“premium” was used in its modern sense in the insurance industry long before the 19th century (see Peter Bernstein’s “Against the Gods”). It’s certainly possible that it had crept into other financial contexts by the date of that ad.
From what people have quoted above and the links provided, there’s no direct relationship between this guy and bank interest rates anyway. He was a stockbroker, not a banker. I haven’t seen anything so far to suggest he had any involvement with basic bank lending rates at all.
Wouldn’t it be capitalized, at least in the first few years, if it was directly associated with Prime? Wouldn’t it be a “Prime rate” instead of “prime rate?” The OED entry from 1815 doesn’t show that.
Capitalization was very inconsistent and spotty in the 19th century. I wouldn’t read too much into that.
Interesting debate. Thanks, everybody.
I would. From what I’ve read, it was often the case that (perhaps) random words in a sentence would be capitalized, but never put lowercase when they would normally be capitalized. Not having a capital P in ‘prime’ rather strongly indicates that it wasn’t supposed to be.
While i agree that there’s no evidence to connect him to basic lending rates, he is described as a banker by quite a few authors.
Here’s a link to page 127 of the book A century of banking in New York, 1822-1922 by Henry Wysham Lanier. The page contains a short biographical sketch of Prime, which says:
And from page 16 of The old merchants of New York City by Walter Barrett:
Could we dig up any more on the use of ‘prime rate’ in the 19th century? I agree that by the 20th (when the Federal Reserve was established and economists’ focus turned on the prime rate) Nat was mostly forgotten. There’s got to be more to find than a couple references in the OED…
Mortgages are the right of all sentient beings.
Well, a search of 19th century British newspapers brings up some hits, but none of the ones i’ve seen so far refer to interest rates. Rather, they refer to the costs associated with cargo handling for ships in docks.
For example, an entry from the Daily News (London, England), Friday, September 5, 1856 discusses the procedures at the Victoria (London) Docks, and says:
There’s an earlier entry from the Freeman’s Journal and Daily Commercial Advertiser (Dublin, Ireland), Monday, April 28, 1851, which discusses costs associated with various ports (Dublin, Glasgow, Liverpool, London) and notes:
The quotation marks are in the original.
There are quite a few similar notices under the topic headings “Advertisements and Notices” and “Commercial Intelligence,” where the term is used to talk about dock charges.
The first (and only) British reference i could find to prime rate referring to interest was in the Daily News (London, England), Tuesday, April 5, 1881. A section titled “Money Market” noted:
That was in the British newspapers database. A search of 19th century UK periodicals found no further instances, the only hits being for articles containing information on “the rate for prime livestock” in the agricultural and farming journals.
In the United States, the first true reference to the term prime rate (i got a few hits that turned out to be “prime rice”) came in the Portland Advertiser (Portland, Maine), September 27, 1825, and referred to the quality of apples required for making the best cider.
The first reference to prime rate in the banking sense that i’ve found in American papers comes from the 1920s, and appears in Barron’s. Interestingly, it is referred to on a few occasions as the “prime name rate,” and on other occasions merely as the “prime rate.” An example of the “prime name” and “prime rate” usage together comes from the October 22, 1923 issue of Barron’, which says, in the Money section:
I believe that the contrast of the adjectives “prime” and “good” here provides some support for the notion that the term “prime rate” was introduced as a descriptive term, one that distinguished the “prime” risks from the merely “good” ones. Given the evidence, and the lack of evidence, i really have trouble believing that the term derives in any way from Nathaniel Prime.
I can reprint what the original 1815-1816 cites were. But they have nothing to do with interest rates. As far as finding other 19th Century uses, they’re actually quite scarce.
But, here’s the Ad as it appeared in the Times of London.
In my search of British papers, above, i forgot to include the Times, because it is a database all by itself, and is not included in the other ones i searched.
