The Journal of Banking
by William M. Gouge,
Deacon Graball's Diary.
It was intimated in our first number, that application had been made to Deacon Graball, for some passages from his Diary, for publication in this Journal, and that, though his reply was rather equivocal, hopes might be entertained that he would ultimately accede to our request.
The Deacon has at length yielded to our earnest solicitations; but he makes it a sine qua non, that we must first republish such extracts as have already appeared in the Democratic Review. We have begged hard for "original," but he says that the extracts in question will, to ninety-nine readers in a hundred, be "as good as original," and that without first reading the extracts that have already been published, such parts of his Diary as still remain in manuscript cannot be properly understood.
Still pushing our request for "original," the Deacon has bid us "not forget the immense distance there is between an editor and a bank director. Heretofore," he says, "he has had only to intimate his wishes to Journalists, and they have been immediately complied with. The London Times, the leading paper of Europe, republished the extracts from his diary, whole columns at a time, without so much as his asking it: and he thinks it very strange that the editor of the Journal of Banking, a paper just starting into existence, should not joyfully comply with the condition he prescribes, especially as the said editor is soliciting additional favours from him."
We assure the Deacon that we are duly sensible of the difference between an editor and a bank director. We feel it in our pockets. And, as in duty bound, we commence to-day the republication of the "extracts," hoping that the "additional passages" will be furnished in due season.
Extracts from the Private Diary of a Certain Bank Director.
Monday. Had just finished my breakfast, when Mr. John Jones called at my dwelling, to beg I would use my influence with our board, to prevent a note of his from being thrown out. Mr. Jones pleaded very hard said his credit would be ruined if this note were not discounted. He proved to me very satisfactorily that he owns twice as much as he owes, and is only pressed for a little ready money. Assured Jones that I would do all in my power to serve him. When the board met, and Mr. Jones's note came under consideration, I mentioned that I had great respect for the offerer, who was one of my most particular friends, and one for whom I would go all lengths that I could, with propriety, to serve. But, as a member of a directory to which the little property of orphans and widows was intrusted, I felt it my duty to state that I had undoubted information that my friend's credit was at this moment in a very ticklish condition. Did not doubt, however, that he would ultimately pay every body, and have something handsome left; and as he had usually a very large deposit in our bank, I hoped the board would take this into consideration, and not suffer the credit of so meritorious a merchant to sink for want of a little timely assistance. Mr. Snatchpenny, chairman of the discount committee, said that, as I was a particular friend of Mr. Jones's, I would probably be willing to guarantee the bank from loss. Astonished at such a proposition, and frankly told Snatchpenny as much. Friendship is one thing business another. Sorry to say that, notwithstanding all my endeavours, the board threw out Jones's note. However, we had no sooner adjourned, than I went to the first teller, and took up the amount on a memorandum check of my own.
As I passed out of the bank door, found Jones waiting on the steps in great anxiety. Told him of my bad luck in as circumspect terms as possible; but the poor fellow was near sinking to the earth. Did all I could to comfort him, but he refused to be comforted. He spoke of his wife and children, and of the loss of all his earnings and savings, the result of many years of toil and trouble. Could not bear to see him so distressed, and therefore told him that, thou would exceedingly pressed for money myself, I would speak in his behalf to a friend of mine, who occasionally had money to lend, and he must make the best bargain with him he could. Referred him accordingly to Mr. Sharpsucker, my private broker, taking care to have first an interview with Sharpsucker, to be sure that my benevolent intentions should not be frustrated.
In the afternoon met Jones, and found him very grateful. Was sorry to learn from him, however, that Sharpsucker had himself to borrow the money, and therefore could not let him have it at less than three per cent. a month. But this, as Jones himself says, is a trifle in the present condition of his affairs.
I have done a good day's work. I have done my duty to the bank, to myself and family, and to my friend.
Tuesday. Nothing particular at the Exchange or at the bank to-day; but in the evening there was a social, little party of one or two hundred friends at my mansion. Among them was our beloved pastor, the Rev. Dr. McThwackem, with whom I had a most interesting conversation. As the Doctor was once Professor in a University, and as he is as distinguished for his erudition as he is for his piety, I took occasion to ask him the exact meaning of the word specie, and was pleased to learn from him that the popular use of the word is entirely unauthorized by any classical authorities. The true word, the Reverend Doctor says, is species, which, in a secondary sense, is equivalent to the vernacular sorts. As language deteriorated, men began to speak of species of coin, as philosophers sometimes spoke of species of things; but not knowing exactly what philosophers meant by species of things, the vulgar herd misapplied the term, and further corrupted speech by an ellipsis "of coin," and dropping the final s in "species." To a man of true classical taste, the Reverend Doctor said, nothing could be more offensive than a word thus extruncated and misapplied, and in this I perfectly agree with him. "Species," and consequently "specie," has its root in a Latin word which (the Doctor says) signifies to see, and therefore species, specie, and specious, correspond very nearly, in their primitive acceptation, with idea and ideal, the two latter being derived (the Doctor says) from a Greek word which has the same signification as the Latin radical of species. The original application which philosophers made of these terms, was strikingly indicative of their affinity of meaning; species being, in the science of logic, a special idea, and sometimes denoting mere appearance to the senses, or mere visible or sensible representation. The Reverend Doctor is decidedly of opinion that, for purity of language, with which purity of morale is closely connected, it is necessary to restore the primitive sense of the word specie, if not the primitive spelling. All analogy is shocked by the vulgar use of this dissyllable; the true meaning of which is, however, still retained in its cognates specious and speciously.
Nothing could be more lucid than the reverend gentleman's illustrations; and his arguments were perfectly conclusive. This encouraged me to ask him the true meaning of the word bullion. He said it was a downright vulgarism which few scholars thought worthy of any attention. The French word billon, a kind of base metal or base coin, was evidently related to it; but it was altogether too base a word to have an etymon in respectable Greek or Latin. Its root, if to be found anywhere, was, perhaps, to be found in bulla, a word of the corrupt Latin of the middle ages,* which word might be rendered into English by either ball or bubble, a bubble being literally a little hollow ball. "Recollecting," continued the Reverend Doctor, "the connection there is between bullion and the bulls of the Roman see, I never hear the word mentioned without experiencing the most painful emotions. The Popish edicts take their name of bulls from a little ball of gold attached to each, called bulla in monkish Latin. Hence the English word bullion. The bare sound makes me tremble, for it immediately causes my mind to revert to the little balls of gold attached to the Popish bulls, thence to the contents of those bulls, and thence to the horrible designs many entertain of subverting our Protestant liberties by bringing in the Pope, and it may be the Pretender also."
Well may you tremble, my beloved pastor. The evident intention of the hard-money men is to bring us back to the condition of the dark ages.
Wednesday. I was early at bank this morning, for this is the day for preparing our annual return to the Legislature. Cashier in trouble, circulation above a million gold and silver coin in vaults of too small an amount to be mentioned except to particular friends. Asked cashier if he could not borrow from other banks for the day, to be paid back to-morrow. Said he had already borrowed as much as he could from every bank and broker for five miles round, and that to get what he had got, he had been obliged to promise to pay back to-day instead of to-morrow, and also to lend every pistareen he had to three several banks in succession, before three o'clock this afternoon. How very embarrassing these returns to the Legislature sometimes prove ! I wished to know if the difficulty could not be got over in the old and approved way of putting specie and specie funds together, and including bills of exchange among the latter; but learned that the directors had taken out so much money on various memoranda, purporting to be promises to pay on demand, that the bank had not been able, during the last six months, to purchase a single real bill of exchange. One of the board suggested that the notes of other banks on hand, and sums due from other banks, being as good as specie, might be put down as specie. Cashier said if he took too much from these accounts, the return, though it would look very fair in the eyes of the Legislature, might excite suspicion in the minds of great financiers" in other banking institutions. Besides this, as a conscientious man, he should not like to swear to such an account.
Mentioned to cashier my conversation of last evening with his beloved pastor and mine. The whole board loud in their praise of the Rev. Dr. McThwackem's piety and patriotism; but cashier, though perfectly satisfied that there is a Popish plot at the bottom of the schemes of the hard-money men, a little dubious as to the true meaning of the word specie. Said, however, that if he could be convinced that specie meant much the same as specious and speciously, he could make out a very fair account, for then he could include the memoranda checks of the directors among the specie.
Sent for Webster's large dictionary, and read to cashier the following explanations of the word, omitting the first, second, fourth, eighth, ninth, and tenth meanings, they not being essential:
Species [L. from specio, to see.]
"3. In logic, a special idea, corresponding to the specific distinction of things in nature."
"5. Appearance to the senses; visible or sensible representation.
"6. Representation to the mind.
"7. Show; visible exhibition."
Cashier perfectly satisfied, except as to whether species and specie were not different words; therefore read to him a part of what Webster says under the eighth head, namely,
"In modern practice this word is contracted into specie."
Cashier convinced, and at the same time delighted. Says he shall never more have any difficulty in making up his annual returns. Memoranda checks are the real specie; for, if they are not "a special idea," they are certainly "an appearance to the senses a visible or sensible representation a representation to the mind a show a visible exhibition."
Mr. Snatchpenny proposed that, to make the specie in our bank a round half million, we should each take up an additional amount on memoranda checks, allowing the cashier to share equally with the directors. Nothing could be fairer, and the conscientious scruples of cashier being entirely removed, he went immediately before a magistrate and made oath to the return, agreeably to the provisions of our charter.
* It is with great diffidence we venture to dissent from so high an authority as Dr. McThwackem, but we mast be permitted to observe that the word bulla is used by Virgil, and other writers of the Augustan age. Editors of Democratic Review.
Extracts from the Private Diary of a Certain Bank Director.No. II.
Thursday. My son Jack, who has just come from college, put into my hands the Democratic Review for May. Was highly gratified with the autobiography of my most worthy friend, Ferret Snapp Newcraft, Esq. Mr. Newcraft hardly does himself justice in this brief memoir. I hope he will publish fuller reminiscences of his life and times, for the benefit of his children, and of mine. It is true, he was not quite free from faults; and I always thought that, as he himself says, "the distinction between making a great speculation, and 'taking in' a fellow creature," was never precisely clear to his mind.
Thanks to McThwackem's excellent instructions, I can perceive distinctions where Newcraft never could. McThwackem splits hairs with so much dexterity, that they never break off in the middle. The worthy Doctor called on me this morning to consult on some affairs of the ****** Society, of the board of managers of which we are both members; and also to aid in completing the plans of some land, rail road, and other speculations in which we are jointly interested. In the pulpit and out of it he is equally instructive. We talked at large of our banking system, which we, as moral and religious men, agreed required reform. But how, said McThwackem, is a reform to be effected ? A reform must be either sudden or gradual. A sudden reform of the system every man of sense must admit to be impracticable; and as for a gradual reform, that will produce more evil than the system itself occasions.
