How Alexander Hamilton Used One New Jersey Waterfall to Stick It to the British

Paterson Great Falls

Fresh from becoming Treasury Secretary, Hamilton had a bold plan in 1792. He wanted America to stop buying everything from Britain and make its own stuff instead.

His answer was Paterson, built around the roaring Great Falls to power the machines that would kickstart American industry.

Here’s how Hamilton’s plan turned out, plus how to visit this incredible National Historical Park.

How Hamilton Founded The Society for Establishing Useful Manufactures

Hamilton created the Society for Establishing Useful Manufactures (SUM) in 1791. This organization was the first partnership between government and private investors in American history.

His assistant Tench Coxe first suggested the idea. Hamilton liked it and convinced wealthy Americans to invest. They raised $500,000, a huge amount of money at that time.

New Jersey’s government gave SUM special advantages. The organization didn’t have to pay taxes for ten years and gained broad powers to develop land and use waterways for industrial purposes.

The Purchase of 700 Acres Along the Passaic River

SUM bought about 700 acres along the Passaic River in 1792. This land purchase was the first real step toward building America’s first planned industrial city.

The property included the Great Falls, securing control of the water power that would run the future factories. The deal raised some eyebrows because three SUM investors owned parts of the land being purchased.

Initially, the board wanted to name the new town “Hamilton,” but political considerations led to a different choice.

Why The City Was Named After Governor William Paterson

The new city was named “Paterson” after New Jersey’s Governor William Paterson. He had signed the official papers that created SUM and approved a charter giving the town control of 36 square miles.

This name choice was smart politics. By honoring the governor, Hamilton secured his ongoing support for the project. Paterson was an important figure who had served as a U.S. Senator and later became a Supreme Court Justice. His name gave the new industrial experiment added credibility and political protection.

Pierre L’Enfant’s Original Grand Design for the Industrial City

Hamilton hired Pierre Charles L’Enfant to design Paterson in 1792. L’Enfant had just finished planning Washington D.C. and was America’s top city planner.

His vision included a complex water power system with channels at different heights to maximize power for factories. The city would have wide streets radiating from central points, mixing factory areas with homes and shops.

The SUM board grew frustrated as L’Enfant focused on big ideas rather than quick results. They thought his plans cost too much and took too long.

When The Society Fired L’Enfant and Hired Peter Colt

SUM fired L’Enfant in 1793 after growing tired of his slow progress. They needed faster results with less spending.

Peter Colt took over as the project engineer. He had practical business experience and understood what the project needed right away.

Colt built a simple dam above the falls with a single channel running down the hill. This basic approach let SUM start manufacturing quickly, though it used less of the falls’ power than L’Enfant’s complex design would have.

How The Panic of 1792 Nearly Derailed Hamilton’s Plans

Financial disaster struck in March 1792 when William Duer, a key SUM investor, caused America’s first financial crisis. Duer had gambled heavily on bank stocks and government bonds.

When he couldn’t pay his debts, market prices crashed by nearly 25 percent in just two weeks. SUM lost $10,000 meant for buying machinery and hiring workers.

Hamilton had to focus on saving the national economy instead of developing Paterson. Though he stopped the larger crisis, SUM never fully recovered from this early financial blow.

The First Raceway and Power System Completed in 1794

Peter Colt finished the first water channel, or “raceway,” in 1794. This channel diverted water from above the falls to power mills downstream.

Known as the Middle Raceway, it was the first part of what would grow into a larger system. The raceway carried fast-moving water to turn wheels at various factory sites.

This was the first major water power system built in America. While simpler than L’Enfant’s original design, it worked well enough to begin powering the first mills in Paterson.

The Bull Mill – America’s First Cotton Factory in Paterson

SUM built its first factory in 1794, a cotton mill nicknamed the “Bull Mill” because oxen initially powered the machines before the water system was ready. The factory included America’s first large-scale calico printing operation.

Calico was a popular printed cotton fabric previously imported from England. Thomas Marshall, who claimed to have run the famous Masson Mill in England, came to manage operations.

This pioneering factory was the first attempt to make Hamilton’s vision of American manufacturing a reality.

Why SUM’s Manufacturing Operations Failed in 1796

The Bull Mill closed in 1796 after only two years. Several problems caused this failure. The company had too little money to keep operating after the Panic of 1792 drained their funds.

Worker issues also created trouble. In 1794, skilled calico printers staged what historians consider America’s first industrial labor dispute, disrupting production.

The basic problem was profit. The mill made some money, but not enough to cover its startup costs or pay back investors for what they had spent.

How SUM Shifted From Manufacturing to Real Estate

After failing as manufacturers, SUM’s leaders changed strategy. Instead of running factories themselves, they became landlords and power providers.

SUM leased land and water rights to private business owners who built their own mills. This approach gave SUM steady income without the risks of manufacturing.

The company kept ownership of the dams and water channels, selling water power to factories along the canals. This business model proved more successful than making goods directly and kept SUM in business for 150 years.

Visiting Paterson Great Falls National Historical Park

Paterson Great Falls National Historical Park is located at 72 McBride Avenue, Paterson, NJ 07501. The park is open daily with extended summer hours from Memorial Day through Labor Day.

Entry to the park is free. You can start at the Welcome Center to pick up a map for the self-guided Mill Mile tour focusing on Hamilton’s industrial vision.

Park rangers lead free “Hamilton’s Vision” tours on weekends, explaining how the 1792 plan shaped the city. The Alexander Hamilton statue near the Overlook offers the best falls view.

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