J 02 



NEW ENGLAND FARMER, 



SEPT. ;iO, 1840. 



AND HORTICULTURAL RRGtSTER. 



Boston, Wednesday, Sept. 30, 1840. 



BANKS AND THE CREDl V SYSTEM. 



Having spoken of tim nhuscs of |jfinl<«, we now pro- 

 ceed til say something of the ahiisis of cierlit. Credit is 

 a most important eh^menl in every commercial commu- 

 nity. It is difficult 10 see how the business of life can 

 be carriid on without it. Where the arts of lifu have 

 made any progres.*, the division of labor is not only con- 

 venient but essential; and it will become more com- 

 plete in proportion as society hecoini s more civilized 

 and improved. HencM' the necessity we are under of 

 serving each other ; and of one man's being able to com- 

 mand llie services of others. Many of the i^perations 

 of life in the arts anil in all bui^iness concerns, require/ 

 time lor their aocompli.-hnicnt. We apply the labor and 

 must wait the return. Every voyage must be consider- 

 ed as a system of credit. Every agricultural operation 

 is, in a certain sense, an operatiim of credit. We invest 

 our inoney and our labor with a view to a return at 

 some future day. lieu then it is obvious that the capi- 

 tal or labor must be invested or there can be no return. 

 No man expects a harvest without sowing the seed. 



In business life, as we have said, credit is indispen- 

 sable. It is power — the power of action, of improve- 

 ment, of success, of wealth ; without which the poor 

 man would with extreme difficulty rise above his pover- 

 ty ; and unless we abolish all the present relations of 

 property, would fiml the road to wealth and even to 

 subsislonce toilsome and discouraging. A young man 

 witli a disposition to labor and habits of industry, hav- 

 ing acquired a trade, comes of age without a dollar. 

 He wants a shop, tools, materials for his work, and sub- 

 sistence until he can manufacture the articles of his 

 trade, so as to obtain a return for his labor ; and these 

 he must obtain on credit, or he cannot obtain them at 

 all. An enterprising young man, devoted to agricul- 

 ture, wishes to obtain a farm. He must have imple- 

 ments, seed, manure, and stock. Now if all these are lo 

 be paid fur before he can obtain them, in moat parts of 

 our country his ca.se would be, if not hopeless, extnenie 

 ly discouraging. But if he can obtain such an establish- 

 ment upon a reasonable credit, his industry .and good 

 management, stimulated by this very debt, will in due 

 time enable him lo become the freehold possessor of the 

 farm. So likewise in almost every branch of business, 

 men require other capital than their laborto render that 

 labor effectual. 



We miglit illuslratH this subject much more fully, but 

 the value and utility of a well regulated credit are loo 

 obvious. It is an immense advantage to any business 

 community and especially to a young coniinuoity, to 

 have an accumulation ol <;a|iital of which to avnil them- 

 selves for use, for production, for improvement ; and it 

 would be the same ^e if it did not exist, iftiie fiossessrirs 

 of this surplus accumulation were in any respecl forbid- 

 den or prevented frinn using or loaning it. We are 

 much in the habit cif looking upon a creditor, a capital- 

 ist, a lender of money wiih (!isre.-[>ect or hostility. But 

 why should it be so? It' he abuses his power to pur- 

 poses of oppression, if he. violates the law by the exac- 

 tion of enormous or usurious interest, if he takes severe inducements lo speculation and to enterprises of hazaid 



tion of foreign capital into the country and the conse- 

 quent amount of interest money we are obliged to pay 

 for it No honest man can fir a moment object to pay- 

 ment for the use of this capital. The borrowing is ol 

 our own choice, and every reflecting mind must per- 

 ceive of what (ireat advantage, under proper use and 

 management, it may be made to our young and gri>w- 

 ing country. 



Of 1 be abuses, or we may say, the bad uses of credit, 

 we shall say little. It is a great error to suppose that 

 we cannot have t(»o much credit or too much capital. 

