Alfred Kelley
Alfred Kelley (November 7, 1789—December 2, 1859) was a banker, canal builder, lawyer, railroad executive, and state legislator in the state of Ohio in the United States. He is considered by historians to be one of the most prominent commercial, financial, and political Ohioans of the first half of the 19th century.
Alfred Kelley
November 7, 1789
Banker, canal builder, lawyer, legislator, railroad executive
Building the Ohio and Erie Canal;
saving Ohio from bankruptcy;
establishing the State Bank of Ohio;
Building the Cleveland, Columbus and Cincinnati Railroad
Kelley is known as the "Father of the Ohio and Erie Canal" for his successful legislative attempt to establish the Ohio and Erie Canal. He was one of the canal's first two "acting commissioners", and oversaw its construction and completion. He was the president of Columbus and Xenia Railroad (completed in 1850) and the Cleveland, Columbus and Cincinnati Railroad (completed in 1851), and pushed for a state charter for the Cleveland, Painesville and Ashtabula Railroad (later known as the Lake Shore and Michigan Southern Railroad). For this, he is known as the architect of Ohio's rail system.
As a member of the Canal Commission Fund, he helped save Ohio from bankruptcy in 1841 and 1842. As a state legislator, he led the investigation into and secured the resignation of two Ohio State Treasurers for financial malfeasance, successfully proposed legislation abolishing imprisonment for debt, created the State Bank of Ohio, reformed the state's tax system, and successfully proposed legislation to create the first state oversight of public education.
Kelley was notably the first lawyer and prosecuting attorney in Cleveland. He became the youngest member of the Ohio General Assembly at the age of 25, and returned to the legislature numerous times, until he became the oldest serving in the assembly.
Early legislative career[edit]
In October 1814,[40] Alfred Kelley was elected to the Ohio House of Representatives.[41] He was the youngest member of the state legislature,[42] barely old enough to meet the Ohio constitution's age requirement for holding public office.[43] He was re-elected in 1815[44] and 1816.[45][i]
Kelley did not seek office in 1817 or 1818, but was elected again to the House in 1819. He served a single term,[46] and did not run for reelection. His legislative accomplishments in this short period were numerous. Kelley successfully proposed that the Ohio House create a finance committee, and the members elected him its first chair. Within weeks, he authored a report which argued for taxation of land according to value and not use.[47] No action was taken on the report; it would not be until 1846 that the state's property tax laws were changed.[48] Kelley was also one of five members of the legislature appointed to a special committee to investigate financial malfeasance by Hiram M. Curry, the Ohio State Treasurer, and his predecessor, William McFarland, both of whom had incurred substantial deficits, embezzled funds, and exhibited incompetence.[49] Curry resigned, the first state official to do so for corruption.[50] Some of Kelley's legislative proposals were less successful. He introduced the first bill barring imprisonment for debt, but it did not pass.[25][51][52][53] He also supported a bill to allow free African Americans to testify in court against white citizens, but this also did not win enactment.[54]
Involvement with the Ohio & Erie Canal[edit]
Support for a north-south canal in Ohio[edit]
In 1816, the state of New York asked the state of Ohio's aid in building the Erie Canal. The request was referred to the Ohio House committee on public works, which was chaired by Kelley. He wrote a report endorsing the project, but the Ohio General Assembly did not act on New York's request.[55] Kelley and others came to believe that a canal linking the Ohio River with Lake Erie would greatly benefit Ohio. They frequently communicated with New York Governor DeWitt Clinton and those building the Erie Canal, and circulated glowing reports about construction progress and the ease with which financing was obtained. They also worked to build a coalition strong enough to overcome parochial opposition to an Ohio canal.[42]
In one of his first acts as Governor of Ohio, in December 1818 Ethan Allen Brown proposed construction of a canal between the Ohio River and Lake Erie. A financial panic occurred between March and August 1818[56] that led to a severe national recession (known as the Panic of 1819) that militated against any consideration of a major spending bill like the canal.[42] The recession finally eased in the spring of 1821.[57]
Bank investor and executive[edit]
Using the canal fund to build banking relationships[edit]
Kelley built extensive business and personal relationships with bankers in Ohio and New York City while a Canal Commissioner.[92] To help Ohio banks, Kelley required that canal workers be paid in bank scrip. This ensured that bank scrip circulated more widely, helping to expand a bank's market and making each bank's scrip more widely accepted by the public.[92][r]
