STUDIES IN GEORGIA HISTORY AND GOVERNMENT, Athens GA, 1940

Bonner and Roberts, editors, West Georgia College

Charles G. Cordle:

HENRY SHULTZ AND THE FOUNDING OF HAMBURG, SOUTH CAROLINA

ALMOST FROM the time it was founded in 1735 down to the advent of the railroad, Augusta (with Savannah) dominated the trade of the Upper Savannah River valley and, in addition, had a large share of the trade of western North Carolina, eastern Tennessee, and western Georgia. In the 1820's a bold attempt was made in South Carolina to break this Georgia monopoly and to restore the commercial preeminence of Charleston. This attempt was due to the initiative and promotive powers of Henry Shultz.

This entrepreneur had come to Augusta, Georgia, from Hamburg, Germany in 1806. A poor immigrant with nothing but industry, perseverence and native ability, he secured work as a common boatman on the Savannah River.¹ In 1809, with German thrift, he was able to purchase for $510 cash a tobacco flat, The Diana,² and become "patroon" of his own vessel. On this boat, and perhaps others, he plied for seven years between Augusta and Savannah.³

In 1813 he and one Lewis Cooper entered into an agreement to build a bridge across the Savannah River at Augusta. Shultz was to furnish the timber, while Cooper did the pile-driving and supervised the construction.⁴ They purchased bridge and ferry rights from Walter Leigh and Edward Rowell⁵ and secured charters from the legislatures of South Carolina and Georgia.⁶ They opened the bridge in the summer of 1814.⁷ Before the opening Cooper had sold his interest in the bridge to John McKinne, a prominent merchant of Augusta.⁸ From the first the bridge paid good dividends on the investment.⁹

In 1816, under the influence of the prevailing banking mania, McKinne and Shultz opened a bank, called the Bridge Bank, and issued "bridge bills" secured by the bridge and other nearby property, estimated to be worth about $105,000. They entered into an agreement pledging the bridge and the other property for the security of the bridge bills, but they never committed it to record or named a third party as trustee, to whom a legal interest in the property should be conveyed for purposes of the trust.¹⁰ For a time the bank prospered; to house it, the partners erected a magnificent structure, the Bridge Bank Building, paid for, apparently, from the issue of bridge bills.¹¹

In 1817 Shultz on his own account leased from the City Council of Augusta two tracts of land adjacent to the river¹² and there erected, at a cost of $60,000, the first practicable wharf at Augusta.¹³ He was, about the same time, one of the incorporators of the Steam Boat Company of Georgia, which in 1817, was granted by the legislature exclusive rights to steam navigation on the rivers of the state.¹⁴ He ws also named a commissioner to supervise improvements of the navigation of the Savannah River between Augusta and Petersburgh [50 miles upstream - PJH].¹⁵ Thus, in thirteen years the poor immigrant had become one of the outstanding business men of Augusta.

In 1818 Shultz prepared to return to Germany; he sold out his interest in the Augusta Bridge, the Bridge Bank, and other property connected with them to Barna McKinne, brother of his partner, for the assumption of Shultz's debt to the bank of $63,000¹⁶ and a personal bond of John and Barna McKinne for $500,000 to secure him against damage or loss on account of his responsibility for bridge bills.¹⁷ Shultz then informed the public that he had sold out his interest in the bridge and bank, and offered for sale his other property in and near Augusta.¹⁸ Since the wharf was built with such "regard to solidity, beauty and convenience" that no individual could afford to pay the builder a fair price for it,¹⁹ Shultz organized a stock company and sold the stock for $60,000, thus repaying himself or the wharf.²⁰

Unfortunately for "the Dutchman's" plans, the Bridge Bank was, on May 24, 1819, forced by a continued demand for specie to cease redeeming its bills,²¹ the amount of which in circulation was $461,767.07.²² The McKinnes, it would seem, had used the funds of the bank to uphold their mercantile affairs and had thus brought about the suspension.²³ Knowing that the McKinnes' bond could not protect him, Shultz re-entered the firm, bought back the interest of Barna McKinne, and put up $15,000 of his own funds to pay the depositors.²⁴ But before his re-entrance into the firm the two McKinnes, partly to secure their own debts and partly to secure the obligations of the Bridge Bank,²⁵ mortgaged the Augusta Bridge and other property, including eighty Negro slaves, to the Bank of the State of Georgia.²⁶ This mortgage, which Shultz always claimed was illegal because the bridge was by partnership agreement pledged for the payment of bridge bills, eventually led to the loss of the bridge,²⁷ the initiation of a long and acrimonious lawsuit,²⁸ and the founding of the town of Hamburg, South Carolina.²⁹

