3. Hamilton's Bankruptcy

Although historians of the trade and biographers, when they cite Hamilton's failure at all, have tended to imbue the scene with an aura of inevitability, this was not apparent to many contemporaries.(44) Certainly, little warning was provided for the subscribers to the R.G. Dun Company's credit ratings. Since 1857 their Kingston reporter had judged Hamilton to be "good and safe".(45) Even though the Grand Trunk had substantially undermined the market value of his vessels, it was considered that Hamilton would not commit himself to greater expenses than he could handle. Thus, on the basis of his character and connection with the Commercial Bank, Hamilton continued to be accorded the status of a first class risk.

Those property records available to Dun's Kingston based informant only partially support this analysis. To use his vessels as security, Hamilton would first have had to register them, a step which he had never taken. However, the Montreal registry of the Champion reveals that Hamilton and Bowen mortgaged her after her purchase in 1857.(46) This debt would be assigned to his trustees along with the full ownership.

In terms of land transactions Hamilton's most public move was the generous gift of land and a magnificent duplex to two of his children in 1858.(47) At the same time the water lot on which Hamilton's Commercial Wharf stood had been paid for by way of a mortgage in 1841. Partial release had to be secured for this when half was sold to the Grand Trunk in 1858.(48) A second mortgage related to a purchase was paid off by 1860 but the final 1858 Kingston mortgage was still outstanding.(49) Although not particularly active in the real estate market, Hamilton had been by default a major landowner, his share of his father's estate alone amounting to over 5000 acres.(50) While the occasional lot was disposed of in the ensuing thirty years, it was 1853 before Hamilton began seriously marketing this land, despite the fact that a good portion was in the long settled Niagara peninsula. Perhaps half the lots were sold during the 1850s.(51) The balance, in a move strongly suggestive of advance warning, was assigned to Thomas C. Street for the value of the registration fees four months before the bankruptcy.(52) This could not have been a deft manoeuvre to avoid his creditors for Street sold most of the land within the next two years on his own account. Rather, given Street's reputation as a financier as well as a vessel owner, one is led to suspect that Hamilton had borrowed some unspecified and unsecured sums from Street. It may have been this "foreclosure" which precipitated insolvency. Certainly there was no breath of rumour that the Commercial Bank's directors over indulged their president, as would later be the case with their vice-president and solicitor.(53)

Even if unsecured, Hamilton's debts were nevertheless very real. At the time of his assignment his obligations were assumed to be about $122,000. To meet this his assets were estimated to be worth about $100,000.(54) If these figures can be taken as reasonably accurate then Hamilton's affairs had indeed been tottering on the brink when he had negotiated his agreements the previous spring. Compared to many bankrupts of the same era, Hamilton was assured gentle treatment by his creditors. The trustees of the estate included a political associate, the Hon. Alexander Campbell, the vice-president of his bank, D. Prentiss, and most surprisingly his second son, Clarke.(55)

Why had Hamilton not sought the security of a limited liability corporation before his affairs finally collapsed? Although the general act permitting the incorporation of joint- stock companies did not yet include the passenger steamboat trade, specialty acts had been passed incorporating existing groups like the Richelieu Company and new promotions like the Canadian Inland Steam Navigation Company.(56) But Hamilton had had little sympathy for existing associations seeking shelter from their liabilities and had openly opposed the incorporation of the Richelieu Company.(57) Perhaps after thirty-five years in the trade he could not conceive of running his operations on any other basis, or perhaps it was a matter of pride. One thing was certain, none of the corporations created by public statue before 1861 were dominated by one or two individuals in the way that any firm which incorporated the current mail line proprietors would be. Consequently incorporation was probably not a politically viable option, even if Hamilton had seriously considered it.

An even more basic question then arises. Why did Hamilton not withdraw from the trade six or seven years before? Macpherson and Holton had done so in 1853, successfully converting their interest into a railroad construction firm. Sutherland had gone to work for a railway, albeit in the management of their steamboat investment.(58) Even Bethune had panicked and never returned to the shipping trades. But Hamilton had stayed, and, knowing that the Grand Trunk was to be a reality, had expanded his fleet, even investing in an expensive floating palace, the Kingston. Without any personal or business papers his reactions to the impending contest are difficult to assess. Perhaps he felt too secure in the cartel agreements or in the prosperity of the pre-railroad era. With the maturation of his two eldest sons he may have felt impelled to preserve the family business. alternatively he may simply have felt too old to alter his business life radically had instead determined to fight. Finally, Hamilton may have felt secure in the backing of the Commercial Bank and his political connections. For whatever reasons, even from the most profitable days of 1854 and 1855 we may be certain that the rationale was more psychological than economic in its roots.

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Chapter 5 appeared in FreshWater.