A German philosopher admirably illustrates the effects of gradual reform, by a story of his dog and his servant. He directed the servant to cut off just so much of the dog's tail as the fashion of the times required, and then returned to his studies, "de omnibus entibus et quibusdam aliis," in full expectation that the dog would, in a few days, be in a fit trim to accompany a philosophical dandy whenever he felt inclined to be of the Peripatetic school. But day after day elapsed, and the dog was not forthcoming, and every day the philosopher was disturbed by the wailings of his favorite. At length he inquired into the cause, and found that his servant, supposing that the dog could not bear to have one-half of his tail taken off at once, had endeavored to make the operation as easy as he could for the poor animal, by clipping off a little piece every morning !
Now, continued McThwackem, the application of this story is obvious. Brother Jonathan is a "sad dog" if not a "spry dog." The banking system is his tail, and about nothing else is he so sensitive, because he is fully conscious that it is not such a tail as a good looking dog ought to have. He is willing, and even desirous, that it should be clipped, but then it must be only a little piece every day. It is evident that before half the necessary clippings can be made, Brother Jonathan will become restive; and as half reform is worse than no reform, let us have no reform at all.
I do like McThwackem. I only wish he would drop the ugly prefix to his name, and become a native.
Friday. Great outcry among the merchants, because our bank and the other banks cannot grant them facilities, in consequence of the directors and a few others monopolizing the funds of the public institutions for their private speculations. Of all stations in society it appears to me that that of director of a bank is the most thankless. The officers of Government are all paid for their services, and the officers of banks, presidents and cashiers excepted, are not paid. Even the small emoluments we get in an indirect way seem to be grudged to us, though these have never, in my own case at least, amounted to more than fifty thousand dollars in any one year. Yes, these little gains excite envy, and this at a time when we are doing all in our power to make dollars as plenty as black-berries, and when the country would, without our operations, be in as desolate and dreadful a condition as Spain or Barbary.
The merchants and the rest of the community have, indeed, abundant cause of complaint, but then it is of the government, not of the banks. If the government would only cease its war on the banks, we could make money so plenty that there would be not only enough to promote our own speculations, but also to grant to the merchants the facilities they require. What I mean by government ceasing to make war on the banks, is, that government should redeem our bank notes by giving land in exchange for them, regard our promises to pay as equivalent, in all cases, to actual payment, and let us have the use of all its funds free of interest. So long as Government refuses to come into these measures, it must be regarded as standing in a hostile attitude towards the banks: therefore making war upon them. Some of our friends are decidedly of opinion that Government ought to levy a direct tax on the people for the benefit of the banks. I have no particular objection to this, but it seems to me that redeeming our issues by giving public lands for them, and receiving them for duties, will amount to much the same thing. This the government must do and shall do. Its attacks on the time-honored institutions of our country are no longer to be borne with.
I do not go as far as some, and say that if there were no bank notes there would be no money, but this I will say, if there were no banks there would be no paper money, and we have the authority of a former committee of the United States Senate for declaring that bank notes are better than gold and silver.
Neither do I agree with those who think that if there were no banks there would be no credit, but I firmly believe that many men who now have a most extensive credit, would not then be trusted for a shilling. If there were no banks, commerce would be a humdrum affair, whereas it is now almost as exciting as a game at rouge et noir, and almost as uncertain. If there were no banks every man would have to be content with his own earnings, and there would be no capital to the Corinthian column of society; or rather, there would be no Corinthian column at all, nothing but a plain Doric shaft. If there were no banks there would be no means of acquiring even a competency, except by labor, agricultural, mechanical, mercantile, or professional, all slow and hard ways of becoming rich. Banking affords a quick and easy road to wealth, if not to the whole nation at least to a part of it. By its means I have myself, besides living tolerably like a gentleman, acquired a snug little fortune of two hundred thousand dollars in the short space of ten years, and I am morally certain that if I had been obliged to work for it, I never should have been worth the one-half part of that many cents.
Saturday. I happened once to be present when an old and experienced bank cashier dropped the remark that he had known the rejection of a single note to sink the price of flour in one of our principal markets, simply because it compelled the offerer of the note to sacrifice his merchandize to save his credit. I treasured up the remark for future use, and some time since entered into a combination with a number of friends to depress the price of certain articles by refusing to the holders of them all kind of facilities, and pressing on them for the prompt discharge of their obligations. As the scheme was an extensive one, requiring a number of persons to carry it on, and profound secrecy to bring it to a successful issue, it was several times in danger of miscarrying. But our power was so great, and the necessities of the merchants who held the articles were somehow so urgent, that we bought them all up pretty much at our own price. We have now only to increase our issues, and we shall be able to sell these articles at such rates as we may choose to ask. In that case my two hundred thousand dollars will become four hundred thousand. I prefer going on in this snug way to dashing out as Newcraft did. He always appeared to me to go ahead too fast.
At a special meeting of our board, held to-day, Mr. O'Squeezem made a long speech, in which he dwelt at great length on some very plain truths, such, for example, as that gold and silver in the vaults of a bank are a dead weight to the bank, and of no use to the community that there is continual risk of the metals being stolen that memoranda checks are the real specie, &c. &c.; and finally wound up with a proposal to rid the bank of the gold and silver with which it was encumbered, by giving his own memoranda checks for it.
O'Squeezem is all for self. Now, if there is any one vice I do dislike, it is selfishness. I therefore opposed him most manfully; but I had not spoken more than half an hour before another director proposed that each member of the board should have an equal share of the gold and silver. In this form there was something like fairness and justice in the proposal; and I withdrew my opposition, for the moment, that the cashier might give some necessary information.
Cashier expressed his desire to do all in his power to favor the wishes of the board, but stated frankly that the adoption of the resolution in its present form would expose him to considerable inconvenience, and he doubted if all the gold and silver at present in the vaults of the banks, would be much of an object to the directors, if equally divided among them. Mr. O'Squeezem remarked that the amount, when the annual return was made up, appeared to be considerable. Cashier said that appearances were frequently deceitful. The sun appeared to move around the earth, but every body knew that the earth moved around the sun. Things appear great or small according to the position in which they are placed. The gold and silver belonging to the bank appeared considerable, placed in a certain position, that is, in the accounts of the bank placed in another position, that is to say, in the pockets of the directors, it would appear much less considerable. He hoped that whatever was done, the board would leave him enough gold and silver coin to pay postages.
The tyrannic requisitions of the Government under which we live made this indispensable. The remark of the cashier in regard to postages almost decided me, and a few words I had with him apart, left me no longer in doubt as to the course I should pursue. I opposed the proposition in its modified form with as much energy as I had resisted it in its original shape. A distinguished Senator from ____, would doubtless have displayed more ability in arguing for the propriety of having a metallic basis for our currency, but he could not have evinced more zeal.
O'Squeezem sneeringly remarked "that Deacon Graball ought to be at his prayers that he was becoming a convert to the 'Specie Humbug' a defender of the 'Specie Circular,' &c." These revilings affected me not. I look on all kinds of paper money except what is founded on a metallic basis as a DOWNRIGHT FRAUD on the community. Whether the basis is large or small, is not of much moment. Such is the excellent nature of paper credit, that a single dollar in metal may serve for any number of dollars in paper.
Sunday. Brother McThwackem has gone to a watering place, partly to recruit his health, partly to look after some rail road, and other speculations in which he and I are jointly interested and partly to try if he cannot be of some spiritual benefit to the poor, light-headed mortals who usually flock to those scenes of gaiety. Through some strange mistake he left to fill his pulpit a stupid country parson, or I should rather say priest, for if his sermon did not savor of popery I know not what popery is. It was all works works works ! Not one word about the precious doctrines of grace ! I doubt if the man be not a Jesuit in disguise, smuggled into the church by the hard-money men with intentions best known to themselves. His text was "Thou Shallt not Steal;" and, in the course of his remarks, he drew a strongly marked line between what he was pleased to call conventional and essential honesty. There were, he said, many practices which, though strictly compatible with the former, were at utter variance with the latter. Taking advantage of men's ignorance and necessities in driving a bargain, was, he said, just as bad in the eyes of reason and religion, as taking advantage of their physical weakness and robbing them on the high way. It was no matter whether this was done according to the forms of law or contrary thereunto. What was wrong in itself, mere human enactments could never make right. It was no matter whether this taking advantage of men's ignorance and necessities was open and immediate, or covert and indirect, by a long string of contrivances, with a legislative charter at the end. If a man's pocket was picked, it was much the same to him whether the thief did it with his naked hand and five fingers, or by means of machinery the handle of which was turned in the next street. If a multitude of men were thus treated, it only added to the enormity of the offence.
I can truly say that I never listened to a more unedifying discourse; and the whole congregation were of the same opinion as myself, at least, I know all my particular acquaintances were. I suspect that this parson or priest, or whatever he is, will have but few hearers this evening. At all events, I am determined that my pew shall be vacant.
If I use the power which circumstances or my superior intelligence gives me to increase my wealth, I am only acting according to the dictates of nature. That is morally right which is conformable to the law of the land. It is the law of the land which, in fact, determines what is right in a civil sense, and therefore in a moral sense. If the law is wrong I am not in the fault. I did not make the law.
Went in the evening to hear Dr. Diddler, and heard a truly great and glorious discourse. It was all gospel and no law all faith and no works.
Monday. An old friend whom I saw in the congregation last evening, but whom I had not met with for many years before, called on me this morning. I wished to draw him into conversation on the excellent discourse we had both been favored with hearing, but he rather avoided the subject, and from some of his remarks I fear he is infected with the new-fangled notions of the day. The doctrines of legal righteousness are making strange havoc among professors. "The five points" have been rubbed at so long that they are actually worn down into five blunts. This brother's mind seemed full of worldly matters. He reminded me that about twenty years ago when I was much embarrassed, he had not pressed for the payment of a debt of five thousand dollars I then owed him, but suffered the claim to lie over. With some little difficulty I recollected the fact, but I did not think it very christianlike in him to call it up at this late day. A favor ceases to be a favor if gratitude is required in payment. He said that he had met with many reverses since that time an ample estate had been reduced to nothing and all the efforts he had made in the South and West to retrieve his fortunes had proved unsuccessful. Understanding that I was possessed of boundless wealth of a tract of three millions of acres of land, and six town plots, in the Western country, besides stocks and various other property in the East, he now ventured to hope I would discharge his claim the interest he would give in if I would pay the principal.
Such effrontery I never before met with. The debt is barred by the statute of limitations, and has been these thirteen or fourteen years.