 We ha\e always too mnch when we have more than 

 we can apply to legitimate and useful purposes; and 

 are thus tempted to undertake hazardous and extrava- 

 gant enterprises and speculations. We have had some 

 les-ons on this subject which ought not to be forgotten. 

 In I83li, when the country was deluged with bank is- 

 sues, individuals insiead of making application for loans 

 were importuned u> borrow ; and we have been credi- 

 bly inli^rmed that such was the eagerness of some banks 

 (since of course defunct) to loan their money, that their 

 notes were left at grocer's stores in some fiarts of the 

 citv, in order to find customers. Indeed, it wis the ob- 

 ject of the banks, as far ns possible, to extend their i.s- 

 sues, and this of course induced them to discount far 

 beyond the limits of safely ; and the natural consequence 

 was loss and ruin, often to both parlies, the borrowers 

 and the lenders. The loss and ruin however, in many 

 cases to these parties were merely nominal. Such banks 

 having been established without actual capital, and the 

 borrowers being in general equally dcslitute, by the 

 failure of the banks or of tkeir enterprises, they were in 

 no worse condition than when ihoy began their opera- 

 lions ; but the loss fell upon those who held the bills, 

 who had received them for other property, or for their 

 labor ; and upon them it operated as a serious fraud. 



Two great evils come from a redundance of borrowed 

 capital in the community, or in other words, from too 

 great facilities and an excess of credit. The evils are 

 not limited to two ; but we shall on iliis occasion point 

 only to two as the most prominent. The first is the 

 WHSte of money. There is a delusion liable to creep 

 upon and obscure the strongest minds; and that is the 

 belief that borrowed inoney is our own. Wc spend it 

 therefore, as if it were not to bs returned ; upon our 

 own accommodation, upon dress, furniture, matters ol 

 mere ornament and embellishment, in pleasure and lux- 

 ury. In this case it is never returned. We throw it 

 overboard and cannot fish it up again. We may some- 

 times bring the fragments to the surface ; but it serves 

 only to demonstrate the irretrievableness of our loss. It 

 is like water spilt upTn the ground. But pay day never 

 drops out of the calen<lar. It comes round much sooner 

 than we expect; and under these circumstances hun- 

 dreds and thousands find themselves bankrupt. They 

 have lost not only the boirowed money, but any other 

 liitle property which they had when they contracted 

 the debt, has become now involved, and perhaps is in- 

 sufhcient to liquidate it. We have portrayed no ficti- 

 tious case ; hut cases with which our community n- 

 bounds. Credit, under such ciictinistances, proves a 

 bitter curse. 



The second evil that springs from a redundancy of 

 borrowed capital or faiMlitics of credit, is the offering of 



or cruel advanl.ige of the necessities of the distressed, 

 he may justly be blamed and condemned. But if, on 

 the other hand, he is ready to loan his money tiir the 

 benefit of the community, and takes no improper ad- 

 vantage, he is most justly entitled to a fair, certainly to 

 a legal compensation for its use, and is to be regarded as 

 a benefactor to the community. Nothing can be more 



Speculation, in general, deserves n(» other name than 

 gambling. It is adventuring property upon contingen- 

 cies which human sagacity cannot foresee, nor human 

 power control. If the event is certain, and just in pro- 

 portion as it is ceitain, it ceases lobe speculation. Un- 

 certainty appertains to cvciy thing that is human. Ev- 

 ery voyage at sea, every spring sowing and j.iantins is 



absurd than the c.ainor <ifieii raised against the introduc- I in .a certain degree, a speculation. But the hazards 