Banking roles[edit]
Kelley's close association with the banks made him a leading figure in the Ohio banking community by the mid-1830s.[92] In April 1832, Kelley and eight others sought additional investment to help expand the Commercial Bank of Lake Erie.[123] Most of the capital was provided by Henry W. Dwight and his wealthy family of bankers and investors.[124][125][s] The Commercial Bank of Lake Erie was Cleveland's only bank from 1832 to 1834, and afterward only one of two. Until the expiration of its charter in 1843, it provided most of the scrip and bills of credit in northern Ohio, provided the underpinning for nearly all of Cleveland's business community, and was one of only a few major banks where the state and federal government deposited specie.[126] Kelley pushed the bank to become involved with the Ohio & Erie Canal. It received specie payments from Eastern bond investors and disbursed scrip and specie on behalf of the Canal Fund Commission.[104] Kelley also became a major investor in the Franklin Bank of Columbus[127] (probably no later than June 1836).[128] This institution, founded in 1816,[129] became a depository for canal funds and disbursed specie and scrip on behalf of the Canal Commission,[104] and Kelley was later elected to the bank's board of directors.[127] Through Micajah Williams, Kelley also became a stockholder in the Franklin Bank of Cincinnati.[130]
Second return to the state legislature[edit]
Kelley's role in the Canal Fund Commission financial crisis left him with strong views about the state's banking system. His experience on the fund commission had not changed his belief in strong, centralized state government. However, rather than heavily regulate Ohio's banks, he now sought to strengthen state incentives for banks to engage in better decision-making.[199] Like-minded individuals persuaded him to run for Ohio Senate in 1844 in order to pass banking reform legislation.[200] Kelley ran for and won office to the state senate in 1844[201] and 1845.[202]
During the 1844-1845 legislative session, Kelley was elected chairman of Ohio Senate's committee on currency[203] and was a member of its committee on finance.[204] On January 7, 1845, he introduced a bill to establish a State Bank of Ohio. The state bank was authorized to establish branches throughout the state to provide new capital to local banks and the public. The capital provided to local banks carried with it new requirements designed to strengthen and reform financial practices, thus lessening the likelihood of future bank failures. This, in turn, would encourage outside investment in Ohio. The second part of the bill concerned the issuance of new bank charters and the re-issuing of charters to banks whose charters expired. All state-chartered banks henceforth would be required to participate in a form of deposit insurance, limits were set on the rate of interest which could be charged (to avoid usury), and the size of loans given to any individual or firm were restricted (to help rein in risk-taking and reduce the likelihood that a single large loan default could ruin the bank).[197]
Although strongly attacked by Democrats,[205] Kelley's banking bill was adopted by the legislature almost unchanged.[206] The Kelley bank bill ended much banking chaos and confusion in Ohio.[207] As predicted, the banking legislation increased capital in Ohio at a time when it was sorely needed,[205] and helped end much of the conflict of interest and mismanagement in the state's private banks.[199]
Kelley also sought to reform the state tax code.[208] He authored a comprehensive report on the tax system which the finance committee submitted to the Ohio Senate on February 17, 1845.[209] As he had 26 years earlier, Kelley proposed taxing property according to its value, not its use. This time he was successful: The bill passed the General Assembly on March 2, 1846,[48] and the parameters of the bill governed Ohio's tax code for more than a century.[208]
Cleveland, Columbus and Cincinnati Railroad[edit]
Election as president of the line[edit]
The Cleveland, Columbus and Cincinnati Railroad (CC&C) was chartered by the state of Ohio on March 14, 1836,[236] and authorized to construct a railroad from Cleveland to Cincinnati, passing through the cities of Columbus and Wilmington.[237] Fundraising failed, no construction occurred, and the charter lapsed.[238][239] In 1845, a group of Cleveland business and civic leaders[240] succeeded in persuading the Ohio General Assembly to revive the charter on March 12, 1845.[237] Once more, the company failed to raise funds for the venture[241][242]
Financier Edmund Dwight, representing the wealthy Dwight family of Massachusetts and New York,[88] visited the city in August 1847. The Dwights and Kelleys had invested in the Commercial Bank of Lake Erie,[124] and the Dwight family was strongly interested in Ohio railroads.[104] Edmund Dwight told the board that improved investor confidence was needed to raise funds, and this required that the board seek a new leader who could ensure the efficient and timely construction of a well-built railroad.[240] The president of the CC&C resigned[243] and Alfred Kelley and Leonard Case Jr. were elected to the board of directors.[244] Kelley was appointed president on August 13.[244][243][245][am]
