118 



NEW ENGLAND FARMER, 



OCT. 14, 1840. 



A r< n H O R ' I' I C U L r U R A L R I G I S T K R , 



Boston, VVednesdav, Oct. 14, 1840. 



CREDIT. 

 We promised some farther olis<*rvrition9 on credit : 

 and having given them, shall relieve our readers from 

 any longer discussion of theHC snbjecis for the present. 



There are two kinda of capital — actual iind fictitious ; 

 and actual capital may be considered in two aspect^ — as 

 productive and unitrodurtivp. Actu:il capital rs ihat 

 which has a real and substantial f xislcnce : as land, 

 houses, buildinjis, machinery, ship^, cash or specie. — 

 Fictitious capital is that which is made rapital by a le- 

 gal fiction ; by a mere convfintional agieement; that 

 which wc oitrseiv" rt create at our own pleasure, and 

 hold and exchange as the representative of value; such 

 as notes of hand. bill§ of exchange, bank notes, and nil 

 other paper currency. The value (»f the precious rnelals, 

 or rather tlie standard o( their value, may he considered 

 AS in some m«a.sure coaveniional ; yet as tliey have an 

 intrinsic and universal value, and are the representative 

 of wealth among all nations who have a currency ; and 

 as they are lo a great degree imperishable, and not to be 

 produced at our pleasure, we may consider them as ac- 

 tual capital. In the business of life fictitious capital an- 

 swers every purpose of actual capital, so hmg as its cre- 

 dit can be maintained, or while society is willing In re- 

 ceive it as such. But in order that it may be re{,r;ir(led 

 as the true repre«enlalivH of real wealth, it must-be as 

 we have shown, capible of beinp converted into real 

 wealth. When this ceases to be the case, its value cea- 

 ses, of course. 



Productive and unproductive capital are easily under- 

 fitood. That which is capable from its use of giving a 

 return, is productive : that wluch gives no return is un- 

 productive. A house, which we leiise and for which 

 we receive a quarterly or an annual rent, is productive ; 

 but a house upon ii farm, which we occupy, and all the 

 necessary buildings for the storage or protection ol our 

 produce, is nnproduciive. The ci>st of these is an ex- 

 penditure which ia indispensable, but for which we get 

 no lelurn. Si», likewise, in regard to n faclory. The 

 buildings, (he danre ai»d sluice wa\s, the machinery, 

 the houses for the opcrati^ves, are all lo be considered as 

 unproductive. We can not du without these; yet they 

 are, properly speaking, so much nnprnductive capital. 

 The money expended in raw matfiri.il, .n-hos*! value in 

 passing throngh the varir>ufi proci:^i*>es of the manufac- 

 ture is often increased a thousand (&j/i,.<ind in the laboi 

 which conducts these 'iperations, is tn ^^ considered as 

 productive. Ko, likewise, money invested in shipments, 

 in stucks, in cullivalion, and in any nj;ricullura! im- 

 provement wliieh renders the land m.vi;3 fruiiful, is pro- 

 ductive. Mnney wiiicli is lioarded up without use, is 

 unproductive. All ninney expended in mere nrnanjeiit.s 

 or embellishnients, which do not render the proferty 

 to which they arc ajjplied more luciative itr pruduelive, 

 must be legarded in the li^ht of unpr'MJuetive ra^jitaj. — 

 If a house for being painted will yield no more rent tiiHn 

 if it were suffcrfd to remain plain, the expense ^o^' paint- 

 ing it is placing capital where it is nnproductiye, and ii* 

 lost. The erection of a fenre eufficienl to protect nnr 

 crops and fields is in<lispensahle ; but the investment of 

 capital in its erection i»; un|iroductive ; and all expendi- 

 ture upon this fence in the wa) cjf (irnanient, is a waste 

 of capital, as far as any leturn ia concerned. It may it)- 

 crease tlie intrm^ie Viilue of llje properly, and render it 

 more saleable in case it should he desirable to .sell it; 

 but it IS useless in respect to any (iroductive return. — 



We need not proceed f.ulher with these illustrations. 

 Productive and unprftdnctive cnpital seem in some ca- 

 ses to be so nearly allied that it is dithcull t" distinguish 

 them; but all that which has no tendency to inere.ase, 

 tlunigh such expenditures are in many cases indispensa- 

 ble, must be classed With the unproductive. 



Credit is wealth: that is, it camrt.ands wealth, and 

 answers every purpose of wi-iilih. Ii is so much capi- 

 tal, which its possessor may eniphty ;is he wnuld any 

 capital of a substantial or real character. As it brmgs 

 with it equal ficilities fur gond, so is it equally liable to 

 abuses as wealih. In general with us it comes in the 

 firm of hank loans; and cnnsi.'^ts in money obtained 

 from till' b;inKs The <-redit, therefore, of which we 

 mean to speak in lids case, is borrowed money, which 

 is s'jpplied by the banks, and for the supply of which 

 they are created. 



Now as we have ?aid,tliere may bo too much capital 

 and too much credit in a community. We mean parlic- 

 ulaily for purposes of business. Certainly we do not 

 mean to say there may he too much wealth ; because, 

 where it is already ac(|uired or accumiilnted, those who 

 have it may employ it, as they will, in public iniprove- 

 n>ents and e iibellishmenis, whether they may be pro- 

 dnciive or unproductive ; Un if not productive in a pe- 

 cuniary view, they may be productive in gratification 

 and in various other w.'iys to tiie whole community. But 

 this i.s not the ease with matters of business. Here, if 

 tliere be more capital than can be employed with ailvan- 

 tage, there is too much ; and where capital is ahuedant 

 and credit tasy, men are liiib'e lo bo hd into numerous* 

 and groHS abuses Credit is of gren.t value where it 

 serves as a stimulant to industry; but it is a curse 

 where it encourages or becomes the means of extrava- 

 gance, gambling, dissipation or profligacy. Now there 

 can be only a cei tain amount of business, profitable bu- 

 siness done in a community ; and beyond tiiat, capital 

 is not needed ; and indeed is often much worse than 

 useless. 



