“Which is perhaps not saying much for it, as the commercial difficulties of this year must necessarily interfere with all amusements of that sort.”
“That does not follow,” observed my friend; “neither is it actually the case. Public amusements are going on as usual,—our theatres are well attended,—crowds of well-dressed people are nightly listening to good, bad, and indifferent concerts at Niblo’s garden,—horse-races are going on in fine style, and are this year surpassing all that is on record by the gentlemen of the turf,—there is the same quantity of champaign drunk as in former years;—in short, people seem to do as well with their ‘shin-plasters’[6] as formerly with redeemable bank-notes. Our merchants are certainly the most extraordinary people in the world; and, if every other resource were to fail them, would not hesitate one moment, instead of payment, to take and offer drafts payable in the moon. That’s what I call the genius of a mercantile community.”
“And the way of keeping up appearances by credit.”
“But the credit system enhances their profits more than in proportion to their liability to losses,” remarked my friend; “and, besides, sharpens their wits, by obliging them to inquire into the character of those whom they trust.”
“All this may be very well with regard to one merchant and another. Both find their remedy in the enlarged profits of the system; but the consumer is obliged to pay the advanced price of the merchandize. This is taxing the labouring classes for the defalcations of the traders. Besides, when a failure takes place, the merchant, who is more or less prepared for it, loses generally but a part of his profit; but, if the creditor be a mechanic, he loses the whole fruit of his labour.”
“But the American merchants say, if it were not for the credit system, the labour of the mechanic would not command nearly so high a price.”
“And I can assure you,” said I, “that this is altogether an erroneous conclusion. The wages of the journeyman mechanic or the day-labourer, and the prices of the common necessaries of life, are not in proportion to the credit of the merchants—but to the actual demand and supply. During all this trouble, and while the banks stopped specie payments, all sorts of provisions were unusually high, and so were all articles of manufacture. All that the credit system of your merchants can do consists in creating, for a time, an artificial demand, and thereby raising, for a short period, the price of a peculiar description of labour; but, if you will take the pains of examining the history of American trade, you will find every such extraordinary price of labour soon after followed by a proportional depression, which could not but prove a greater disappointment to the workmen than would have been a regular succession of moderate prices.”
“I said that the credit system favoured only for a time particular trades and occupations; because it is a well-known fact that the Americans seldom follow the same trade a great number of years. Let it be known that the cotton speculations of one or two individuals have been successful, and immediately half the merchants in the United States will commence speculating in cotton, until the trade is completely run down, and half the speculators reduced to bankruptcy. When, in the course of last year, twenty millions of dollars were to be raised on credit to pay for the purchase of public lands, what influence did that have on the industry of our working men, except that the diverting of a large portion of the capital from which they received their emoluments, into a different channel, reduced the demand for, and consequently the value of, their industry? But even granting that the American credit system, which is said to act favourably with regard to the merchants, proves also a benefit to the small trader, the mechanic, and the farmer, would not the prosperity of the latter entirely depend on the former? and would not the extension or restriction of credit, which, with such a system, can always be effected by the rich capitalists, affect the demand and supply, and place the whole community at the mercy of a few individuals?”
“And what is the moral effect of the credit system on the sturdy husbandman or the mechanic? Instead of being sure of the price of his labour,—a surety without which the labouring classes of all countries lack the principal stimulus to exertion,—he sees his success in business reduced to a game of hazard; in which, like other gamblers, he often stakes his whole fortune on a single chance. Hence, instead of adopting a course of rigid economy, he indulges in reckless expenditure, and a degree of luxury which sooner or later may prove the grave of the republican institutions of the country. For why should a man be saving, whose success depends, not on frugality, but on a ‘successful hit’? and who, in a single speculation, may lose the savings of years?”
“That is a fact,” observed my friend. “How many of the gentlemen that dined with us to-day do you think are possessed of real property? Not one-third of them. And yet they are all ‘young, respectable merchants,’ as a certain New York paper calls them, doing ‘a handsome business’ on a borrowed capital. You could see them again at the theatre, and, after that, dashing at some fashionable party, where they will talk of thousands as of mere bagatelles. And yet nothing acts so demoralizingly on a community as the insecurity or instability of property. I would rather see the United States ‘progress slowly and steadily,’ than, as they have done, by fits and starts, with periods of commercial calamities, such as no European nation has felt under the yoke of the most odious tyrant.”