Raising funds and constructing the road[edit]
Kelley immediately began speaking with his colleagues in the banking and finance fields, and by early September 1847 indicated to the board that a favorable response had been found among investors in New York City.[246] Kelley ordered construction of 10 miles (16 km) of track near Cleveland to test new construction methods and railroad technology.[247] To ensure that the new charter did not lapse, on September 30, 1847, Kelley and other members of the board of directors went to Cleveland's Scranton Flats and ceremoniously filled a wheelbarrow with earth to symbolize the start of construction. The company hired an old man to work five days a week, continuously digging this trench, in order to prove to the state that construction was "ongoing".[243][248][249]
Kelley also began to raise substantial funds. He began his tenure as president by urging the board of directors (composed of wealthy Ohioans) to show faith in the business by purchasing company bonds. By September 15, 1847, the board had invested $100,000 ($3,300,000 in 2023 dollars) in the CC&C.[250] Kelley heavily promoted the railroad in Cleveland and by April 15, 1848, investors there had purchased $100,000 ($3,500,000 in 2023 dollars) in company bonds with pledges to purchase another $100,000 when the company asked.[251] Kelley traveled to Cleveland in early August 1848, delivering a rousing one-hour speech which led listeners to purchase $73,000 ($2,600,000 in 2023 dollars) more in stock.[252]
Kelley ordered the railroad's route resurveyed, a process which began in October 1847 and concluded about the end of January 1848.[253] Engineers issued a new report to the board on August 19, 1848.[254] The contract for construction was awarded to the firm of Stone, Harbach, and Witt on November 1.[255] Harbach was one of the two engineers who had resurveyed the line in late 1847 and early 1848. Amasa Stone had worked with Harbach and another railroad engineer, Stillman Witt,[256] while building railroad bridges in New England,[257] and Kelley knew Stone well from his visits selling bonds back east.[257] Kelley reached out to Stone, Harbach, and Witt, and asked them to build the railroad.[258] The three men formed a company in late 1848 to do so,[248] and agreed to take a portion of their pay in the form of railroad stock.[258]
Kelley personally traveled to the United Kingdom[255][259][260] in 1848 where he again contracted with Sir John Guest & Co. for T rails.[228][an] The 7,000 short tons (6,400 t) of rail purchased was sufficient to lay half the road.[262][263] Some 3,000 to 4,000 men were at work on the line at the end of July, completing the grading, constructing the track bed, and beginning to lay rail. With the cost of the main line appearing to hold steady at $2.5 million ($91,600,000 in 2023 dollars), Kelley personally went to New York City in July 1849 and sold another $400,000 ($14,600,000 in 2023 dollars) in bonds to keep the work going.[264] He sold another $100,000 ($14,600,000 in 2023 dollars) in bonds to Ohio investors the same month.[265]
The first 35 miles (56 km) of CC&C track, between Cleveland and Wellington, Ohio, opened about September 1, 1849.[264] A train carrying Kelley and several board members toured the completed 15 miles (24 km) of track in mid-March 1850.[266] Alfred Kelley was reelected president of the Cleveland, Columbus and Cincinnati Railroad in January 1850.[267] With the company in need of more rail, Kelley traveled to New York City in late May, where he sold enough bonds to pay for the necessary iron.[268] He then made a second trip to Britain to purchase more rail.[259] He returned in mid-June[269] having purchased another 5,000 short tons (4,500 t) of rail.[268] The CC&C reached Shelby, Ohio, on November 12, 1850.[255][270]
Celebratory completion trip[edit]
The Cleveland, Columbus and Cincinnati Railroad was completed on February 18, 1851. At 7 A.M. on February 18, Alfred Kelley and a party consisting of the railroad's directors, Columbus mayor Lorenzo English, and a number of other business and civic leaders departed on a special northbound train from Columbus.[271] Kelley and Mayor English each laid a final rail on the line,[272] and then Kelley drove the last spike at noon.[271][273] The party reboarded the train and, after a salutary cannonade, proceeded to Cleveland.[272] The train gave three whistles as it entered the city, which was returned by a three-cannon salute.[271]
The CC&C began freight and passenger operations on February 21, 1851.[274] To celebrate the event, Kelley invited Ohio Governor Reuben Wood, the entire Ohio General Assembly, the mayors and city councils of Cincinnati and Columbus, and numerous other local politicians and business leaders[275] to travel at the railroad's expense on a four-day excursion trip from Columbus to Cleveland and back. The excursion train and its 425 passengers left Columbus on February 21.[276] The following day, the excursionists watched a parade in Cleveland's Public Square. Although several politicians and local leaders spoke,[277] Kelley declined to address the crowd.[277] The excursion train returned to Columbus on February 24.[278]
