I do not pretend to decide beforehand what the precise organisation of a system of credit for France should be; but I think it may be safely affirmed, that the system which prevails here would not do for us. In appropriating to ourselves the improvements of the English and of their successors in America, we must modify them in conformity with the genius of the nation, or they will wither on our soil. As the East is the cradle of religion, so England in our day is the mould in which the political and commercial institutions that seem destined to rule the world have been cast; but as the religious conceptions of the East have had to undergo a radical change in order to gain a footing in the West, so the political and commercial creations of our neighbours, must undergo a transformation before they can become fixed amongst us. Coming into the world under circumstances of a peculiar nature, amidst a people of an original and peculiar character, born under the unhealthy shadow of conquest and civil war, they are not suited to be transferred bodily to another soil. They are already undergoing modifications in America, although they are here amongst the scions of the English stock. Among the people of the south of Europe and among us, when they have taken their final shape, it is probable that they will no more resemble their British type, than a Benedictine or a Sister of Charity resembles an Indian fakir or dervish. It would be presumptuous to attempt to pronounce at present what precise form the institutions of credit will assume; yet it is reasonable to presume, that to be in harmony with our character and disposition, they must lean upon the government, combine their operation with its action, become, in a word, public establishments, and they must be ready to extend a large share of their benefits to the agricultural interest.
The public credit, which, in France, must be the bulwark of private credit, still feels and will continue to feel the effect of our former bankruptcy. It should be our aim to make the breaches of the public faith under the monarchy and under the republic forgotten, and to strengthen the foundations and enlarge the sphere of the national credit, which will thus become a suitable basis for the banks, for in France we shall not trust in the bankers, nor will the banks have confidence in themselves, any further than they are propped up by the government, and become in fact public establishments. Many sound heads consider it indispensable that the system of credit, should be, in many respects, amalgamated with the financial system of the State. This is no rash speculation, or untried novelty. In the Southern and Western States, which, like France, are chiefly agricultural, the principal banks are dependent on the State governments, they are employed in collecting the taxes, and transferring funds on account of the State treasury. This is the case, in a greater or less degree, in the Carolinas, Georgia and Alabama, and still more so in Indiana and Illinois.
The greatest change, which institutions of credit will have to undergo in their introduction amongst us, will be the adaptation of them to the wants of agriculture. We are more an agricultural than a manufacturing people; three fourths or four fifths of our population live by agriculture. The English are especially devoted to manufactures and commerce; their banks are most easily accessible to the merchant, next to the manufacturer, and but little or not at all, to the agriculturist. The feudal traits, which landed property still retains among them, contribute to this result. In this country, the banks have been organised on the English model. They have become excessively numerous in the Northern States,[DI] which are inhabited by a people eminently possessing the manufacturing and commercial spirit. Those which have been established in the agricultural States of the South and West, have fallen through at different crises, of which the most disastrous was that of 1819. In 1828, the local banks had ceased to exist in Kentucky and Missouri; each of the States of Tennessee, Indiana, Illinois, Mississippi, and Alabama, had but one, or had not yet established any. At present they are created in the South and West with something of a public character, the state either becoming the principal share-holder or guarantying the loan for raising a capital. Several of them have a decided tendency to connect themselves with the agricultural interest. Louisiana has adopted the most comprehensive and important measures in this respect.[DJ]
It is evident that the extension of credit in France would be the means of a greater saving to the people, than any reform in the budget. The average rate of interest on all transactions of all kinds is at least 15 or 20, perhaps, 25 per cent. Suppose that this could be reduced only two per cent., a result which does not seem very difficult to be obtained, it is plain, that as positive a saving would be made to the country as could be made by a diminution of the expenses of government, and that the former would be applicable to as many millions as the latter would be to thousands. It is not possible to give an exact estimate of the amount of the annual transactions in France, it must be enormous, for every time an article of property changes hands, there is a transaction affected by the rate of interest; now the total annual produce of French industry is estimated at nearly 2,000 millions dollars; and we must suppose the amount of transactions to be ten or twelve times greater. The annual amount of commercial transactions alone is about 4,000 millions. Admitting the average credit to be four months, and the mass of transactions to amount to 16,000 millions, a saving of two per cent. a year would be equal to 100 millions. Add to this that the creation of institutions of credit would make a saving once for all of 300 or 400 millions, by the substitution of paper for a portion of the metallic currency. (See Letter V.)