"The Dutchman" now became interested in other locations. He purchased a number of lots in the rising town of Brunswick, Georgia,³⁰ and planned a canal from the Altamaha River to Turtle River so as to give Brunswick direct access to the Altamaha valley. He asked the Georgia legislature for a charter to the canal; but the General Assembly delayed action,³¹ and Shultz went elsewhere.

Across the Savannah River from Augusta he had already noticed a corn field which offered, to his mind, an ideal location for a town. For nearly a mile the current of the river ran near the Carolina bank, thus deepening the channel and affording easy access for steamboats. The bluffs rising fifty to seventy feet above the strip of level ground by the river would offer healthy residential sites, in contrast to Augusta, which was built in a swamp. Four springs rising below the bluffs would furnish an abundant supply of pure water.³² Therefore, with the proprietor of this tract, John B. Covington and Lucilla H. Covington, who held it in their own right and as guardians of the minor children of Isaac Fair, deceased, Henry Shultz entered into an agreement June 6, 1821, for the speculative enterprise of founding a town. On the tract of 330 acres Shultz received a lease for the term of six years at a rent of five hundred dollars a year. He was to drain the swamp, lay off lots and streets, build warehouses and storehouses, erect wharves, and lease lots to others. At the expiration of the lease he was to have one-fourth of the improvements and of the land upon payment of a proportionate share of the value of the land, estimated as seven thousand dollars, the rest of the land and improvements reverting to the former holders.³³ On this (the Fair) tract Shultz, with the assistance of his friends, began on July 2, 1821, the construction of Hamburg (so called from his native city in Germany), South Carolina. So rapidly did he build that in December he was able to report to the state legislature that Hamburg contained eighty-four houses and had as residents forty-four families, numbering about two hundred people.³⁴

South Carolina editors began to notice the new town and to consider the possible advantage to the state. Among them the Columbia Telescope, in a long article³⁵ urging the merchants of Columbia and Charleston to invest in Hamburg, listed the following advantages: Hamburg possessed the same advantages of navigation, wharfage, and location as Augusta, and, being located in South Carolina, would attract trade that had been going across the river, especially since South Carolina cotton always commanded a better price than Georgia cotton. For many years, too, the town would not have a city tax, and therefore its merchants could undersell those of Augusta. The limited number of merchants in Hamburg would afford opportunity for a greater volume of business for the individual and therefore offer greater profits. The new town would be more healthy than Augusta, for Mr. Shultz had drained the marshes and low grounds about it, and the houses and smoke of Augusta would protect it against the miasmata and damp rising from the low grounds across the river. Finally, the new town would divert to Charleston a considerable part of the Carolina trade that had been monopolized by Augusta and Savannah, and would thus increase the importance of Charleston.

The founder of Hamburg himself, who firmly believed in advertising, thus announced the progress of his town:

Such advertising paid, for in less than three weeks after the first appearance of his announcement, the founder of Hamburg was able to report 1083 bales of cotton received in Hamburg in one week.³⁷

By this time, however, Shultz was at the end of his financial resources. Therefore he presented to the South Carolina legislature, then in session, a memorial praying for assistance. He held out to the legislators, and especially to those from Charleston, the prospect of opening a direct trade between Hamburg and Charleston and thus regaining for the state the trade of Upper Carolina, estimated at more than two million dollars, which had been going to Augusta and Savannah. He asked for a loan of fifty thousand dollars, of which thirty-five thousand would be used to complete the buildings, warehouses, and wharves at Hamburg, and fifteen thousand to construct a steamboat to ply between Hamburg and Charleston. He requested also that all town property, stock in trade, faculties, and professions in Hamburg should be exempted from taxation for five years. He sought authorization to open an inspection for tobacco at his warehouse. And he requested also that a bank should be established in Hamburg, "which will protect its inhabitants against the rivalry and opposition of those institutions in Augusta, and will supply the upper district with the more valuable currency of our own banks."³⁸

