“And now,” said my friend, “unless you can follow all these windings, and are ready to turn as sharp a corner as the rest of them, let me advise you not to stay long in Wall-street; for, depend upon it, while you are here, you are in the midst of temptation, and no man ever trifled long with that, and came off with his honor unscathed, and his heart not indurated.”
I thanked my friend for his advice, and replied, “that I had already determined, that I could never aspire to a professorship, nor even a pupillage, in a school requiring such active energies of body and mind.”
But my friend continued, and, taking out his watch, remarked, that, as he had yet time to spare, if I pleased to listen, he would tell me something about the manner in which discounts were sometimes made, and obtained. And, willing to be informed of all particulars, in which I had now become deeply interested, I signified my wish to hear how these important appendages of trade are managed.
FICTITIOUS CREDIT.
“Young men,” said he, “often mistake the basis of their own credit, and are flattered by the freedom and liberality with which money is sometimes lent them. They could not possibly commit a more fatal error, and this arises in a great degree, perhaps, from the false estimate of what is commonly called money.”
The system of Bank credit, which has so widely obtained in this country, and which allows of a circulation of their notes, or bills of credit, as a substitute for money, has been productive of untold benefits. But its long success has led to its abuse; and the manifest advantage, to those who held the privilege, has led designing men to seek an influence in its control. In times of ease and plenty, these gentlemen are ever ready to exchange their credit for the substantial securities of the merchant, receiving therefor the premium of interest, as their profit. These Bank credits, being readily convertible for the payment of debts, entice men of small means into an enlarged business.
COMMON MISTAKE.
The error of young merchants seems to have been, an appreciation of Bank issues, to be the same as money, instead of an equivalent in credit, and a discount obtained, as an exchange of securities for cash, instead of a new debt contracted. They have overlooked the fact, that the same circumstances that will cause distress to them, will also cause it to the Bank, and bring with it a curtailment of their accommodations, just at the time when their wants require their enlargement. Their independence is gone, as soon as they are obliged to solicit a favor, and if in the hands of heartless and designing men, this is just the time when advantage will be taken of their necessities, as long as their securities are good; and they will find, when it is too late, that they have leaned on a broken reed.
HOW THEY GET SERVED.
The habit of merchants leaning on a Bank credit, and considering it better than their own, with the dependence growing out of it, has enabled the latter, by common consent, to throw around it a sacredness of character that does not attach to credit in any other place or form; and instances are of daily occurrence, where men do injustice to a neighbor, to enable them to pay a note at the Bank; while the latter, to protect themselves, will sacrifice a score or two of their customers, without mercy or compunction. When men become necessitous, they are afraid to let it be known out of doors, because it will injure their credit; and they will make almost any sacrifice in private, to save such a mortification. And to this fact, designing and unprincipled men, who, in times of pressure, convert the capital of a Bank into a means of preying upon their customers, owe their security in doing it; when, if the undisguised particulars could be known, they would immediately lose their charter and their reputation.