here encouniered are incidental to our nature and con- 

 dition, and we cannot escape them. Speculation, prop- 

 erly so called, is operating upon haziirds, uncerta-nlies, 

 chances, contingencies, which are not matters id' any 

 exact calculation ; and which, though not always as un- 

 certain as liio cast of a die, yet in general may be re- 

 garded as ofcipially doubtful result. Into such risks 

 men are alvvays likely to be led, whenever they can 

 find the means of engaging in them. The passion for 

 adventure, springing from self loneeit, and an almost 

 mysterious confidence in our own success and good 

 luck, finds easy admission into '-very bosom.^and when 

 enkindled and nourished burns with an almost unquench- 

 able flame. Men in jiossession of money, which has 

 not been earned by labor, will rush into any hazard ; 

 and the history of ihe years 1836 and '37 shows into 

 what frenzy the mind of the whole community may be 

 driven, under an extraordinary accession of the means 

 of indulgence. Fortunes were made in a day. A fic- 

 tiiioiis and exaggerated value was attached to every 

 ihing susceptible of traffic. The most extravagant en- 

 terprises were entered upon ; the most enormous luxu- 

 ries indulged in, until presently the leaction came in alt 

 its bitterness ; and the delirium tremens at last passed 

 off, leaving the social body wasted, exhausted, and with 

 difficulty capable of resuscitation. 



We have little more to add in this case ; but that lit- 

 tle must wail a more convenient occasion. II, C. 



, CoR!;ection'. In our second number we stated that 

 befi>re a bank could go into operation, two thirds of the 

 capital stock must be bona fide paid in, to remain as part 

 of its capital or for the use of the b: nk. In the situation 

 in which the article was wiilten, the laws of Massachu- 

 setts were not accessible. This must be our apology 

 for stating " two thirds " insiead of " not less than one 

 half," which the law provides. We are always anxious 

 to be precise and true ; but the error in this case does 

 not affect the argument nor the principle. In the orig- 

 inal law incorporating the Massachusetts Bank, it is 

 said, this is to be " held as security against any demand 

 which may be made against the bank." In the general 

 banking law of the State, it is provided that it shall re- 

 main as part of the capital of the bank, H. C. 



CATTLE SHOWS AND KAIRS. 



The Cattle Shows at Pittsfield and Northampton are 

 lo be held on the 7th and 8th days of October. The ad- 

 dress at Pittsfield to be delivered by that eminent friend 

 of horticultural and agricultural improvement, Henry 

 A. S. Dearborn, Esq., of Roxbury. The address at 

 Northampton has been expected frtim Hon. D. Webster. 



The Essex Agricultural Show lakes place at George- 

 town on the 30ih of Sept. The address will be given 

 by Asahel Huntington, Esq., of Salem. 



The Weircester Agricultural Show lakes place on the 

 I'dlh and 14th of October. The trial of ploughs is to be 

 made on the 13th inst. under the supervision of a Com- 

 mittee of the Massachusetts Agricultural Society. It is 

 announced that one hundred dollars will be given as a 

 premium for the plough best suited to lay the furrow 

 slice flat; and seventyfive dollars for the plough best 

 adapted to lay the furrow slice at an oblique angle, or as 

 it is commonly termed, lapping. The competition is 

 open lo the whole country. 



Two addresses are announced lo be given at Worces- 

 ter at the Cattle Show; one by Hon. Daniel Webster, 

 of the U. S Senate, and one by Hon. Isaac Hill, ex- 

 Governor of New Hauipsliiie. *' Speed Ihe plough." 

 \\'orcestcr Caitle Shows have been always remarkable 

 fir tlieir sJi.iw of bipeds ; and when two such Belgian 

 gianis in agriculture are to show what they can do in 

 tunning a i'urrow or mowing a swarlli, what farmer, 

 who can be, will not find an irresistible attraction, lo be 

 pre-ent. 



The town agricultural Show and celebration of Wesl- 

 boro' and iis vicinity, under the auspices of some as de- 

 voted friends to agricultural improveini-nt as the Slate 

 contains, will be holden on the 7th of October. Our 

 friend Breck has t onsented lo address them on the oc- 

 casion ; and iherclbre we promise, without meaning 