It would be superfluous to dwell upon the salutary influence of a judicious system of public works on the prosperity of all classes, and more especially of the lower classes. On this point every one is already convinced; it would be an enterprise worthy of a great people to undertake such a system, which should include canals, local roads, and railroads on the great routes; which should drain our bogs and supply water to the districts that need irrigation; which should convert Rouen and Havre, Lille and Calais, Orleans, Rheims, and Troyes into suburbs of Paris; should consummate the union of Belgium with France; should make Strasburg one of the greatest entrepôts in the world; should restore life to Bordeaux, which is now pining away, by giving it a more easy access to the central and southern departments; should revive Nantes, which is dead, by connecting it with the flourishing interior provinces, and particularly with Paris, the heart of France; should bring Lyons into contact with the Rhine and the Danube; should develop our mineral wealth, which now lies useless in the bowels of the earth, for want of means of transportation; should not, as is too often the case, overlook our peaceful and laborious country population, but should deliver every farm and village from the six months' blockade, to which they are now condemned by the mud of every winter. This would be a grand and noble enterprise.
There is a common bond of union between the various branches of social improvement; a good system of public works would exercise a powerful influence on the extension of credit, and, reciprocally, a liberal system of public and private credit, would communicate activity to public enterprises. I go further; it is impossible that our public works should be carried forward with vigour, without the aid of credit. To pretend to execute them wholly by means of taxes, would be madness. Without public and private credit, the Americans would never have had any public works. They have entered upon the construction of their great canals and their innumerable railroads only through the instrumentality of the banks and their loans. In 1828, the three cities of the Federal District, Washington, Georgetown, and Alexandria, having together a population of 32,000 souls, with little trade, no manufactures, or agricultural resources, for the country around is sterile, subscribed 1,500,000 dollars towards the construction of the great canal from the Chesapeake to the Ohio, raising the funds by a loan in Holland. Our large towns Bordeaux, Marseilles, Rouen, Lyons, will have canals and railroads, whenever they shall see fit to do with moderation what Washington, Georgetown, and Alexandria have attempted on too great a scale.
The improvement of the means of transportation often causes such a fall in the price of articles, that the construction of a canal or road relieves the inhabitants to an extent much exceeding the amount of the most oppressive tax. In France, where wine is abundant, and where it is a light drink which does not brutify a man, it is important to bring it within the reach of the poorer classes, and to accustom them to the daily use of it. There are still several districts in central and southern France, in which wine is transported on the back of mules, for a distance of 40 miles. Transportation, the same distance, by a canal, would only be one sixth of the price of mule carriage, or would make a saving of five cents a gallon, which is more than the excise on the common wines; so that the construction of a canal, considered in this light, would be a greater relief to certain consumers, than the suppression of the excise.
In regard to legislation, we have reason to congratulate ourselves on having a uniform system of laws, instead of a jumble of rules and customs derived from all ages and various sources. The spirit of Napoleon pervaded the creation of this noble work; but Napoleon was wholly pre-occupied with Roman ideas; he wished to found an empire of adamant on the Roman model; his counsellors were possessed with the notion that the Roman law was pure, absolute, immutable justice. They have, therefore, given us a code of laws, protecting various interests rather according to the degree of importance which they possessed eighteen hundred years ago, than that which they have acquired in modern times. In the time of the Romans, landed property was almost the only property; agriculture was the only branch of industry held in respect; manufactures were merely a department of domestic labour, and were carried on by the slaves in the house; commerce was abandoned to foreigners and freedmen. At that time, no one dreamed of the possibility of those huge factories on the English plan, or of that powerful machinery which is the soul of our industry; or those immense docks and and store-houses, which enable a man, in his closet, to arrange and direct the most extensive operations, without touching an article of merchandise, or even inspecting samples, merely by setting his signature to a warrant or a receipt. The system of accounts was then unknown; the idea of banks did not occur to the most far-sighted intellect. Governments took little thought for the means of making exchanges sure, easy, and speedy; the great roads opened by the prætors and emperors, were military roads. Little care was given to economy of time; for time has a value only in an industrious community.[DK] On the contrary, there was every reason for endeavouring to keep property in the great families. Landed property, with reference to which all the laws were framed, is inconsistent with the idea of constant change. The object of legislation was stability and permanency; the forms which it established, were favourable to delay.
Following this example, Napoleon and his counsellors have given us a code of laws, in which every thing is sacrificed to landed property. The law treats the manufacturer and the merchant with suspicion; it looks upon them as the sons of the slave and the freedman, or at least, as persons of no consideration, commoners whom it is permitted to treat without ceremony. On the other hand, the presumption is always in favour of the proprietor; he is protected not because he is a cultivator and producer, but simply and abstractly because he is a proprietor, the owner of the soil, the successor of the Roman patrician and the feudal lord. Thus our laws overlook the importance of manufacturing industry, and the great destiny which awaits it; they shackle and check it by the complicated formalities to which they subject it, and the vexatious details with which they embarrass its movements.