Mr. Downright said law was not every thing there was such a thing as equity. So there is, I admit, but I have had the misfortune to fail three times in the course of my life, and the aggregate of my old debts (if debts they can be called) is between two and three millions of dollars. It is utterly impossible for me to pay all, and nothing could be more clearly inequitable than for me to pay one of my creditors and not the others.
Finding by further conversation that Downrigbt was in great distress, I gave him a check for fifty dollars, writing "charity" on one corner of it, as is my practice when I make donations, in order that I may keep my accounts square, and know exactly how much I give in each year for benevolent purposes. Downright refused to receive the check unless this word was erased; and so finding him both poor and proud, I took it back, leaving him to suffer the consequences of his folly. People ought to learn to conform to their circumstances.
In regard to the three millions of acres of Western land, I must remark that they are not exactly mine, though they will, I hope, nay trust, be mine. It is Newcraft's tract which he has transferred to me on certain conditions, and which I am to restore to him in certain contingencies, which I shall take good care shall never occur. Newcraft thinks himself a man of business. And so he is, but others are men of business as well as he.
Sunday. Beset during the whole day by a crowd of vulgar mechanics, to whom, during the late high prices, I had sold, or let on ground rent, some hundreds of lots in the city and the many new and important towns and villages that were then rising up around us on every side. The company of this class of people is always disagreeable, but I had to endure it. On a great number of these lots they have erected substantial buildings, but owing to the pressure of the times, (produced entirely by the doings of the Government,) these buildings rent at very reduced rates, and such of the lots as remain vacant will sell for but a small part of their original cost. Made the best arrangement with these people that I could, both for themselves and for myself. I cannot enter into particulars. It is enough to say that there is a fair prospect of my getting back one-half of my lots with good houses upon them, and the mechanics who built them will be rid of all incumbrances for property is always an incumbrance to this kind of people. I fear, though, I shall have to sue some of them to get my just dues, and this will be very unpleasant and somewhat expensive.
Was bored for a whole hour by that eccentric old mortal, Judge Johnson of West-Quoddy Head. He maintained that I and Snatchpenny and O'Squeezem, and the other directors of the great bank of Bubble-opolis, are conducting our affairs on false principles. He said that the proper business of a bank is granting facilities to merchants by discounting business paper, and that to this we ought to confine ourselves. He averred that a bank's dealing in cotton was only a kind of wholesale pawnbroking. He said that the bank of West-Quoddy Head, of which he is a director, never discounts any thing but business paper, and has in consequence not made one bad debt in twenty-five years.
I cannot subscribe to such views. Banks, so far as my observation goes, are not established by people who want to lend money, but by people who want to make money. We pay heavy sums to the State for our privileges, either in the shape of a bonus or of an annual tax. And it is strange, indeed, if after this we are not to be allowed to use our privileges for our own exclusive benefit.
Wednesday. It seems as if my troubles were never to end. To-day I was tormented by groups of old men, and old maids, and old widows, and some young ones among them, to whom I had sold stocks when they were high. Stocks have fallen now, and these foolish people really seem to think I am to blame. I told them that the fall of stocks was altogether owing to the infamous Specie Circular, and the odious Sub-Treasury, and thus satisfied some of them. With the rest I did the best I could that is, I bought back their stocks at such prices as I was able and willing to give. Some of them said I was rather buying them back at such prices as they, from stress of circumstances, were forced to take. But what is this but the usual course of trade ? All questions of price are questions of power of power on the side of the seller to get as much as he can, and of power on the side of the buyer to give as little as he can.
I was truly grieved at the conduct of many professing Christians, both among the mechanics who visited me yesterday and the motley group that filled my office to-day. Downright infidels very heathen could hardly have displayed less resignation under reverses of fortune. There was one old father in particular, a man seventy-five years of age, and a member of the church from youth, who seemed as if he would go frantic under his losses. He had, by my advice, sold his farm, in a neighboring county, for five thousand dollars, and invested the proceeds in a stock, which was then the best in the market, being fifty per cent. above par. Through the vicissitudes of the times, (caused entirely by the abominable proceedings of Government,) it is now fifty per cent. below par. The old man said he knew not how, with what was left, he should be able to support himself, his aged and bed-ridden wife, and three small grand-children, who had, within the last six months, lost both father and mother.
Thursday. Good news at last. The odious Specie Circular is repealed ! I know not at which most to rejoice, whether at the Government's being compelled to bow to the banks, or to the power now given to us to raise prices as high as we please. One joy is enough for one day, and the prospect of the rise of prices is quite sufficient of itself to make me forget all my troubles. Now for the sale of the lots and houses that were transferred to me on Tuesday, and for the stocks I bought on Wednesday. And now I shall be able to do something handsome with my three million acres of Western lands, and my six town plots. I may as well call them mine, for I have so arranged matters that Newcraft can never get them from me.
Of all means of advancing the wealth of a country there is none like banking. Agriculture, manufactures, and commerce, are well enough in their place; but they all sink into insignificance when compared with this modern mode of acquiring wealth or rather of producing, for I will maintain that the two terms are synonymous. By our banking operations, between 1834 and 1836, we gave value to many pieces of property which never had any value before, and which will never have any value again. The pine lands of Maine attest our power, as do also the cabbage gardens in the neighborhood of New York, and the lands ten feet under water in the new State of Arkansas. An able writer estimates all the landed property in the United States as having been worth four thousand millions of dollars in 1834, and six thousand millions in l836.* By our banking operations we added half as much to the value of real estate in two years, as all the industry of the country had been able to give it in two hundred years. And if the Government had not interfered with its despotic and atrocious experiments, who knows but that we might, in two years more, have made the real estate of the country worth sixty thousand millions !* See pages 106 and 149 of Principles of Political Economy. By H.C. Carey. Philadelphia, 1837.
Now this obstacle is happily removed, confidence will be restored, and we shall go on increasing in wealth. Some say this will be only in appearance. Let it be so. What is there that is truly real in this world of vanity and show ? Every thing depends on our conceptions of things, and if a man can only fix it firmly in his fancy that he is worth six millions of dollars, he may enjoy just as much happiness as if he really possessed this amount of solid wealth. If he had the whole sum in silver dollars he could not eat them or drink them; neither could he eat or drink what they could procure. A man's personal wants are very few, and easily supplied; but most men have cravings to which it is not easy to set limits. And I will affirm that there is no way in which all men's cravings, or even the cravings of any great number, can be satisfied, unless it be by banking, or some similar contrivance. It is, in the nature of things, absolutely impossible that all men, or that any great number of men, should be very rich; but by the rise of prices, produced by plentiful issues of paper money, a great many may be brought to believe that they are very rich, and thus enjoy as much satisfaction as if they really abounded in wealth. Happiness resides in the mind. All philosophers agree in this.
Friday. Great jubilation at a meeting, of our friends to-day; but Satan came among us in the guise of a Loco-Foco, and a more appropriate shape he could not have assumed. Loco-Foco said much about the importance of a fixed standard of value that it would be as absurd to be always changing the size of the bushel, or the length of the yard stick, as to be always changing the value of the dollar, &c. Talked, also, much about justice, and equity, and honesty, and all that sort of thing. The devil can, you know, quote scripture to serve his purpose. Told Loco that all he said was very true in the abstract; but he was a mere theorist. I was a practical man. Loco asked me if I knew the true meaning of the word "theory." Told Loco that if I did not, my friend Dr. Diddler did. Loco asked what I meant by "a practical man." He had never heard of Adam smith or J.B. Say's keeping a huckster-shop. Made no reply to Loco, but thought within myself that "a practical man" is one who has failed in business at least twice, and owes at least twice as much as he can ever pay.
Changed the subject by telling Loco that the "Specie Circular" was "a humbug." Loco said modestly that perhaps the paper money system was "a humbug."
Here Dr. Diddler stopped in to my relief, in a manner which entitles him to my eternal gratitude. Without condescending to make a direct reply to Loco-Foco, he began:
"I am a humbug, We are humbugs,
Thou art a humbug, Ye or you are humbugs,
He, she, or it, is a humbug, They are humbugs."
And in this way went through all the tenses, present, imperfect past, perfect past, plusquam-perfect past, future, and paulo-post future, and all the moods, indicative, imperative, subjunctive, and infinitive. It is impossible for me to do justice to Doctor Diddler's performance on this occasion. His gesticulation was admirable, and his enunciation so varied that the conjugation of a verb was as pleasing to me as the best performed music I ever listened to. It even extorted a compliment from Loco-Foco, for he said Doctor Diddler must have been taking lessons from the editors of the Journal of Commerce.
Saturday. Well, this is most outrageous. The old Specie Circular is repealed; but here comes a new Specie Circular close on its heels. Our tyrannical Government is not content with redeemable paper, but will have it actually redeemed at stated periods ! This is a downright farce.
Redeemable paper, every one knows, is just as good as gold and silver. Having it redeemed is sinking bank notes to a level with the notes of private traders. The very means by which banks make their profits are by issuing a great many notes which, though always payable, are never paid. However, we have obtained one great and open triumph over our abominable Government, in the repeal of the old Specie Circular; and, a for the new, if we do not make that a dead letter, my name is not Graball. Government is at Washington. The collectors are all along shore; and the receivers all over the prairies. They are not as stupid as the Administration. They know where their own true interest lies.
Sunday. Really, the Church is as much in need of reform as the State. McThwackem is still at the watering place, and his pulpit was supplied by, if possible, a more intolerable proser than we had last Sunday. His text was, "Ye cannot serve God and mammon." He said that to be idolators men need not bow down before images of wood and stone. There were false gods still more to be dreaded idols of the mind, for whatever a man did in heart regard as his Supreme Good, was, in reality, the god he worshipped. At what shrine the great body of men of the present day paid their devotions, few could be at a loss to discover. At no period in the world's history had we stronger evidence of the truth, that "the love of money is the root of all evil." Hardly more ingenuity had been exerted in inventing machines for the multiplication of products, than in devising ways and means for abstracting wealth from toiling producers and honest proprietors. Operations of this kind on a small scale are, indeed, branded with the name of dishonesty; but when they become extensive they are highly honorable. Not a few seem to be of the opinion of the old Highland chieftain, who thought the only crime consisted in not taking enough. On the same principle that
Such was the substance of this truly vapid discourse.
In the evening went to hear Dr. Diddler, and was comforted and edified as usual.
Monday. Read some remarks on banking, addressed by a learned Professor in the University of Pennsylvania, to a member of Congress, from Philadelphia, and was delighted with them beyond measure. It is a common saying that colleges are half a century behind the rest of the world in practical information, but Professor Hare is evidently fifty years in advance of the present generation. Take his initial paragraph by way of example:
"By the most zealous advocate of hard money, it cannot be denied that, the competency of specie to act as money is dependent altogether on its ability to create in the mind of each successive holder, an expectation that it will pass as money at the value at which it may be received. They cannot deny, that during a century in which a piece of coin may have been current, all those attributes which give it a value over other substances, have been inert. As a metal, it will have done nothing. Evidently its sole mean of utility has been its power of creating a confidence that it will pass in the market without depreciation. It follows, that whatever else may prove competent to produce a similar confidence, under like circumstances, must, as money, be equivalent to coin."
