A new Baseball Association is talked of for next season, which shall have as one of its rules that the price of admission to all games shall be twenty-five cents. The project is meeting with great favor in St. Louis, Pittsburg, Louisville and Cincinnati, and a meeting is to be held in Pittsburg Oct. 10 to consider the formation of the new association. Philadelphia, Boston, and this city have been invited to co-operate in the plan, and the proposition it is believed will be favorably received.
-New York Clipper, September 17, 1881
One September night in 1881 two men conspired into the small hours in a Philadelphia hotel room. The one who did most of the talking was "Hustling" Horace Phillips, twenty-eight years old and the manager of the Philadelphias baseball club. Phillips was galled that the City of Brotherly Love was without a major league team, as were Cincinnati, St. Louis and New York, and he had a plan for changing that.
His listener was Oliver Perry "Opie" Caylor, a thirty-one-year-old newspaperman with legal training who had quit his job with the Cincinnati Enquirer to practice law and write the baseball column for the Cincinnati Commercial...
Caylor was in Philadelphia on this late-summer night after a postcard from Phillips had fallen into his hands, inviting baseball-minded men in cities that were currently unrepresented by a major league team to attend a meeting. He was disappointed but not overly surprised to discover that only Cincinnati had responded to Phillip's invitation...
The following morning, telegrams were sent to many of the same men who had ignored Phillip's initial summons, informing them that their city was the only one that had not been at the historic first meeting of the new major league, which was to be called the American Association under the slogan "Liberty for All," and offering them a chance to rectify their blunder. The ruse worked.
-The Beer & Whiskey League
The October meeting is really when the AA was founded but this meeting between Phillips and Caylor is the beginning of the league. Phillips and Caylor should be and, I think, are credited as founders of the league. People like Von der Ahe would come in at the next stage, in October, and were every bit as responsible for the starting the league but it's important to note the contributions of Phillips and Caylor.
There are two other things I'd like to note quickly before I wrap this up. First, note the list of cities involved in the AA project. Yes, they were all cities without NL representation but they had something else in common. These cities all had clubs that were playing each other in 1881. More importantly, they were making money by doing so. In many ways, the AA was a consolidation or an official representation of the relationships that had formed between the baseball fraternities of these cities in 1881. The groundwork had been been laid in 1881. They already knew that something like the AA could work because they basically had a run-through in 1881 and it had been extremely profitable.
The second thing I want to note is that Horace Phillips is a rather tragic figure. He was still a young man in 1881 and had started managing baseball clubs in 1879. As the man who essentially came up with the idea of the AA and instigated its official organization, he fully expected to be awarded the league's Philadelphia franchise but that franchise was awarded to the Athletics. Phillips was frozen out of the very league he helped form. Now, he would get back into the AA in 1883 with Columbus and would go on to manage Pittsburgh but forcing Phillips out in favor of the Athletics was kind of a harsh move.
In 1889, Phillips began to experience hallucinations and, essentially, had some kind of psychotic episode that forced his removal as manager of the Pittsburghs and his institutionalization. While he was released into the custody of his wife and would have lucid moments, Phillips appears to have remained a seriously ill man for the rest of his life and things got so bad that his wife, who was his main caretaker, divorced him in 1894. Phillips would again be institutionalized and he died in an asylum in 1896. He was only forty-three years old.