That there is a great deal of roguery going on in this city is undeniable, much more, perhaps, than (taking into consideration the difference between the populations) in the good city of London. But it should be borne in mind that New York has become, as it were, the Alsatia of the whole continent of Europe. Every scoundrel who has swindled, forged, or robbed in England, or elsewhere, makes his escape to New York. Every pickpocket, who is too well known to the English police, takes refuge here. In this city they all concentrate; and it is a hard thing for the New York merchants, that the stream of society, which otherwise might gradually become more pure, should be thus poisoned by the continual inpourings of the continental dregs, and that they should be made to share in the obloquy of those who are outcasts from the society of the old world.
America exists at present upon credit. If the credit of her merchants were destroyed she would be checked in her rapid advance. But this system of credit, which is necessarily reciprocal, is nevertheless acted upon with all possible caution. Many are the plans which the large New York importers have been compelled to resort to, to ascertain whether their customers from the interior could be trusted or not. Agents have been despatched to learn the characters, standing, and means of the country dealers who are their correspondents, and who purchase their goods; for the whole of the transactions are upon credit, and a book of reference as to people’s responsibility is to be found in many of the mercantile houses of New York.
Willing as I am to do justice to the New York merchants, I cannot, however, permit Mr Carey’s remarks upon credit to pass unnoticed. Had he said nothing I should have said no more; but, as he asserts that the security of property and credit in America is greater than in England, I must, in defence of my country, make a few observations.
At the commencement of his article Mr Carey says,—
“In England confidence is almost universal. The banker credits the manufacturer and the farmer. They are willing to give credit to the merchant, because they have confidence that he will pay them. He gives credit to the shopkeeper, who, in his turn, gives credit to the labourer.
“Immense masses of property change owners without examination; confidence thus producing a great saving of labour. Orders to a vast extent are given, with a certainty that they will be executed with perfect good faith; and this system is continued year after year, proving that the confidence was deserved.”
Now, after this admission what more can be required? Confidence proves security of property, and should any change take place so as to render the security doubtful, confidence would immediately cease. It is, therefore, rather bold of Mr Carey, after such an admission, to attempt to prove that the security of property is greater in America than in England; yet, nevertheless, such is his assertion.
Mr Carey bases his calculation, first upon the losses sustained by the banks of England, in comparison with those sustained by the banks of Massachusetts. Here, as in almost every other argument, Mr Carey selects one state—a state, par excellence, superior to all the others of the Union; a pattern state, in fact—as representing all America against all England. He admits that, as you go south or west, the complexion of things is altered; but notwithstanding this admission, he still argues upon this one state only, and consequently upon false premises. But allowing that he proved that the losses of all the banks in America were less than the losses of all the banks in England, he would still prove nothing, or if he did prove anything, it would be against himself. Why are the losses of the American banks less? Simply because they trust less. There is not that confidence in America that there is in England, and the want of confidence proves the want of security of property.
The next comparison which Mr Carey makes is between the failures of the banks of the two countries; and in this argument he takes most of the states in the Union into his calculation, and he winds up by observing (in italics) that—“From the first institution of banks in America to the year 1837, the failures have been less by about one-fourth, than those of England in the three years of 1814, 15, and 16; and the amount of loss sustained by the public bears, probably, a still smaller proportion to the amount of business transactions.”
Now, all this proves nothing, except that the banks of America are more careful in discounting than our own, and that by running less risk they lose less money. But from it Mr Carey draws this strange conclusion:—