Excellent ! The only utility of metallic money is its power of creating a confidence ! Excellent ! Excellent !
The conclusions at which the Professor arrives are worthy of his premises:
"When the banks stopped specie payments in May last, every note which they had issued, and every credit given by them for deposits, appeared to fall in value, relatively to gold and silver, from five to ten per cent. But is it to be inferred that there was an actual depreciation of their notes and credit to that amount ? Was it not owing to a rise in the price of specie, which had become an object of demand for exportation, to pay the balance of trade with Europe, caused by a failure in the price of our produce ?
"Is it not evident that the same causes which deprived the banks of the power to redeem their notes or credits with specie, by impairing the credit of individuals, gave to bank notes and bank credits an unusually high value, so that the holder of them in lieu of being a sufferer, was a gainer by the change ?
"Viewing the subject thus, would any thing have been more mischievous, absurd, and unjust, than to have forced them to resume specie payments, upon the plea of their legal liability, or to use the argument of shylock, because it was in the bond."
Surely there is no wisdom like paper money wisdom. When banks suspend specie payments, their notes actually rise in value, and only appear to fall, just as the sun appears to revolve round the earth, though the earth actually revolves round the sun ! I am beginning to think that members of colleges are not as useless members of the community as some people suppose them to be. Certainly none but a Professor in a University could have discovered that the holders of bank notes are enriched by the banks' stopping payment.
Saw a Loco-Foco passing by and called him in, hoping to convince him by the Professor's logic. Found him utterly intractable. He said that money was not only a medium of exchange, but also a standard and measure of value, and that when it was metallic it had a value in itself independent of what it derived from its use as a commercial medium; and that it was from want of a clear conception of this truth that so respectable a man as Professor Hare had uttered such strange paradoxes.
Read to Loco-Foco the following passage from the Professor's production, and asked him what he thought of it:
"I do not consider a bank as the debtor of the note-holder or depositor, so long as their notes or credits are supported at the market price at which they were issued. The bank is virtually obligated to furnish a currency which will answer the purpose of money, so as to pass in the market without depreciation. Of course the bank stands in the relation of an obligor, rather than in that of a debtor, and becomes only so far liable as it may fail in its obligations."
Loco-Foco was evidently puzzled by this distinction between debts and obligations. Indeed he confessed as much, for he said the whole of the Professor's reasoning reminded him of a story he had once heard, and which he would endeavor to repeat. A certain Irishman went into a certain tavern and called for six pence worth of crackers. They were duly set before him, and after looking at them for some time, he inquired if the landlord would have any objection to change the crackers for six pence worth of brandy toddy. Certainly not, said Boniface. Paddy having finished his potation, was preparing to depart, when the land lord called out to him to pay for the toddy. "Pay for the toddy!" exclaimed Patrick in amazement. "Did I not give you the crackers in pay ?" "Well, then," said the landlord, "pay me for the crackers." "Pay you for the crackers! The divil take you! you unconscionable varmint! Hav'nt you got the crackers?" "You may go," said the landlord, utterly confounded; "you have, in some way, diddled me out of six pence. I can't exactly tell how, but I am sure I have lost that much. You can go."
Now, said Loco-Foco, it has always appeared to me that the banks treat the people just as Paddy treated the tavern-keeper. They take two values from us, and give us one value in return. And this in such a manner that few are able to discover the rationale of the process. Professor Hare, however, has laid the matter open, by showing that the outstanding notes of a bank are no part of its debts.
Tuesday. Could not help laughing, in spite of myself, at the humor of a wag of a Loco-Foco from the country. I had bargained with him for five tons of hay to feed my carriage horses, and offered him bank notes in payment. Loco-Foco very deliberately took from his pocket-book a note promising to pay me five tons of hay, and ordered his wagoner to drive off. "Now," said he, "we are quits. You have given me promises to pay silver, and I have given you a promise to pay hay. Nothing can be fairer than promise against promise." The rascal's drollery diverted me so much that I paid him at once in gold.
That old father to whom I sometime ago sold some of the best stocks in the market, came to me in great distress, complaining that the stocks were utterly worthless, and that he was now left not only without property, but with a load of debts which he should never be able to discharge. Cheered him up as well as I could. Told him that this country was a find field for enterprise, and that so far from repining, he ought to bless his stars, that in his long life of seventy-five years he had never failed before. What other business man, I asked him, in the whole circle of his acquaintance, could say as much ? I myself had failed not less than three times, but on no one of those occasions did I become disheartened. It was true, indeed, that I always made such previous arrangements that my family were sensible of no change in their mode of living. I was duly impressed with the truth that "he who provideth not for his family, hath denied the faith, and is worse than an infidel." Not willing to sink myself to a level with the wretched, infidel Loco-Focos, I always, before stopping payment, set my house in order, by securing to my wife, or infant daughter, a coach and country-seat, and such other little comforts and conveniences, as the usages of good society render indispensable. I did not, however, mention this to old father, for fear he should think I was reflecting on his want of Christian prudence in not having done likewise. We cannot be too delicate in our treatment of the feelings of people who are in distress.
Wednesday. Looking through a file of the National Intelligencer, I was forcibly struck with the following remarks by a distinguished Senator from Kentucky, delivered by him on the twenty-first of June, 1838:
"He had denounced a military aspirant, and denounced him in language which he was proud to have used, when he had exclaimed, send us war, pestilence, and famine, rather than curse us with a military rule: and if he could then have foreseen that this execrable measure, the Sub-Treasury, would have been introduced by the influence which he then deprecated, he would then have denounced it as he did now, as not at all preferable to war, pestilence, and famine, and as not inferior to any one of them in its malign effects on the welfare and prosperity of the country."
Exactly my opinion. Give us war rather than the Sub-Treasury bill ! Neither the Senator nor myself will have any thing to do with the fighting. That must all be done, as in the last war, and in the war of the Revolution, chiefly by the laboring classes: provided enough of them are left to do the hard work, I care not how many of them are killed. Besides this, a war would entail on the country a permanent national debt; and every body knows that a national debt is a national blessing. Funding and banking being twin brothers, only give us a sufficient national debt, and our paper money institutions will live forever. With a large and permanent national debt, we might reduce the working-men of America into as complete subjection as their brethren in England.
Give us pestilence rather than the Sub-Treasury ! Yea, give us pestilence ! In that event the Senator and myself would not be as far from personal danger as in the event of war. Yet we might venture on the risk. Pestilence generally spends its violence in the hovels of the poor. It might be almost as effective as war in ridding the country of those wretched vermin, the Loco-Focos.
Give us famine rather than the Sub-Treasury ! Yes, give us famine ! Let what will come, the Senator and I will have plenty to eat. As to these Loco-Focos, they are pretty well used to starving already, or, if they are not, it is quite time they should be.
Give as war, pestilence, and famine altogether, rather than deprive the banks and speculators of the use of the public money. A war is, above all, specially desirable. Smart men never do so well as in time of war. What with army and navy contracts, and contracts for loans, and fluctuations of currency, and irregularity in the supply of commodities, fortunes can be made with rapidity in times of public hostility, and the sooner such times commence the better for all the Grab-alls and Gripe-alls and Grasp-alls in the whole country.
Thursday. Heard to-day of the defeat of the Sub-Treasury bill. Glorious, glorious news indeed ! Not that I concur in opinion with those who think that the passage of the bill would destroy the banks. We should still be able to levy a tax on the whole commerce of the country; and if the Loco-Foco absurdity of compelling the banks to pay specie is to be persisted in, why, perhaps, a Constitutional Treasury would only act as a balance-wheel in the machine. But then it would curtail our stock-jobbing and land speculations. Here is the rub. But even this is not the grand evil of the Sub-Treasury system. My grand objection to it is, that it would increase executive patronage. I know not who it was that first discovered that giving the President, in concurrence with the Senate, the power to appoint some four or five Receiver Generals, and they, in their turn, to appoint some eight or ten clerks, would be conferring on the Executive more patronage than he would have, if he, or the Secretary of the Treasury under him, should have the selecting of some twenty-five banks, and thereby the power of directly influencing their numerous officers, and indirectly influencing their thousands of stockholders and debtors. I say I know not who it was first made this profound discovery. But, certainly, he must be a man of uncommon powers of mind. No one can fail to be convinced of this who reflects on the fact, that under the proposed system, the Treasury officers would be punishable as criminals if they lent or used a single dollar of the public money; and that the President himself could not touch even the amount of his own salary except on warrant, duly signed, countersigned, and registered, according to law. Now, that such a system would increase executive patronage, is truly a wonderful discovery. To common minds it would seem rather like an increase of Executive responsibility. But there are, fortunately, some uncommon minds in the world, and to one of these we must be indebted for this discovery in political science, as great as the greatest of Franklin's in natural philosophy. No doubt we shall see in time to whom this great honor is due; or, as they say in French, nous verrons.
Judge Johnson, of West-Quoddy Head, came in, but instead of crying "Laus Deo" or "Victoria," he shook his head gravely. As a man's shaking his head is a sure indication that there is something in it, I resolved to pump it out, and at length I succeeded. The Judge doubted if the defeat of the Sub-Treasury bill was so great a victory after all. Banks ought to cease to be political machines and become commercial institutions. As such they would be useful to the community. As at present constituted and conducted, all the advantages derived from them accrued to a few. Those few were acting very impoliticly in keeping open the Sub-Treasury question. They ought to have suffered the bill to pass without debate. By the clamor they had raised, they were provoking inquiry into the general characteristics of the banking system, which was precisely what the Loco-Focos desired.
Told Judge Johnson that I feared we had made a blunder, but it was too late to correct it now.
Friday. Like well enough a victory over the Government, but do not like one of the consequences that victory brings with it. There is now no longer any excuse for our not resuming specie payments, and with the general resumption of specie payments, away go our great profits on exchanges, and may be our cotton monopoly will go with them. By an understanding with certain corporations in the south-west, our bank and certain other banks in this quarter, have been doing a very snug business. Buying up Mississippi notes at a discount of thirty or forty per cent., then buying cotton with these notes, thus creating a fund for foreign exchanges, and having domestic exchanges completely in our power, was truly as pretty a mode of operating as reasonable men could desire. The profits were certainly not less than thirty per cent. per annum on the amount of capital invested. But our odious Government and the stupid people combined, are putting an end to all this. And this too, after our paper money editors, and paper money orators, and paper money collegians have proved as clear as day, that "the less gold and silver there is in a country, the richer that country is" "that when the banks suspend payment, their notes are actually more valuable than they were before, and only appear to fall in value," with other truths equally recondite and equally well established.