Henry Shultz had chosen a very favorable occasion for presenting his petition. The merchants and people in general in Charleston were worried over a decline in trade, following a period of prosperity during the years 1815-1818. They had seen exports decreasing to such an extent that the average for the years 1820-1830 was forty-one per cent less than in 1816; and the imports, judged by customs collected there, decreased even more.³⁹ At the same time they were seeing a loss of retail trade with the interior because of the rise of small market-towns at the head of navigation on the rivers.⁴⁰ Therefore the Charlestonians and their friends were ready to support anything that promised a revival of trade.⁴¹ They knew that Shultz had been uniformly successful in business (the failure of the Bridge Bank was due to the McKinnes rather than to Shultz) and that he had the reputation of completing everything that he undertook. Under these conditions a joint committee of the legislature recommended the enactment of Shultz's requests, with the exception of the bank. They advised that the loan should be made on a credit of five years, with interest at six per cent payable annually, with security to be approved by an appointed board of five commissioners. The legislature adopted the recommendations and named the five commissioners.⁴² At the same session it granted to Isaac Rudolph the exclusive privilege for ten years of running a line of stages from Charleston by Waltersborough to Hamburg.⁴³

To secure the loan from the state, Shultz gave the commissioners his personal bond for $100,000, secured by a mortgage for $50,000 on his one-fourth undivided interest in the Fair tract and the improvements thereon.⁴⁴ At the same time his associate John B. Covington executed a similar mortgage for $20,000 on his interest in the same property.⁴⁵ Thus provided with money, the promoter set energetically to work. His efforts to improve the navigation of the Savannah River were so successful as to be commended by the editor of the Augusta Advertiser.⁴⁶ For $15,000 he bought the steamboat Commerce, which had been plying between Charleston and Cheraw,⁴⁷ and initiated direct intercourse between Charleston and Hamburg. Beginning its first voyage February 20, 1822,⁴⁸ the Commerce sailed by way of Beaufort through the inland passage to the Savannah and up to Hamburg in 132 hours.⁴⁹ So profitable were the first few voyages⁵⁰ that other steamboats entered the trade.⁵¹ From the experience of the first voyages Shultz recommended that the inland passage between Savannah and Charleston be improved by by deepening and widening Wappoo Cut and Bull's Cut, and offered to do the work for $22,000.⁵² For assistance in making these improvements he appealed to the City Council of Charleston, promising that if his petition were granted, three or four more steamboats would begin making regular trips to Hamburg. He explained also that with improvements he had made in the Commerce he had been able to make the voyage to Hamburg from Charleston in five days, one day less than the Georgia Steam Boat Company's boats took, as a rule, between Savannah and Augusta. The City Council thereupon named committees in all the towns concerned to solicit contributions for making the improvements.⁵³

As a result, no doubt, of sentiment for improvements thus built up, the legislature in December, 1822, named two groups of commissioners, each including Henry Shultz, and authorized them to open Wall's Cut, Bull's Cut, and Wappoo Cut at a total cost up to $20,000.⁵⁴ It also appropriated funds up to $5000 to build a bridge over Steven's Creek⁵⁵ [10 miles upstream of Hamburg - PJH] and directed two roads to be laid out from Hamburg, one to intersect the main Columbia road, and the other the main road from Charleston to Augusta.⁵⁶ The legislators also incorporated the Bank of Hamburg, chartered till January 1, 1837, with a capital of $500,000 payable in specie, and named commissioners in Hamburg and other towns of the state to receive subscriptions to the stock.⁵⁷

By this time Hamburg had its own newspaper, the weekly Hamburg Gazette, published by Frederick W. Pleasants.⁵⁸ Indeed, the new town had become such an important trading center that between March 1 and November 30 it had received in its warehouses 24,000 bales of cotton.⁵⁹