The completion of the Cleveland, Columbus and Cincinnati Railroad created the first direct rail link between Cleveland and Cincinnati.[279]
Cleveland, Painesville and Ashtabula Railroad[edit]
Election as first president of the railroad[edit]
In 1847, a group of businessmen from Ashtabula, Cuyahoga, and Lake counties undertook an effort to build Cleveland's railroad link to the east,[280] and on February 18, 1848, they received a state charter for the Cleveland, Painesville and Ashtabula Railroad (CP&A). The line had authority to build a railroad from Cleveland to some point on the Ohio-Pennsylvania border.[281][282] The stockholders met for the first time on August 1, 1849, and elected Herman B. Ely, George G. Gillett, Alfred Kelley, Tappan Lake, David R. Paige, Peleg P. Sanford, and Samuel L. Selden to the initial board of directors. Kelley was elected president, but due to other pressing business had to temporarily step aside. Herman Ely was named acting president until such time as Kelley could take up his duties.[283]
Frederick Harbach surveyed the route for the CP&A in late 1849 and early 1850. In his report, issued at end of March 1850,[284] he proposed two routes.[285] Kelley reviewed both and chose the northern route.[286] To construct the road, Kelley once more turned to the firm of Harbach, Stone & Witt, which won the CP&A construction contract on July 26, 1850.[287] Financing for the road was never an issue, and construction proceeded swiftly. Regular trains began running on the 71-mile (114 km) line[288] on November 20, 1851.[289]
Role in creating the Franklin Canal Company railroad[edit]
The CP&A did not have the legal authority to build a railroad in Pennsylvania.[290] The railroad soon discovered that the Franklin Canal Company (FCC) had been empowered by the Pennsylvania state legislature to build a railroad in April 1849.[291] Railroad historian Anthony Churella says the CP&A's New York City-based financial backers first realized the value of the FCC's charter.[290] However, Kelley biographer James L. Bates and Cleveland historian Harland Hatcher both claim it was Alfred Kelley who did so.[292][293]
On July 5, 1849, the FCC issued $500,000 ($18,300,000 in 2023 dollars) in stock,[294][295] with the CP&A purchasing $448,500 of it.[289][296]
In addition to building north to the city of Erie, Pennsylvania, the FCC also intended to build a 25.5-mile (41.0 km) branch line along the shore of Lake Erie from Erie west to the Ohio-Pennsylvania border.[297] Completion of this branch line (the "Lake Shore Division") would connect the CP&A with the Erie and North East Railroad (E&NE) and bring the FCC significant income with which to build its main line.[298]
On January 10, 1850, Kelley agreed to connect the CP&A with the FCC at the Ohio-Pennsylvania border.[299] This was superseded by a new agreement on August 26, 1850, under which the CP&A not only committed to connecting with the FCC but also to building and operating its lakeshore line.[300] Kelley was able to commit to these agreements because the CC&C was generating large revenues. Kelley used these revenues to subsidize the construction of other important railroads in Ohio, which in turn gave him leverage to forge operating agreements with the CC&C once they opened.[225]
The CC&C was completed in February 1851,[271] and Alfred Kelley took up the CP&A presidency the following month.[301] As the cost of building the FCC rose, the canal company decided to sell bonds to raise the necessary funds. Kelley offered to have the CP&A guarantee the bonds.[302][303] The CP&A began construction on the Lake Shore Division shortly after November 1851[289] and the line was completed 12 months later.[294][304][305]
Role in the Erie Gauge War[edit]
People in Pennsylvania were angry that the FCC's track gauge was the same as that of connecting railroads in New York and Ohio. This meant passengers and freight did not have to be transshipped at Erie,[306] and threatened to allow the railroads to largely bypass Erie.[307][308] The Erie Gauge War erupted, in which state and local authorities as well as mobs attempted to prevent completion of the Lake Shore Division. The Attorney General of Pennsylvania filed suit on October 12, 1852, to enjoin the Franklin Canal Company from opening its nearly-completed railroad.[309] This threatened the CP&A's investment, as construction had only reached as far west as Crooked Creek.[295] Although the Supreme Court of Pennsylvania overturned the injunction in January 1853, the court interpreted the FCC's charter to preclude the construction of any railroad within 5.5 miles (8.9 km) of the Ohio border.[310][311][312][313]