Saturday. Banking and politics have, somehow, got so strangely commingled, that both for pleasure and profit, I spend my leisure in perusing the newspapers. To-day I read, and was much pleased with, an argument from an illustrious paper money man of Virginia, going to prove that an attempt to substitute metallic for paper money in the United States, would give European powers a just cause of war against this country. The Loco-Focos say they cannot see how this could be, inasmuch as we should honestly pay in cotton or other produce for such quantities of the precious metals as we should take from Europe. They add, also, that the whole amount of gold and silver in the world is, according to the estimates of the most able authors, equal in value to not less than ten thousand millions of dollars, and that as we should require only eighty or one hundred millions, in addition to our present stock, to enable us to dispense with paper money, they cannot see how we should give offence to foreign powers by adopting this policy. And, they subjoin, as it is by gradual means that we propose to introduce solid money, if European powers object to letting us have it, we can attain our end by detaining such amounts of gold and silver as will, in the natural course of trade, flow into our country from South America. To all this, I have one short reply. The Loco-Focos are fools. None are wise but the Virginia paper money man and men of his way of thinking. An attempt to substitute metallic for paper money in this country, would undoubtedly give European powers just cause of war against us, though, for reasons already stated, I do not think war is to be deprecated.
I know not to which to give the preference, to the illustrious paper money man from Virginia, or his equally illustrious brother from South Carolina, who has proved that the addition of five millions to our metallic medium which the Sub-Treasury system would make necessary, would sink the price of cotton so low in Europe, that the Southern planters would lose incalculable sums.
Indeed, I must say that in profundity and comprehensiveness, closeness of reasoning, and force of argument, the advocates of paper money in the United States, excel the writers and speakers of every other age, and of every other country. McThawckem agrees with me perfectly in this. He says that the English language is utterly inadequate to the expression of the thoughts of our paper money men. Some of them might be very prettily rendered into Latin. But others of them are so completely transcendental, that nothing short of Greek is adequate to their just expression.
Sunday. Did not go to church to-day. My clerical friends, the Rev. Matthew McThwackecn L.L.D. and the Rev. Jeremy Diddler, D.D. are both at a watering place, and I have no disposition to be bored, as I have been of late, by discourses from strange parsons about honesty, fair dealing, and all that sort of thing.
When the pure gospel is preached, that is to say faith alone, without any reference to charity and good works, no person is more disposed than myself to pay due respect to the ministers of religion, or to be more attentive to the means of grace. No one shall ever see my seat vacant when Diddler or McThwackem fills the pulpit. But I cannot abide heresy.
However, I trust that I did not spend the day wholly without profit. I employed the greater part of it in writing to McThwackem and Diddler, partly about things spiritual and partly about things worldly. I hope their religious zeal for the benefit of the poor giddy mortals at the watering place, will not induce them to relax their exertions for the promotion of the rail-road and other speculations in which we all three are so deeply interested. They have families to provide for as well as myself, and ought to recollect that coaches and country seats are great conveniences, or rather absolute necessaries of life. Nothing would grieve me more than to see these two patterns of piety and most excellent friends of mine, reduced to the necessity of trudging through the mud, after the manner of the wretched, infidel Loco-Focos.
Monday. The impudence of the Loco-Focos does actually exceed all bounds. This morning there was found pasted on our bank door the following advertisement:
will be received for building a
And furnishing the same with
SLIDING SHELVES, AND HYDROSTATIC BALANCES.
The building must be constructed of the BEST MATERIALS, and suitably provided with IRON DOORS, LOCKS, BOLTS, and BARS. The vault must be divided into two compartments. The first, or
FOR GOLD AND SILVER:
The second, or
for the safe keeping of bank notes.
Architects and others are invited to send in their proposals to DEACON GRABALL, who will, in due season, forward them to the seat of government.
The time when this advertisement appeared marks the depravity of the age. As it was found on the bank door early on Monday morning, it must have been put there on Sunday evening. And this is the way in which the Loco-Focos spend that sacred day ! The recent elections must have inspirited them, or they would never have had the audacity to get out such an advertisement.
Tuesday Surely troubled about my eldest son, Tom. He is sadly afflicted with fits of absence of mind. Though a leading member of our Temperance Society, and a rigid total abstinence man, he sometimes, in his fits of abstraction, gulps down gin instead of water. This I do not wonder at much, for gin and water are so nearly of the same color that I am myself sometimes deceived by the similitude. But then he makes the same mistake with brandy. These fits come on him so often that his very horse seems to have caught them from him. This I had occasion to observe some short time ago, when I borrowed Tom's horse and buggy to drive McThwackem some eight miles from town, to lay the corner-stone of a new church. The horse stopped, of his own accord, at the door of every tavern on the road, and would not move forward except on application of the whip. Sometimes when Tom is half way on his road to church, these fits of absence of mind come on him, and he goes to houses of an indescribable reputation gambling houses, for example. Once the poor boy started to go to a camp-meeting, and never drew up till he got to a race-ground. The most troublesome symptoms of these fits of absence of mind have, however, showed themselves in his frequently signing other men's names to notes, and then raising money on them. I have often had to pay large sums on this account; and the occasions have become so frequent of late, as really to prove very burdensome. Tom, when spoken to on the subject, laid all the fault on his Miss, who was always getting money from him. Asked Tom why he kept so expensive a Miss. Said he could not help it; 's'posed it was predestinated.' Told Tom not to come over me in that way, for if it was predestinated that he should act the fool, it was also predestinated that he should suffer for his folly. The poor, innocent boy, (he is "only thirty years old") was evidently affected at my treating him in a manner so different from my wont; and my paternal feelings utterly subduing me, I gave him money to hush up the affair. Could not, however, help telling him that it was well he was the son of a wealthy Bank Director. If he had been the son of some wretched Loco-Foco, it might have gone hard with him.
Finding myself much in want of consolation, I sent for old Parson Maultext, and told him of my griefs. But he, instead of healing my wounds, only tore them open afresh. He said if parents, by successful speculations, took away from their children the necessity for industry, it must be expected that, unless their education was carefully guarded, the children would run riot in all kinds of excesses. This was all the comfort I got. My poor child's misfortunes spoken of as downright profligacy just as if he had been the son of some wretched Loco-Foco.
Some people say that I am neither "Old School" nor "New School," but a downright Antinomian, in principle and in practice, and that son Tom is only carrying into effect the lessons I have taught him. They may say what they please. What care I for their remarks ?
Wednesday Turned a penny to-day in a way I am almost ashamed to narrate, but in these hard times one must not be over scrupulous about the ways and means one takes to get ways and means to pay one's just debts.
A poor, hardworking Loco-Foco, a boot and shoe maker, whose stock in trade, and house furniture together, were worth about a thousand dollars, applied to me some time ago for a loan of five hundred. From my anxiety to assist the poor, which has always been the leading passion of my life, I readily lent him the money, taking a bill of sale of all his goods and chattels, by way of collateral security. It so happened that I wanted the money back sooner than I had expected, and sooner than Loco-Foco was prepared to pay it. The consequence was, that all his stock in trade, and his furniture, became my property. His wife and children were much afflicted at the loss of their little all, and so should I have been too, if the man had not been a hard money man in his sentiments, and, of course, an infidel.
So far all was well. I got the boots and shoes, leather straps, lap-stones, and all, of Loco-Foco. To-day an opportunity occurred of disposing of them to advantage. Another Loco-Fooo, a flour dealer, applied to me for a loan of fifteen hundred dollars. Told him I had it not to lend, but was willing to let him have my note for three thousand dollars, which I could insure him would be promptly discounted at our bank. Loco said fifteen hundred were all he wanted. Told Loco I could not think of engaging in so small a transaction; but that if he would take his brother Loco's shoes and boots, and pots and pans, and beds and bedding, at a valuation of fifteen hundred dollars, (which I esteemed very low) and would give me a mortgage on his own house for the remaining fifteen hundred dollars, he should have the note for three thousand instanter. Loco demurred to this. What could he, a flour dealer, do with boots, shoes, lasts and lap-stones ? I told him that no doubt, his brother Loco, the original owner of them, would be very glad to buy them of him, on credit. However, I did not wish to press the subject on him. Loco-Foco spent several hours in running about town, trying to raise the money in some other way, but as all the banks had come to a resolution not to advance a cent to any person at all infected with the horrible doctrines of Loco-Focoism, and as the brokers all knew that there was a negotiation then pending between him and me, and they did not like to offend me by interfering, he found his only chance of saving himself was in accepting my offer. He paid me fifteen hundred dollars in hand for the shoe-maker's stock and furniture, and the shoe-maker has got his lap-stones back, which rather pleases me, though he is a Loco-Foco, and, of course, an infidel. As for flour dealer Loco-Foco, his house adjoins some property of mine; and when I get possession of it, I can make some valuable improvements there which I have long had in contemplation. It cannot be long before the transfer will take place. The very means the flour dealer has taken to extricate himself from one difficulty will lead him into others, and the house is as certainly mine as if I had already the title deeds.
Thursday. Received to-day some very wrathful letters from a bevy of farmers who had whished to emigrate to the West, and to whom I had sold certain choice spots on Newcraft's celebrated three million acre tract. They find the whole of the land they bought of me, ten feet under water. I cannot help that. I sold it to them as I bought it. The law maxim, caveat emptor, "let the purchaser be on his guard," plainly applies to this case. After all, they have got a good bargain. The alluvial which the western rivers deposit is very rich; and I have no doubt that in about fifteen years these lands will all be in a fit state for cultivation.
I had hardly finished these wrathful letters, before Quilp, and Digby, and Askincellos, and I know not how many more of our first men, all beset me, because of certain doings of mine, to which I am sure that none of them can have any objections, except that they do not share in the profits. Taking for my example certain officers of the pattern bank of the United States, I have, when the market rate of interest was two or three per cent. per month, objected to our board's discounting the notes of the most able merchants at bank rates, because money was worth more in the street. Still, that the merchants might not suffer, I have invariably directed my private broker to discount their notes at the market rate of interest, that is to say, two or three per cent. a month, as the case may be. He then brings the notes to me. I mark on them the initial letter of my name. He carries them to the first Teller, who immediately lets me have the money for them, at bank interest, without consulting the board of Directors.
It is a snug way of doing business, I confess. But as I have, at no one time, borrowed in this way more than 300,O00 dollars from the bank, at about 6 per cent. per annum, and lent the same to the merchants at about 36 per cent., I have not in any one year realized more than 90,000 dollars from this source. I know not why Quilp, Digby, and Askincellos should complain of this. They indeed gain nothing by it: but neither do they lose any thing by it. Envy, however, is so deeply seated in some minds, they cannot regard the smallest good luck on the part of another, with any feelings of complacency.