At first the people of Augusta were inclined to scoff at the pretensions of the new town.⁶⁰ But before long both Augusta and Savannah were taking measures to restore their diminishing trade. In Savannah a public meeting recommended action to the Georgia legislature and took measures to correct local abuses. In Augusta the merchants made an arrangement with the proprietors of the bridge, making it free of tolls for all wagons laden with flour, cotton, or tobacco passing or repassing to or from Augusta, but requiring empty wagons, returning to Carolina, to pay toll.⁶¹ At a public meeting they also drew up a petition to the legislature for assistance in permanently freeing the bridge from tolls.⁶² The committee of the Georgia legislature to which these petitions were referred ascribed the decline of trade at Savannah and Augusta to (1) the rise of Hamburg and the opening of direct navigation between Hamburg and Charleston, encouraged by grants of money from the South Carolina legislature; (2) too high steamboat fares between Augusta and Savannah, due to the monopoly of the Steam Boat Company of Georgia; (3) the diversion of ocean commerce from Savannah to Charleston caused by the inability of large ships to reach the wharves in Savannah; (4) depreciation of the notes of Georgia banks; (5) acts imposing tonnage duties at Savannah; (6) the tax at Savannah on commission sales of imported articles; and (7) the fact that Georgia cotton was inferior to South Carolina cotton because of (a) the hiding of rocks or the placing of inferior cotton in the interior of cotton bales, (b) the Georgia practice of weighing when the cotton was damp, (c) injury to the cotton from exposure to the weather, (d) the use of round instead of square bales. The committee furthermore recommended legislative action to remedy these defects.⁶³ Most of the recommendations were adopted by the legislature.⁶⁴

In the meantime Hamburg had continued its steady growth. It reported to the South Carolina legislature in the fall of 1823 that it contained 176 houses, "viz: 1 Church, 1 Bank, 1 Post-Office, 1 School, 39 Stores, 4 Public Houses, 2 Warehouses, 114 Private Dwellings, 1 Printing-Office, 1 Market-House, 2 Physician's Offices, 1 Druggist's Store, 1 Silver-Smith, 2 Blacksmiths, 1 Butcher's House, 1 Tailor's, 1 Saddler's. and 1 Painter's . . ." and a population of 800-1000.⁶⁵ Even Augusta merchants were beginning to trade with Charleston, though goods had to be loaded and unloaded at the Charleston wharves or on lighters in the river for fear of infringing the franchise of the Steam Boat Company of Georgia.⁶⁶ When the Supreme Court decision in the case Gibbons vs. Ogden destroyed monopolies on navigable rivers, the Charleston boats began to load and unload directly at Augusta wharves;⁶⁷ this, of course, affected adversely the trade of Savannah, and soon the Steam Boat Company's boats began to enter the port of Hamburg to carry goods to Savannah.⁶⁸

Elated at the steady growth of his town, Henry Shultz had, on May 5, 1823, purchased at auction for $15,500 a tract of land lying west of Hamburg, 398 acres, property of Walter Leigh, deceased, giving a mortgage for the whole of the purchase price.⁶⁹ At the same time he executed another mortgage on the same tract to John B. Covington, E. Cook, and James Cobb to secure them against the bond for $31,000 which they had signed with him.⁷⁰ The next year he gave a third mortgage on the same tract to William E. Snowden to secure a debt of $41,918.15.⁷¹ This Leigh tract, when laid off in streets and lots, became known as Upper Hamburg.

But Hamburg was still without a bank, for the bank commissioners had found capitalists not interested in the terms of the charter of the proposed Bank of Hamburg. So Shultz advertised that, on July 2, 1824 (the anniversary of the founding of his town), he was going to open a banking institution, to be known as "The Bank of Hamburg, South Carolina", the stock to consist of the specie in the vault and all of Shultz's interest in the town of Hamburg and in over nineteen hundred acres nearby. He offered to make loans at seven percent on warehouse receipts for cotton and tobacco and certain other merchandise up to two-thirds of the value.⁷² Soon notes of the bank, signed by J. M. Tillman, Cashr., and Henry Shultz, Prest., were in circulation.⁷³ Their appearance in Augusta provoked considerable newspaper controversy over their value.⁷⁴ In fact, the Bank of Hamburg was soon in difficulties; according to a communication of the Augusta Chronicle and Georgia Advertiser, October 13, 124, it had suspended specie payments. It continued, however, in business for at least a year;⁷⁵ but by the end of 1826 it was either closed or in very bad repute, for a petition was circulating in the upper districts of South Carolina for the establishment of a branch of the Bank of the State.⁷⁶ Eventually its notes became worthless,⁷⁷ and a second Bank of Hamburg was chartered by the South Carolina legislature on December 19, 1835.⁷⁸

