The making of the financial capital of the world

The famous waterway that made New York the financial capital of the world, provided a supply channel that helped the Union win the Civil War and triggered a series of cultural, social and economic changes throughout America was financed in part by The State Bank of Albany, Bank of America’s heritage bank.

The Erie Canal, started in 1817 and opened in 1825, is considered the engineering marvel of the 19th century. Many referred to the canal as the “Eighth Wonder of the World” as it was 363 miles of canal through the wilderness, connecting New York with Lake Erie, built with nothing but the muscle power of men and horses. It’s what paid for that muscle power that makes us proud, as it was financed in part by our heritage bank, The State Bank of Albany.

The bank, opened in 1803, was just the second bank established in Albany, NY with $460,000 in capital. It became a leader in municipal financing projects, most notably the Erie Canal. One of the bank’s founders was Elkanah Watson, a Massachusetts-born visionary known to be the originator of the idea for the Erie Canal. He had studied canals in Holland and Germany as a young man and brought his knowledge and enthusiasm for the project to Albany.

In 1791, Watson traveled west to plot a possible route for the canal that would connect the Hudson River with the Great Lakes as a means for opening trade into central New York State. After the federal government decided that the project was too ambitious, Watson returned to Albany and joined forces with General Philip Schuyler to take the canal proposal to the New York State legislature.

The State of New York took on the task of the Erie Canal at the urging of Governor Dewitt Clinton who lent his vision and political muscle to the project. Meanwhile Watson, with help from Goldsbrow Banyar, organized the Bank of Albany. To help make the canal a reality, Watson also joined General Schuyler in the Western Inland Lock Navigation Company.

Governor DeWitt Clinton took on the role of canal surveyor during its building era. This caused Watson to harbor terrible bitterness against Clinton, who took the credit for Watson’s idea. To this day, Clinton’s name, unlike Watson’s, is widely associated with the Erie Canal.

The famous waterway made New York the financial capital of the world, provided a supply channel that helped the Union win the Civil War and triggered a series of cultural, social and economic changes throughout America.

Visit one of our Heritage Centers for an up close look at this and other stories from our bank’s history. Learn more