Friday Well, there is one of my children, at least, with whom I have abundant cause to be satisfied. My second son, Bob, who set out a few years ago with nothing but a letter of advice (not a letter of credit) from me, has returned home with a fortune of at least half a million.
To relate Bob's story would be as good as to write a treatise on banking, for it illustrates all the art and mystery of our craft. When Bob arrived at his place of destination he had not one cent in his pocket, but he so ingratiated himself with his landlady and his washerwoman, that they made no demand for payment for a whole month, and by this time he had established so good a credit with the storekeepers and other substantial residents, that he found it easy enough to pay his board and incidental expenses. When those from whom he borrowed wished to be repaid, he always got the means by borrowing from others.
Being an industrious, enterprising lad, he immediately set to work to establish a bank. He found some who were as needy as himself, but not half as knowing, easily persuaded to sign a petition to the Legislature for a charter. The substantial class of citizens he did not at this time suffer to participate in his operations. Bob borrowed the money to pay the expenses of his journey to the State Capital, borrowed the money to support himself while there, borrowed the money to buy the Champagne with which he drenched the members of the Legislature, borrowed the money to pay for the sumptuous dinners and suppers with which he feasted them; and, finally, after he had got a bill passed exactly to his liking, borrowed the money to carry himself to his new home.
It was amusing enough to hear him relate how he worked his way along how by treating one member to a bottle of Champagne, he thereby ingratiated himself with that member so as to borrow enough from him to treat another member, and so on, till he had treated them all round, and then begin again. When he got back to his new home, he had to borrow money enough to buy blank books, and pens and ink, wherewithal the commissioners might receive subscriptions for the stock of the new bank. The number of shares being duly subscribed, the first instalment was paid in, in coin borrowed for one half-hour from various friends in the neighborhood. Having the example of moral and religious New England before him, Bob had no scruple in swearing that the coin paid in was the property of the bank.
At this crisis a difficulty occurred that was truly alarming. The engraver who had the bank notes prepared, refused to deliver them up except for cash. But Bob, whose resources of mind are equal to any exigency, got over this difficulty in a way he did not tell me, and then by buying desks and a counter on credit, brought the bank into immediate operation.
At first the more substantial inhabitants were shy about receiving the notes, and still more shy about touching the stock of the bank. By little and little, Bob dispelled their fears. By circulating his notes at a distance from the bank, he kept them out a long time. By various means, he contrived to accumulate a stock of specie, the whole of which he displayed most ostentatiously on his counter, and then that it might be generally known how abundant specie was with him, he had his agents out who, under one pretext or another, used to request their friends as a matter of favor to go to the bank and get notes exchanged for them. As the silver thus paid out, came back the same day, Bob made a small sum effect a great many exchanges. By arts like these, the notes of Bob's Bank became current in the whole country round, and he found one dollar in silver quite sufficient to support a circulation of twenty in paper.
The more substantial citizens still showed little disposition to touch the stock; but when at the end of six months, the bank declared a dividend of ten per cent., they became so eager to bite, that Bob's first impulse was to sell all out, and let them have the whole concern to themselves. A little reflection convinced him that this would be folly. He, however, as a favor, parted with a few shares to some three or tour of the most wealthy, and whose habits were such that he was sure that they would never interfere with his management. By these means he increased the anxiety of the others to buy, and inspired such general confidence in the bank, that all the spare cash in the neighborhood was left with him for safe-keeping.
Being a good Democrat that is to say, a Democrat by trade, (heaven forefend that any son of mine should be a Democrat in principle) being a good Democrat by trade, he got a snug slice of the public deposits. Then commenced scenes of unexampled prosperity. The prices of property of all kinds were doubled, trebled, quadrupled. Enterprises of all kinds were invigorated. The whole style of living was changed. The young women forsook their spinning and knitting, to play upon pianos and dance cotillions. The young men laid down their mechanical tools and agricultural implements, that they might partake of the gentlemanly recreations suited to their age. The great increase of wealth, and the advance of refinement which accompanied it pari passu, were, as Bob describes it, equally gratifying and astonishing.
It really did my old heart good, to hear that a son of mine had, while advancing his own fortune, done so much towards promoting the prosperity of his country. But who can stand up against the atrocious experiments of our detestable Government ? Even the "great financier," with his thirty-five millions of capital has sometimes quailed; what wonder, then, that my son Bob's bank, which began business without any capital at all, should be brought into straits. I do not allude here to its stopping payment in common with the other banks of the country: that was a blessing to both the banks and the community. But, through a series of disasters, the notes of Bob's Bank became greatly depreciated, till at length the other banks refused to take them at all, and then they became worth nothing.
Bob was game to the last. He saw the storm approaching when he was the principal debtor to the bank. One by one he drew out all the notes on which he was indebted, by prevailing on the other directors to receive in their place, the notes of other men he had on hand, men, which his enemies say, were men of straw; but Bob, on his honor, assures me, they were all first rate men, and equal at least to the Rathbuns, the Hermans, &c. &c., up to the very day before that on which they stopped payment. Bob thus got payment of all the debs that were due to him, and paid all the debts that he owed, leaving him unencumbered productive property of the value of five hundred thousand dollars. He did, indeed, lose a little on his bank stock, but he does not regard this, having sold out the greater part of his shares at an enormous advance, and retained so many only as were necessary to qualify him for the office he held in the bank.
I will pit my sun Bob against any man's son in the country, "the great financier" alone excepted. Such a son would rejoice, any father's heart.
Saturday. Devoted part of to-day to a tenth reading of the letters of the "great financier." [Nicholas Biddle] I have heard some who ought to know better, talk of this truly great man in rather disparaging terms speak of him as a mere clerk with a pen behind his ear lending other people's money, and instead of attending properly to his business, on the principles of commercial banking, engaging in stock-jobbing, wholesale pawnbroking, and all kinds of political intrigue. "Where," they ask, "is the evidence of his great skill as a banker ? With thirty-five millions of capital, and credit which gave him the command of at least as much more, he was one of the first to suspend specie payments. The cause which led the other leading banks in the country to stop payment, namely, the distribution of the public money among the States, did not immediately affect him, for he had none of that money on deposit.
As for what he avers were the remote causes of the general suspension, namely, the Specie Circular and the Bank of England's withdrawing its support from the American merchants in London, these commenced their operation nearly a year before. As 'a great financier' he ought to have foreseen their effects, and guarded against their disastrous consequences on his own institution. If he had maintained specie payments for only one month, after the other banks suspended, the Government would, under the existing laws, have been compelled to employ his bank as its sole financial agent, and thus his triumph over the government, which is the wish dearest to his heart, would have been complete. Over and above this, the art of a banker consists in his making every body pay interest to him, while he pays interest to nobody. The 'great financier' has so managed matters that the amount on which his bank is paying interest seems nearly to equal the amount of its active investments beyond the capital paid in."
It is ever thus:
"Envy does merit as its shade pursue."
There were not wanting those who used to speak of John Law, the illustrious founder of the Mississippi scheme, and of the equally illustrious projector of the South Sea bubble, in terms equally disparaging. Even Timothy Dexter did not escape reproach, and I have lately read a biography of Samuel Terry, the Rothschild of Botany Bay, in which that truly great and good man is spoken of in a manner anything but laudatory.
The persons who speak in this way about the "great financier," may have a very adequate acquaintance with banking as a science, but they do not reflect sufficiently on the difference between the science and the art of banking. There can be no doubt that the "great financier," having no public money to transfer, and having the control of some seventy or eighty millions of capital, might, by taking due measures in due time, have avoided suspending specie payments. But, then, what would have become of the stock and other speculations in which his friends, to say nothing of himself, were so deeply interested ? Is it no part of a banker's duty to take care of his friends or himself ? And, after all, did not the bank gain largely by the suspension of specie payments ? And if our odious Government, and the stupid people, and the other banks, had only let the "great financier" alone, the same blessed suspension might, according to a hint given in one of his letters, have been continued for twenty-four years, or for as long a period as payments were suspended by the Bank of England.
Let the envious and the malicious carp as they may, the "great financier" is the very Napoleon Bonaparte of the times the greatest man living. Who else but he could, besides managing seventy or eighty millions of capital, in various parts of the world, and in various branches of business, and managing it all well who else but he could find time to regulate the elections, afterwards regulate the members of the State Legislature when they are elected, keep Congress in due order, take a hand in President making, and then find leisure to illuminate the public on the subjects of currency and finance ? In the multitude of his avocations, political, commercial, and literary, he more nearly resembles Mehamet Ali, Pacha of Egypt, than any other gentleman of my acquaintance; but he goes far beyond Mehamet.
Sunday. As my two beloved spiritual guides are both absent from the city, I did not go to church to-day. I cannot endure the Mauletexts and the Mangletexts who supply their pulpits, and who are always prating about what they are pleased to call a good life as essential to religion. But what a blessed institution the Sabbath is ! I know not how a poor creature like myself, busily engaged from morning till night on week days, could ever get along but for the intervention of this precious day of repose. On Sunday, I always feel so tranquil and collected, that, between sermons, I review my transactions of the past week, and lay my plans for that which has just commenced. Sometimes, when the sermon is not very edifying, I devote the time of service to meditating on the best ways and means of increasing my riches, and consequently advancing the welfare of my poor fellow travellers to eternity.
Today, as I did not go to church, I spent most of the time in posting my books. Posting books on a Sunday, as a general practice, I do not approve; but works of necessity must be attended to. I should not exactly like my friends of the Journal of ____ to know how I was employed, though I was so wary it is almost impossible that my conduct should bring any scandal on the cause of religion.
Monday. Rumors have of late been afloat that the "great financier" has turned Loco-Foco. They sorely trouble some of our friends, especially those in the Middle States, on whom he has been pressing heavily, in order that he may strengthen his means for bringing the South-Western States into complete subjection. But such reports do not affect me. I know the man too well to believe that he can ever turn Loco-Foco, except in the same sense that my son Bob became a Democrat.
That such a change should take place in appearance is quite possible, for he has political as well as pecuniary objects to advance; and, I have no doubt, would rather see himself President than either the "Hero of Tippecanoe," or the "Orator of Ashland," or even "the god-like man" of our American Athens. Still, some of his movements were rather puzzling. But that tranquility of mind which the blessed Sabbath always brings with it, has enabled me at length, as I think, to fathom his designs. He has already established one agency at London, and another at Liverpool. To these he probably means to add others in various parts of South America, at Canton, and other parts of Asia, to say nothing of Botany Bay and Van Dieman's Land. I hope sincerely he will embrace New South Shetland in his plan. By agencies thus numerous, and remote from one another, he may establish a system of "kite flying" which will, by its magnificence, utterly astound the inventors of that noble art. He will draw a bill on Rio, and take that up by a bill on Valparaiso. This he will redeem by a bill on the North West Coast, and then redeem that by a bill on Canton. When this is due, take it up by a bill on Botany Bay, (there are several banks there already) and that by a bill on Van Dieman's land, (where there is at least one bank.)