Alarmed that the Lake Shore Division might not reach the state border, Alfred Kelley personally purchased the 5.5-mile (8.9 km) right of way.[295][314][ao] Pennsylvania law permitted private individuals to construct "lateral railroads" to connect their factories, farms, mines, or other real estate to state-chartered railroads.[ap] Kelley initially proposed that several less-prominent directors of and investors in the CP&A and FCC purchase the land and build this lateral railroad with funds provided by the CP&A, but none were willing to take the risk. Kelley went forward with the project on his own, using funds secretly provided by the CP&A.[319] Kelley personally visited landowners along the route, making friends with them and buying the land he needed. In some cases, he was required to purchase entire farms. He also won passage of local ordinances permitting his lateral railroad to cross public roads.[320] Kelley then had the line graded and constructed, and conveyed the lateral railroad to the FCC.[27][295]
Kelley's actions did not end the Gauge War. By April 1853, the situation had so deteriorated that Kelley considered bypassing Erie altogether and connecting the CP&A to existing railroad lines which routed traffic through Pittsburgh.[321] The people of Erie were further alarmed when the CP&A took over operation of the FCC's Lake Shore Division on December 1, 1853.[295] On December 7,[322] mobs tore up the FCC's track, demolished several of its bridges, and assaulted railroad officials.[323][324][325] Kelley threatened to raise a private militia to protect FCC property if the state could or would not do so.[326] Rioters tore up railroad track again in January 1854.[327]
Tensions died down considerably when, on January 28, 1854, the Pennsylvania General Assembly enacted legislation repealing the FCC's charter.[291][328] Pennsylvania Governor William Bigler seized the FCC on January 30, and appointed William F. Packer as the company's superintendent.[329] The CP&A continued to operate the FCC on behalf of the state, forwarding 47 percent of all revenues generated by the Lake Shore Division to the state treasury.[330]
Resignation[edit]
To further placate certain Pennsylvanians, Kelley resigned as president of the CP&A in February 1854, and was replaced by William Case.[331] The state of Pennsylvania had no interest in running a railroad,[329] and in May 1854 the Pennsylvania General Assembly enacted new legislation permitting the CP&A to build a line from the Ohio-Pennsylvania border east to Erie.[332][333] The law allowed the CP&A to purchase the FCC, provided that the CP&A invested in a nearby Pennsylvania railroad.[332] The CP&A, which already owned the FCC, assumed title to the Lake Shore Division.[334]
With the CP&A link between Cleveland and Erie (and the east coast) complete, Kelley negotiated a contract under which the CC&C and CP&A jointly operated the CP&A's line.[335]
Third return to the state legislature[edit]
Health problems[edit]
Kelley took a leave of absence from the CC&C presidency in early October 1851.[336] He resigned his position at the railroad about May 24, 1853, and was replaced by Henry Payne (who had unofficially been acting president for some time already).[337] Kelley retained his directorships on the CC&C and CP&A until his death.[338]
Having long suffered from malaria contracted while working on canal system,[96] Kelley was in extremely poor health after six years leading three railroads. After stepping down as CP&A president, he went to Europe for an extended vacation, not returning until early May 1854.[339]
Personal life[edit]
Kelley married Mary Seymour Welles of Lowville, New York, on either August 25[347] or August 27, 1816.[25][348] He purchased a one-horse chaise in Lowville,[25] and drove to Buffalo in it. Their schooner for Cleveland was not yet ready to sail, so they traveled to Niagara Falls. Upon their return, they discovered the ship had sailed, so they rode in the chaise from Buffalo to Cleveland.[349] Theirs was the first carriage ever seen in Cleveland.[25][348]
The Kelleys had had 11 children:[25][24] Maria (1818-1887), Jane (1820-1897), Charlotte (1822-1828), Edward (1824-1825), Adelaide (June–September 1826), Henry (1828-1830), Helen (April 3, 1831), Frank (1834-1838), Annie (1836-1888), Alfred (1839-1909), and Katherine (1841-1918).[350]
Death and legacy[edit]
For portions of 1856, Kelley was severely ill and confined to home.[343] His health noticeably declined during his last term in the state legislature,[351] and he was once more confined to his home several times in 1857.[343]
Physicians could not determine the nature of Kelley's illness, even as he lost weight and his energy declined.[351] From 1857 to 1859, he became increasingly paralyzed.[352] He was feeble for the last few months before his death,[353] and fell into a coma on November 28.[354] He died at his home in Columbus on December 2, 1859.[338][355] Kelley was interred at Green Lawn Cemetery in Columbus, Ohio.[356] His estate was worth $250,000 ($8,500,000 in 2023 dollars).[357]
Historians consider Kelley one of the most dominant commercial, financial, and political people in the state of Ohio in the first half of the 1800s.[27] He is widely considered the "architect" of Ohio's canal and railroad systems.[335]