In addition to the bank other matters were troubling the founder of Hamburg, though the town seemed prosperous enough. Both the Fair and the Leigh tracts were advertised for sale the first Tuesday in March, 1825, to satisfy executions in favor of the Fire Insurance Company and others; and the editor of the Savannah Republican,⁷⁹ commenting on the advertisement, triumphantly proclaimed that Hamburg was "GOING! GOING! GOING!" Perhaps to forestall this sale and to satisfy the executions, a sale of lots was begun in Upper Hamburg January 18, 1825. Fifty lots were sold for a total of $37,370.⁸⁰ The success of the sale led the Hamburg correspondent of the Charleston Courier⁸¹ to exclaim, "Hamburg stands on a solid foundation, and the trade of South-Carolina and Georgia is 'going! going! going! going!' by Savannah to Charleston." A few months later the Charleston Courier⁸² stated: "The increase of trade between this city and the interior towns and villages of Georgia, is almost incredible. We are reliably informed, that there are now nearly two hundred store-keepers and traders in town, mostly from that quarter, laying in their supplies for the season . . ."

But secure though the town and its founder appeared, misfortunes were near. Shultz was being pressed to pay bridge bills, notes of the defunct Bank of Hamburg, etc.⁸³ The state too was pressing the repayment of its loan.⁸⁴ To make matters worse, the mortgages on the Leigh tract (Upper Hamburg) were foreclosed, and the land and improvements were sold for $22,000 to Captain John Williamson of Charleston.⁸⁵

Shultz himself was indicted and tried for murder. He, Alexander Boyd, and David Lynar had inflicted a severe beating upon a young white man, Joseph Martin, to force him to reveal the hiding place of a stolen trunk. From complications following the beating Martin died.⁸⁶ Shultz and Boyd (Lynar died before the trial) were found guilty of manslaughter and were sentenced to be imprisoned for six months and to be branded, at the first day of the next court, with the letter M in the brawn of the left thumb.⁸⁷ Both defendants were pardoned by the governor in January, 1828.⁸⁸ Soon Shultz was again imprisoned, as an insolvent debtor, and escaped only by assigning all his property to trustees to pay his debts.⁸⁹

With time the Charleston merchants found that they were not reaping the expected golden harvest from Hamburg. When the extra charges to Savannah were removed, it was cheaper to deal in Savannah than in Charleston, twice the distance from Hamburg and Augusta. Also, the Savannah River was in 1827 unusually low; steamboats could not navigate the river; and pole boats, which could not go to Charleston, got the bulk of the business.⁹⁰ The merchants of Hamburg too were giving the preference to Savannah.⁹¹ Consequently, in the year ending July 1, 1827, Charleston received only 9,450 bales of cotton from Hamburg, while Savannah received 21,911,⁹² and increased its total cotton receipts by 42,980 bales.⁹³ Therefore, to gain their share of the 190,000 bales of cotton annually marketed at Augusta and Hamburg, plus the vast amount of supplies -- iron, sugar, coffee, domestic liquors, etc. -- required by the planters of the up-country, the Charlestonians planned a railroad from Charleston to Hamburg and Augusta.⁹⁴ They secured a charter from the state legislature and opened their books for stock subscriptions. Shultz and his friends, still estranged, refused to assist; not a single share was sold in Hamburg.⁹⁵ But despite lack of support in Hamburg, the work continued; and the railroad (then the longest in the world) was opened for passengers and freight from Hamburg to Charleston in October, 1833.⁹⁶

The people in Hamburg would better have assisted, for the town was none too prosperous,⁹⁷ though it was prominent enough to be incorporated in 1827.⁹⁸ In 1830, on instructions from the general assembly of the state,⁹⁹ Baylis J. Earle, solicitor of the western circuit, proceeded to have the state's mortgage on Hamburg foreclosed and the Fair tract, divided into six parts, sold at public auction. In behalf of the state he bought four parts August 2, 1830, for $34,615.¹⁰⁰

With the question of land titles thus settled, with exemption from taxes,¹⁰¹ with water communication with Savannah¹⁰² and Charleston¹⁰³, with railroad communication with the latter city, having withstood safely the highest freshet since 1796,¹⁰⁴ Hamburg seemed, in 1833, to have before it many years of growth and prosperity.¹⁰⁵

C. G. C.

The author of this article, Charles G. Cordle, was a noted professor at the Academy of Richmond County, Augusta Junior College, and Augusta College, according to An Augusta Scrapbook: Twentieth Century Memories, pp. 79 and 80.