The next step will be to New South Shetland, and then he can proceed round and round the globe. This system will come nearer the plan my excellent friend Newcraft has for many years been trying to discover, than any thing I have ever met with. Newcraft's grand object has been to mature a system of banking, by which the disagreeable necessity of ever paying at all, may be avoided. Postponing payment indefinitely, by drawing and counterdrawing on all the towns in the universe, is the next thing to never paying at all and if the "great financier's" bank should chance to be bursted in bringing the system to perfection, why, then there will be only a verbal difference between postponing payment indefinitely, and never paying at all.
I sometimes think this may be part of the "great financier's" design. No greater evidence can be given of skill in the art of banking, than by now and then breaking a bank at the proper time. He is extremely fond of comparing banking and steam power, and I have often had occasion to think of the comparison, in reflecting on the fate of that noble steam-boat, the "Nick Biddle." When that magnificent vessel first made her appearance in front of the famous city of Vicksburg, where there seem to be more banks than churches, the multitude on the shore greeted her with loud huzzas. Her name alone sufficed to inspire in that calm and Quaker-like population this hearty enthusiasm. But, in some few months after, the noble boat burst her boiler, and now nothing more is heard of her.
McThwackem tells a story so pat to the point, that if I had any body to listen to me I would endeavor to repeat it. As it is altogether too good to be lost, I must tell it to myself.
In the western part of New York is the beautiful village of Jack-Downingsville, to which the Slickville Yankees go to finish their education, before they venture to extend their benevolent labors to the inhabitants of "that great moral wilderness," the valley of the Mississippi, just as certain Swiss go to Holland to be polished before they repair to Paris. At this interesting little place a juggler was once exhibiting his powers, and his skill was so great that he utterly astonished even that worthy people, to whom ledgerdemain, in some at least of its branches, is so easy, that it seems to have been born with them. He thrust swords down his throat till nothing but the hilts were visible, and yet remained unwounded. He swallowed prussic acid by the spoonful, and yet remained unpoisoned. He squeezed himself into a pint bottle, and yet retained his natural size and shape. Loud were the plaudits he received, which increased as the entertainment was prolonged, for each trick seemed more wonderful than that which had preceded it. At length, when the admiration of the spectators had reached a point it seemed impossible to surpass, he exclaimed, "Now ladies and gentlemen, I will perform a feat greater than any you have yet seen." Without more ado, he took a pistol and blew his own brains out ! The company, having seen the wonders he had previously performed, waited for some time in silent expectation that he would collect his brainy again, and stand before them a living man as at first. At length they became impatient, and loud cries of "go on! go on! what next? what next?" resounded through the room. But the poor juggler could go no further. This wonderful feat was his last.
By some of his operations the "great financier" has astonished the commercial world quite as much as the juggler by his feats amazed the people of the little town in the west of New York. Is this magnificent system of exchanges to be his last, or are we to exclaim "what next ?"
* I am very much afraid some people will think that I am a prophet after the event. But if any one will be at the pains to look into the Democratic Review for December, 1838, he will there find the above passages of my diary, just as I now give them in the Journal of Banking.
At that time the banks were paying specie, and on the very last day of December, 1838, the stock of the United States Bank was quoted in the Philadelphia papers at $123.
The events that have since occurred, do not in the least affect my judgment of "the great financier." I respect him more than ever. Only give him plenty of capital, and any fool can manage a bank. The really skilful banker is he who can carry on his business without any capital at all. It is in this way "the great financier" has proved himself superior to all other men. Instead of having a capital of thirty-five million dollars, my own firm belief is, that the bank had not for many years a capital of thirty-five thousand. Yet it had unbounded credit, and by a skilful use of this credit, "the great financier" concealed its want of capital.
Monday. McThwackem lent me to-day a dissertation by a learned professor in a South Carolina college, intended to prove that "money is not wealth." Ah, these professors in colleges, they are the men ! Surely wisdom was born with them, and when they die, wisdom will, I fear, die also. One of them, (he belongs to the University of Pennsylvania) not long since proved, or attempted to prove, that "all the use of metallic money is to create a confidence." Now his brother of South Carolina proves, or attempts to prove, that "money is not wealth." In regard to paper money, a Loco Foco might perhaps admit this doctrine to be true as far as concerns the community at large. But the professor extends it so far as to embrace metallic money also. Some curious consequences follow from this. For, if money is not wealth, then a man who is in possession of millions, if it be in the form of gold and silver coin, is not a wealthy man. If John Jacob Astor, should tomorrow sell all his houses and lands, and every thing else he possesses, for gold and silver coin, he would, from being the richest man in the country, suddenly become one of the poorest. He might, indeed, have from five to ten million dollars in hard cash, but as "money is not wealth," the possession of even a hundred million dollars would not make him wealthy. However, John Jacob Astor, in order to become wealthy again, would have only to melt his gold and silver coin into ingots. For, the professor does not, I believe, deny that gold and silver when in the form of bullion are wealth, in the same sense that copper and iron are wealth. It is only when gold and silver are converted into coin, that they cease to be wealth.
The doctrine puzzles me, I confess. Though, as it is put forth by a professor in a college, it must be true, I suppose.
Thursday. Had a conversation with son Tom on the subject of the standard of value. We cordially agreed in denouncing the common ideas on the subject as exceedingly absurd. The very term stand-ard, supposes something that stands. What can be more ridiculous, then, than to make money, which is always circulating, literally going round and round, the standard of value ? I was for taking the earth, the great source of wealth, as that standard wherewith to compare all wealth. But Tom objected that I was not quite original in this. The Nicholas Biddle of the last century, the immortal John Law, was for making the earth the standard, and enriching nations by coining the land. Some distinguished gentlemen of Philadelphia, did moreover entertain ideas approximating to this; and some correspondents of The Madisonian had broached them in that paper.
"For my part," said Tom, "I look upon New England rum as the best standard of value." Hereat I laughed: but Tom told me not to laugh, but to listen, while he compared certain qualities of New England rum with those qualities of gold and silver which, according to the Political Economists, fit them to perform the functions of standards and measures of value.
"In the first place," said Tom, "the demand for New England rum, is universal and incessant, the efforts of the Temperance Societies to the contrary notwithstanding; and the supply exactly equals the demand. Every Political Economist will admit that the laws of supply and demand, affect New England rum in the same way that they affect gold and silver.
"In the second place, it (New England rum) is divisable into extremely minute portions, and capable of reunion without any sensible lose of weight or value. This divisibility and capability of reunion, Say, in his Political Economy, places first in his enumeration of the qualities of gold and silver which fit them for the purposes of money. But every man knows that any given portion of New England rum can be divided and reunited with much more ease than any given mass of gold or silver.
"The exact strength, and consequently the purity, of New England rum, can readily be ascertained by means of a hydrometer. To ascertain the fineness of gold and silver, we have to resort to the troublesome process of assaying.
"Time, weather, and damp, says Say, have no power to alter the quality of gold and silver. Neither do they injuriously affect New England rum. It rather improves by age. You can carry it into any climate. In very cold regions, it is indeed liable to be frozen; but then it can be cut into blocks, and serve very conveniently the purposes of a circulating medium. In this form, I have no doubt, it would be highly prized by the Esquimaux. If the Abyssinians use salt bricks, as money, why should not the Esquimaux use little blocks of frozen rum ?
"Melasses was once a kind of secondary standard of value with our Yankee boys. Nothing used to be more common with them than to say that they had got for their produce, 'half cash and half melasses,' meaning thereby, not melasses literally, but various commodities, of which they made melasses the general representative. In like manner, New England Rum was a kind of standard of value, and even currency, contributions for public objects being made in that medium. Of this, History affords us a remarkable example. When the New Hampshire troops were preparing to join the forces under Gen. Gates, contributions were made to defray their expenses, and among others, Governor Langdun subscribed a large sum. But how did he pay it ? In gold and silver ? No. He was not so foolish as that. He knew that gold and silver could be neither eat nor drunk; and, like a sensible man, he rolled out his four or five hundred barrels of New England Rum. With these, supplies for the troops were procured. And to his rum contribution we are, at least in part, indebted for the glorious victory of Saratoga, and the consequent capture of Burgoyne and his forces."
Pretty well for Tom. When he had done, I told him that he ought to write to Professor ____ of the University of Pennsylvania, and Professor ____ of the College of South Carolina. As one of them had made the discovery that "the whole utility of specie as money is its power of creating a confidence," and the other the no less notable discovery that "money is not wealth," I could not doubt they would duly appreciate his discovery of a new standard of value. Tom said he would think of it. He had his fears, that, if he wrote to those gentlemen, they would seize hold on his theory, dress it up anew, and give it to the world as their own, thus robbing him of honors justly his due.
Sunday. It is said that one of the old times Boston ministers was so averse to preaching, that he used every Saturday afternoon to go to the North End, and if he found a man coming into town with a black coat on, catch him, put him into the pulpit the next day, and make him preach for him. I think the mantle of this old times minister must have fallen on McThwackem, for he never preaches himself when he can get any body else to supply his place. This morning his pulpit was filled by a miserable old drawler from the country, who took for his text, Revelations, chap, ix, v. 20, 21. "And the rest of the men which were not killed by these plagues, yet repented not of the works of their hands that they should not worship devils, and idols of gold, and silver, and brass, and stone, and of wood; which can neither see, nor hear, nor walk: Neither repented they of their murders, nor of their sorceries, nor of their fornications, nor of their thefts."
"A remarkable example," said he, "have we here of the power of evil and of error, and of the inefficiency of mere punishment, as such, to produce reformation. The seventh seal had been opened, the sixth angel had sounded, woe had followed woe in quick succession, and yet the men that escaped destruction, repented not of the evils which brought these woes upon them.
"So it always has been, and so it always will be. And if any man doubts the truth of the doctrine inculcated in the sacred text, he has only to take a look at the present condition of our country. Herein we have the power of evil and of error exemplified in a most remarkable manner, The "third part of the men" have been killed by the fire of avarice, a fire which is, in no allegorical sense, the fire of hell, and yet, the rest of the men "who have not been killed by these plagues, repent not of the works of their hands." It is all scheming and scheming still. As one system of fraud explodes, another takes place. Any thing, cry they, but hard money and honest industry.
