Andrew Dexter, Jr.

Andrew Dexter Jr. (March 28, 1779 – November 2, 1837), was an American lawyer, financier, and speculator. He is known for committing one of the first major financial frauds in the United States. He was also the founder of Montgomery, Alabama.

The son of Andrew Dexter Sr., a successful merchant and one of the first cloth manufacturers in America, the younger Dexter was born in Brookfield, Massachusetts on March 28, 1779. He was raised in Providence, Rhode Island, graduated from Brown University in 1798, studied law, and became an attorney in Boston, Massachusetts.

In the early 1800s Dexter left the law to become involved in business and finance. In 1807 he began construction of the Exchange Coffee House. At seven stories, the tallest building in Boston at the time, Dexter planned the site as a location for business offices, reading rooms, conference rooms and dining rooms to facilitate public meetings and the transaction of business. In his concept, the Exchange Coffee House would also provide a service by helping establish the relative value of the bank notes of the various financial institutions in and around Boston.

At the time, banks transacted business by issuing paper notes that could be redeemed for their value in gold or silver. Banks, merchants, businessmen and workers generally exchanged the notes between each other at a discount to facilitate commercial transactions, and the discounts varied widely depending on each bank's reputation, its distance from the locality where business was being conducted, and other factors. Traders in bank notes in the Boston area set the discount rate by conducting business in outdoor meetings on several Boston streets. Dexter intended for the bank note traders to formalize their business by providing them indoor space at the Coffee House.

To finance the construction of the Exchange Coffee House, Dexter took advantage of this unregulated system by starting or gaining control of banks located far from Boston, including Rhode Island, western Massachusetts, New Hampshire, Maine and Michigan, and issuing bank notes that far exceeded the banks' gold and silver deposits. His intent was to circulate in Boston bank notes from locations so far away that no one would ever redeem them for gold or silver. This meant that he could issue bank notes in unlimited quantities, as long as no one suspected there wasn't sufficient specie to back them.

...
Wikipedia