A search of the Times reveals this comment in the edition of Tuesday, January 17, 1854:
But it seems to me that this still means something quite different from our current understanding of the term “prime rate.”
The next Times article in which the terms "prime, " “rate,” and “interest” appear together like that is not until over a century later, in 1955.
Also, the Times felt a need, in 1958, to explain to its readers what the prime rate actually was. In an article entitled “American Prime Interest Rate,” it said:
Let me hurriedly note that all the important nouns in that sentence are capitalized, so the capital P of Prime is of no significance.
Alright, in that case I give up. Still… it’s one hell of a coincidence.
So in conclusion: ‘prime rate’ relates to ‘a name that’s prime,’ but NOT to Nathaniel Prime.
In fact, almost nothing relates to poor old Nat, who was only the biggest pioneer of trading US treasuries. (This is how everything relates to the War of 1812.) And none of that has ANYTHING do with the Federal Reserve trading US treasuries as its only means of manipulating the prime rate.
Nathaniel Prime, the guy who discovered prime numbers and got the prime meridian named after, and invented pump initialization, and wrote the Directive, yet did not affect the course or jargon of economic science, your name was remembered once more… if for an instant.
er… i meant samclem
As a mere spectator in the thread, my hat’s off to you, sir. Not often, here or anywhere, that one sees someone stake out a position then yield to the weight of evidence. Well done.
So I am Elindel’s heir’s “usually pretty financially savvy” friend.
It’s very funny to be described online anonymously, and I thank my dear friend for the positive attribution.
My favorite comment on this thread was the guy who averred that I could be “ridiculed” unless I was “whooshing” my dear friend, whatever whooshing means.
In any event, while I don’t recall the reason why I stumbled upon this thread, I feel that it is my duty to my great great great great great-grandfather (of whom I had not even heard until about 5 years ago) to set at least some of the dope I have read here STRAIGHT.
I try hard when discussing my ancestors not to talk trash, and I don’t often document everything I read, but learning that Nathaniel Prime’s daughter Laura had married one of the grandsons of John Jay (1st Chief Justice of the SCOTUS and 6x great-grandfather of mine), I took notice.
I did some more research.
I also learned that not everything that existed in the 19th century has been scanned into availability online.
Imagine that.
One such source found its way into a book by a Professor Emeritus at American University
Some current stuff he’s done is listed here, but let’s just say that the dude is retired.
http://www.tni.org/users/howard-wachtel
Howard Wachtel in 2003 wrote this book:
TNI’s press people describe it as “a widely respected history of the infamous New York street.” It was noted enough to make the Harvard Business School Business History Review.
http://www.hbs.edu/bhr/archives/vol77/vol77-2003winter.html
Taking their word for it that he’s an expert, I’ll go ahead and quote from the book directly. For the purposes of our discussion, I’m sure the good professor won’t mind:
"[Nathaniel] Prime was an innovator as a private banker, as an underwriter of new bond issues, and as a conduit into British financial markets. Discreet in the tradition of British merchant banking houses, Prime’s late-Federal building where he conducted his business evoked the atmosphere of a safe, comfortable home. He first made his mark and fortune in handling notes of incorporated banks. His papers reveal extensive purchases and sales of shares in Burr’s Bank of the Manhattan Company. He was the first to become a ‘market maker,’ by which is meant someone who controls so much of the activity in a stock, bond or banknote that he or his firm can establish their price. By 1802 Prime was publishing each week the prices of some ten securities in which he made a market.
“Prime did this not only in bank shares but in direct lending as well. He was the first of the great private bankers in New York to supplement the financial operations of the chartered banks. The rate of interest he charged on loans was carried in newspapers as ‘Prime’s rate of interest.’ It was known on The Street as the best price for money, because he was careful to trade only in the most secure stocks and bonds and make loans only to the most creditworthy. From this designation, prime rate of interest, still in common usage today as the base-line interest rate charged by banks to their most creditworthy borrowers. Prime was also the first to establish direct correspondent relation with British financial enterprises as a result of his pioneering work in establishing investment banking in the new United States.”
