prisoner after the fall of Yorktown.
In 1791, Thomas returned to New York, where he set himself up as the city’s first insurance underwriter. He made a fortune speculating in the first issue of federal debt and was asked to become a director of the Mutual Insurance Company. As his reputation grew, he was invited to join other boards, including that of the Western Inland Navigation Company, which had been established in 1792 for the purpose of developing a navigable route along the Mohawk River to Lake Ontario. When it proved impractical, he proposed building a canal rather than relying on river navigation. His idea became the basis for the Erie Canal. When the project was presented to the legislature in March 1810, Eddy was appointed one of the project’s first seven commissioners.
“There is no benevolent or charitable institution founded of which he was not the serious promoter,” proclaimed New York grandee Cadwallader Colden in 1833. To an early 19th century observer, it would certainly appear so. Eddy was chosen to meet with the Indians of the Six Nations, negotiating treaties and working to alleviate their suffering. He was a charter member of the New York Manumission Society. He was a founding trustee of the New York Bible Society. And he established, and for years was the primary benefactor of the House of Refuge, one of the first charities dedicated to turning around the lives of juvenile delinquents.
One of Eddy’s most noted philanthropic achievements was the reform of New York’s penal laws. In the early 1790s, he began a campaign to end branding, whipping, and solitary confinement in the state prisons. In 1796, he shepherded a bill through the state legislature that established new standards for the penitentiary system. He was appointed to oversee the construction of the first state prison and served from 1797 to 1801 as its first director. On the basis of those experiences, he published in 1801 An Account of the State Prison or Penitentiary House in the City of New York, a landmark book in the history of prison reform.
Equally significant were his efforts to open the New York Hospital. Efforts to build a free hospital for the poor of New York City were begun in 1771. A fire destroyed the first building; the Revolutionary War interrupted the construction of its replacement. Progress stalled. Eddy took it upon himself to drive a new charitable subscription, to which he contributed liberally, and to get the project finished. For his efforts, he was made governor of the hospital in 1793. In 1815, he launched another such project, leading the push for the establishment of a mental asylum in Bloomingdale, New York.
But Eddy’s greatest philanthropic accomplishment was almost certainly the Savings Bank of New York. Largely forgotten today, the mutual savings banks of the 19th century were an invaluable resource for the working poor. “Mr. Eddy,” wrote Samuel Lorenzo Knapp, “impressed with the utility of these institutions to industrious persons of small means, saw only another plan of giving scope to that active spirit of philanthropy which fired his soul.”
Unlike commercial banks of the era, mutual savings banks sought out small depositors of modest means, investing their funds at minimal risk while providing at least a 5 percent return. The banks did not pay dividends, and, rather than reinvesting the profits in paid staffs, most of these early ventures were run by trustees who volunteered their time. At a time when banks were unsecure, deposits were not guaranteed, and the only other method of saving was to hoard cash, the mutual savings bank offered a secure depository—with reasonable rates of interest.
Eddy did not invent the idea of a mutual savings bank. By the time he floated his first proposal in 1803, Boston and Philadelphia had already pioneered the model. Eddy’s great accomplishment was making the Savings Bank of New York an unparalleled success. “One of SBNY’s founders, John Pintard, optimistically predicted that the bank would accumulate $50,000 worth of deposits in its first year,” writes historian Kathleen McCarthy. “Instead, it drew $155,000 in the first six months. And its resources grew exponentially thereafter. In 1825, 9,000 investors had $1.4 million on deposit; ten years later, the number of investors had risen to 23,000, with $3 million in funds; by 1860 over 50,000 passbook holders had nearly $10 million on deposit.”
Thomas Eddy died in September 1827, age 69, of paralysis. “He had been failing for several months, but at last his death was as sudden as his life was serene,” wrote his biographer Samuel Lorenzo Knapp. “He who had done so much to alleviate the sufferings of others, was not doomed to suffer much himself.”
~ Christopher Levenick