Wc have in this case the illustrations of hist<»ry and 

 of personal experience, which are much more striking 

 and instructive than any other- Look back tJien to the 

 memorable year of 1836, when the contmnnity was 

 flooded wiili bank capilal ; when money wa-< almost 

 crowded upon the borrower ; and the ( redit of lew men 

 was so poor that ihey could not obtain it. What was 

 the consequence of this excessive repletion ? Disease 

 and death, as in lite human system; or in other words, 

 universal embarrassment and almost universal bankrupt- 

 cy. Out of twelve hundred dry goods merchants in 

 New York, it has been confidently stated that not more 

 than sixty have escaped insolvency; and this applies to 

 other classes in the community as well as lo the mer- 

 chants; and many staid farmers caught ihe a'most nni- 

 vprsal frenzy, and in the rage for suthlenly growing 

 rich, their whole farms went down in the (general 

 w rec k . 



The first evil effect was a sudden advance in luxury 

 beyond all precedent. This showed itself in houses, 

 style of living, drrss, servants, equip.iges, jewelry, a- 

 m.usements, and all the usual accompaniuients. A great 

 deal of this was the efiect or fruit of boirowed money. 

 Men used it us if it were their own ; sometimes without 

 ever intending to repay it ; but by various modes of as- 

 j;igning their property (pr concealing it, meaning from 

 ihc beginning to enrich theniselves and thus to set their 

 creditors at ileliance. in other cases they were calcu- 

 lating upon some extraoidinary contingency, some 

 stram^e turn of the wheel of hiriune, some unheard of 

 success, that should enable them to meet the day of pay- 

 ment, which in truth was certain to come long before 

 they would be ready for it. 



The second effect was, to produce a spirit of universal 

 speculation in lands, houses, tiees, stocks, and projects 

 and enterprises of every description — the disastrous ef- 

 fects of which have been, and must continue to be, long 

 and most seriously lelt. Few persons by extraordinary 

 freitks of fortune became enriched ; but the gieat mass 

 enj;aged m lliewe wild speculations, were stripl of all 

 former accumulations and left to suffer llie must bitter 

 retribuli')n5 of their madness and fidly. 



Credit thus abused, fictitious capital thus created was, 

 and ever must prove, a great curse to the community. 

 The sudden and most inflated rise of prices beyond all 

 reasonable bounds, was a general evil, by creating false 

 expectations and leading to the most reckless and haz- 

 ardous adventures ; and more especia lly by breaking up 

 and inducing men to abandon all habits of honest indus- 

 try and frugality, and seek shorter modes of acquiring 

 wealth, which in themselves are hut too often based on 

 fraud, and expose human virtue to the most severe perils. 



We are sensible that we leave this subject iiere in a 

 very imperfect form ; and we have hardly entered upon 

 the abuses of credit. We cannot now, however, extend 

 our remarks ; and shall conclude by saying, that all 

 means or methods of acquiring wealth other than by 

 honest industry an4 frugality, are to be discouraged, as 

 too often leading to immorality ; as removing the most 

 efl'i ctual securities against the waste and abuses of 

 wealth; and as being ordinarily inconsistent with the 

 equal rights (»f mankind. Ii. C. 



Killing Canada Thistles. — A correspondent of 

 the New Genesee Farmer says, — It will sometimes be 

 found more convenient to kill Canada Thistles by the 

 application of salt, than by the ordinary method of tear- 

 inir them up with the plough. A small patch, especially 

 if it be in pasture or meadow, may thus be destroyed 

 without materially injuring the sod. The way is for a 

 man to go over the ground wiih a hoe, carefully cutting 

 off each plant just below the surface of the ground, and 

 a boy to follow after and put a small dose of salt on the 

 uncovered roots, say one to two tea-spoonfiills to a root, 

 until every [>lant has been supplied. It is quite probable 

 that a month or two afterwards a few sickly looking yel- 

 low plants may appear, but if they dt», another similar 

 course of tieatmeni will be effectual. 



Any sharp hoe will answer for cutting them off*, but 

 experience will show that labor can be saved by a little 

 different construction. The hoe should be nai row and 

 a little heavier than common. For instance, something 

 in the shape of a chopping axe, wiih the handle put in 

 at right angles with one of the flat sides. It should not, 

 however, be as heavy as an axe. The required weight 

 being merely that which is neces-sary to give force 

 enough to the blow to sever the root without difficully. 

 Such a hoe will be found very convenient for cutting 

 up docks, burdocks, Ai-e. 



Canada Thistles should be cut up as soon as they are 

 in flower, and as much sooner as is convenient. Henco 

 the sooner it is done, the hotter.' 



A gardener at Glasgow, having noticed that a piece 

 of woollen rag which had blown upon a currant bush, 

 was soon < overed with caterpillars, he placed pieces of 

 woollen cloth in every bush in his garden, and found 

 the next <lay that the caterpilhirs had universally taken 

 to them for slielier. In ihts way he d^'stroyed many 

 thousands. 



An infusion of elder leaves is recommended by nn 

 English paper as good to sprinkle over rose buds and 

 other flowers subject to blights and the devastations of 

 insects. 