The quotations and italics are from the original text, however, I have removed the endnotes strewn throughout the text as references due to the difficulty of posting them in this editor.
If I needed additional proof, I might consult the NY Historical Society for a look at the “Prime Family Correspondence”, and perhaps the newspaper listings of those days and subsequent years to see when Prime went from being capitalized to being published in lower case. Alas, these papers have yet to be scanned by Google.
For a guy who’d never taken a marketing class, I’d say old “Nat” was pretty good at the whole branding concept considering that his brand has survived over 200 years. Too bad his company didn’t survive his retirement.
And I note with a hint of sadness that he was not unique among my forebears to take his own life.
I am indebted to my dear friend “Elindel’s heir” for challenging me to learn more about old “Nat”, his life and times, and his hitherto completely forgotten importance among my ancestors.
Thank you for that interesting find. I’m certainly prepared to assume Wachtel is a legitimate source.
However, I write books myownself and I know how all too often the stories that look great that I want to steal and use turn out to be less solid than I would like.
You won’t mind if we examine some of Wachtel’s claims.
I checked Google Books for the phrase “Prime’s rate of interest”, which returns only one hit as well for any time period - in Wachtel’s book.
“prime rate of interest” gives only one hit in the 19th century, from McClure’s Magazine. When the ad there mentions “prime rate of interest” it appears to mean “highest return” not lowest bank rate. That’s the opposite of what Wachtel implies. There is one other pre-1920 hit, from the Canadian Parliament.
Because of the way Google Books handles dates, it’s not certain that is from 1903 but it’s around that time.
Nathaniel and “prime rate” returns nothing from the 19th century either.
So my doubts remain. Wachtel’s book gives only snippets so I can’t see whether the passage you quote is footnoted or to what. If you could provide that information that might guide us to better sources.
I’m still finding it very odd than not a single source can be found in all the 19th century that refers to a man or a phrase supposed to be in common parlance and in many advertisements, which are scanned and searchable. Not impossible, certainly, but it will take more than a single good yarn, even delivered by a scholar, to override my skepticism.
I appreciate your continued interest and skepticism. I suppose that’s what this site is all about.
If I might clarify my previous post, I really only made it to make the following 3 points:
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I had not made up the “yarn”, as you call it, of the Prime rate of interest having been started by my ancestor. It was not something that came from family lore. In fact, no one even remembers old “Nat” except for me and the people on this blog, and Professor Wachtel. If irony existed, it would strike me as amusing that a professionally written and sourced academic history of Wall Street is no longer accepted as some kind of validation on an internet blog.
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Not every source that has ever existed has been scanned and made available on the internet. This appears to include the Prime Family Correspondence available at the New York Historical Society.
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Nathaniel Prime had a really good handle on using the communications technology of the day to “Position”, in the modern marketing sense, his surname to mean a properly discounted interest rate for trustworthy customers.
Your other issues:
As to why his first name would not have been attached to the term “prime rate”, what would have been the point? He was Prime, regardless of his first name.
Are the snippets I posted footnoted? Yes. They refer to the Prime Family Correspondence at the NY Historical Society mentioned above. They also refer to this book by Werner and Smith:
This book is also footnoted heavily as you can see. Alas, those footnotes are not available online either.
Finally, here is Professor Wachtel’s CV. Please note that Street of Dreams has now been translated into Bulgarian and Chinese.
http://www.tni.org/sites/www.tni.org/files/bio_cv/Nick%20Buxton/howardwachtel%20cv.pdf
In conclusion, I have enough evidence for me to continue to mention my 5x great-grandfather (and the use of his surname in the banking world today) at cocktail parties. I hope you will forgive me for throwing caution to the winds of ridicule.
Thank you.
Hey, George - welcome aboard! Glad you found this.