"The words of our text, have, unquestionably, in their primary sense, reference to the spiritual condition of men. But such an application of them, the men of the present day are too worldly-minded to understand. Therefore do I confine my explication to their secondary sense. Worldly-minded men may see the force of the great truth inculcated in the text, namely, the power of evil and of error, when applied to worldly subjects: and yet, though they see, they will not repent. It will all be scheming, and scheming still."
I do wish parsons would stick to their calling, and not be meddling with politics. What business have they to talk about hard money and honest industry, and to speak of scheming, in such a way as to hurt the feelings of the most devout of their hearers myself, for example, among others ?
Tuesday. Had a conversation to-day with McThwackem in relation to banking, viewed as a subject of moral concernment.
"As a moral and religious man," said Mac, "I have never said that the present system of banking was exactly right. Whatever support I have given to it, whether active or silent, has been founded on the supposition that it is the best the present circumstances of society will permit us to have. As our brother from the country told us a Sunday or two ago, "The fire of avarice is, in no allegorical sense, the fire of hell." This fire burns in every unregenerate human breast. What so convenient, then, as to have chimneys to carry off the smoke it produces; and what contrivances can be more convenient for this purpose than our present banking institutions ?
"Do men suppose that by putting an end to paper money banks, they will put an end to that cupidity in which paper money banking has its origin ? My, I tell them it will break out afresh in some new place, and perhaps with redoubled violence. The evil is in man, and it will manifest itself. In barbarous countries, it naturally takes the form of force; in civilized countries, it as naturally takes the form of fraud. The Arab robs; the American cheats: I beg pardon, financiers. It has been said that our banking system is the greatest system of fraud ever known. Well, let it be so. What does this prove but that we are the most highly civilized people on the face of the globe ? A perfect system of fraud is the natural concomitant of a very high stage of civilization."
McThwackem is a truly philosophical divine. I could listen to him with pleasure from Monday morning till Saturday night.
I have been endeavoring for some time to contrive something for the benefit of my country; and at length I have hit upon a plan which must, I think, be eminently successful. We have, as has justly been observed, all the elements of wealth in the United States. We have plenty of land, millions of acres indeed more than we can cultivate: plenty of pork; in Illinois it is selling at one cent a pound: plenty of great men; some of them, I believe, would be very glad to throw the others overboard. All we want is plenty of money, and this is what my plan is intended to supply.
I have taken my hint from the New York "Free Banking" system. The capital of banks founded on that system, consists of mortgages on land, and State stocks such, for example, as stocks of Indiana and Illinois. This is very well as far as it goes; but it does not go far enough. My object is to carry out the principle, and convert all the capital of the country into credit, and all the credit into currency.
If real estate can be converted into bank stock, why not also personal estate. The latter, in many cases, would be more convenient than the former, as it might be more readily used in meeting a run on a bank.
My plan, if carried out, will just treble the riches of the country. First, by enabling every man to create bank stock, exactly equal to the value of his whole estate, real, personal, and mixed. Secondly, by enabling him to issue currency equal in amount to his bank stock, or to the estate, real, personal, and mixed, on which his bank stock should be founded.
My plan is a truly Democratic one; for it proposes to convert every man in the country into a banker, and let him have a share in the profits of the paper money business. If a man's whole capital consists of only one old coat and one old pair of breeches, I would have him found bank stock thereon, and issue currency to an equal amount with his stock. The New York plan was very Aristocratic, inasmuch as it confined "Free Banking" to holders of real estate and mortgages, and owners of State stocks.
Will it be objected that the notes issued on my plan, would not rest on a good foundation ? I reply that they would rest on a much better foundation than many of the bank notes now in circulation. Not a few of the notes which now circulate most widely, represent nothing but stock notes and accommodation notes in the port folios of the banks, and these stock notes and accommodation notes never did represent any thing but the cunning of one portion of the community, and the credulity of another. Notes issued on my plan, would, in all cases, represent real wealth, not indeed gold and silver, but the equivalents of gold and silver. They would represent houses, lands, provisions, clothing, furniture the very things, in fine, which men desire as ends; and to get possession of which they hanker after gold and silver as means.
On this plan, we should have both a sound currency and a sufficient currency. We should have what the whole nation now so intensely desires, namely, "plenty of money." At least, if this plan will not supply us with "plenty of money," I know no other that will.
Great was my mortification to-day, after I was seated in my pew, when I looked up, and beheld the same old drawler in the pulpit that had preached, or tried to preach, the Sabbath before the last. Had it not been that I had invited several members of our Board to accompany me to meeting, I would have immediately left the house. As an office-bearer in the church, I am obliged to walk very circumspectly, for fear of offending the weaker brethren. But such a sermon !
The text was Genesis, chapter xxiii, v. 16. And Abraham hearkened unto Ephron; and Abraham weighed to Ephron the silver, which he had named in the audience of the sons of Heth, four hundred shekels of silver, current money with the merchant.
From, this the miserable old proser took advantage to descant in favor of hard money, and against paper.
"He knew," he said, "that he might be regarded as behind the times. If he was, he gloried therein. The money of the patriarchs, the prophets, and the apostles, was good enough for him.
"Perhaps there would be more truth in alleging that he was in advance of the present times. Paper money, if not the latest, was one of the worst inventions of Satan. If truth and righteousness ever prevailed on earth, (and he trusted that day would yet come) false money would be as much abhorred by men, as other false measures and false weights.
"It was a great mistake," he said, "to suppose that there was not enough of gold and silver in the world to serve the purposes of money. According to the most able writers, the whole quantity of the precious metals in Europe and America, is not less than four or five thousand millions, and in the four quarters of the globe not less than ten thousand millions. Gold and silver exist in this abundance, and to what better use could they be applied (supposing the whole amount to be required for this purpose,) than to forming sound standards and sound measures of value ? What can compensate for the want of honest money ?
"It is not difficult," he continued, "to point out a reason why gold and silver had not been made more abundant than they are. If they had been made as plentiful as copper or as tin, they would in a great bulk have comprised so small a value, as not to have answered the purposes of money. It was necessary that they should be limited in quantity, in order to serve some of the uses for which they were intended. And it was just as evident that gold and silver were intended to be the material of our money, as that wool and flax were intended to be materials for our clothing. There were no other objects in nature that could possibly, in nations having an extensive commerce, adequately perform the functions of standards of value, and measures of value that could truly serve the purposes of money. And no nation had ever attempted to supplant gold and silver money, by the introduction of some 'cheaper medium,' without sooner or later suffering therefrom the most deleterious consequences.
"How true is the saying of the author of the book of Ecclesiastes; "God hath made man upright; but they have sought out many inventions."
Of all church-going men, I am certainly the most unfortunate. It has not been my tuck to listen to a truly orthodox discourse, more than twice or thrice in the last three months.
Monday. A member of Congress, an old friend, called on me on his way "down east." Asked him why he and his fellow-members could not agree on some fiscality. Member said that, to tell the whole truth, nothing would satisfy them except something they could borrow from. Replied to Member, that he and his fellow Congressmen were undoubtedly right in this. Nothing could be plainer than that our government had been established for the exclusive benefit of schemers and speculators. Every page in our statute books establishes this. And for this, no doubt, it was that our fathers fought and bled in the Revolutionary war. Then went on to explain to Member, how easy it would be to borrow to any desirable extent, under any fiscality that had yet been proposed. If the fiscality sold exchange, it would be under the necessity of buying exchange in order to balance accounts. Then Members could dispose of bills to very great advantage, on West Quoddy Head, Bung-town, Michilimackinack, or any where else within the world's wide bounds. Member took me in his arms in an ecstacy, and declared I was "the greatest man living, except Nicholas Biddle." Did not thank Member for "the except." Every dog has his day; and Nicholas Biddle has had a very long day. It is now quite time for Deacon Graball to take his turn on the step ladder of immortality.
Tuesday. Member returned to-day to have further conversation with me. Was quite satisfied that any fiscality would afford members of Congress sufficient opportunities for borrowing, but something must be done "to make money plenty," in order to satisfy "the dear people." Broached to Member my plan of converting all the capital of the country into credit, and all the credit into currency. As, according to the late census, the wealth of the nation is not less than 8,700,000,000 dollars, this would increase our money thirty-fold; in other words, for every dollar we now have, we should then have thirty. Hoped this would satisfy "the dear people." Member said if it did not, "the dear people" must be very unreasonable. The Continental Money issues amounted in the aggregate to only 360,000,000, or less than one-tenth as much as I proposed to emit. Told Member that the avidity of some men for money was so great that I feared that even this would not satisfy them.
Wednesday. Member returned to know if I had any further "improvements in the currency" to suggest. Told Member I had one more, and that of great importance. It was to dispense entirely with gold and silver. All Political Economists agree in declaring that the different portions of the currency ought to be homogeneous. But what can be more heterogeneous than our present currency, part copper, part silver, part gold, and part paper ? The wise Chinese saw the folly of this, and when they established their paper money, prohibited the use of metallic. So also did the French in one period of John Law's règime. Compulsory provisions, however, suit not our age and nation. Nor would they be necessary. Only give permission to issue notes for small denominations as low down as one cent, and such notes would be as effective in driving silver change and even copper out of circulation, as ten dollar notes now are in displacing eagles, and dollar notes in displacing dollars.
And where would be the great harm of this ? Even according to the showing of the Loco-Focos themselves, gold and silver are in our present system merely a subsidiary currency. If paper is good enough for our principal currency, why should it not be good enough for our subsidiary also ? If bank notes are the best kind of currency in transactions amounting to ten thousand dollars, why should we object to their use in transactions of the amount of ten cents ?
There is, to be sure, another use of specie under the present system, and that is in paying balances due by one part of the country to another, and to foreign nations. But every experienced banker knows that there are other ways of settling balances than by paying specie. At the Clearing House, where the bankers of London meet daily to settle their accounts, not an ounce of specie ever makes its appearance; and balances, amounting in the aggregate to millions, are discharged by the intervention of a few hundred thousand pounds in Bank of England notes. And so might we do in this country, settle balances by exchanging one evidence of debt for another.
Thursday. Member back again. My plan for settling domestic balances, was, he observed, admirable: but how would I adjust foreign balances, without the intervention of specie ? Told Member that nothing was easier in the world. Only let Government, said I, draw bills on London for the amount of such balances, and take them up by selling United States Stocks in Europe. What is Government good for, if it cannot do this little for the banks ? *
* The Deacon is not quite original in this. This mode of settling foreign balances, was brought forward, on a particular emergency, a few years ago, by the President of a Bank in Philadelphia county, the very oracle of his neighborhood. It was also supported at some length in a pamphlet published many years since, by one of the Smiths, we believe by the celebrated Dennis A. Smith. We do not accuse the Deacon of plagiarism. We only mention these coincidences to show "how great wits jump together."
Member said he would withdraw "the except" he had made a day or two ago. I was a greater man than Nicholas. I had devised a plan by which the use of gold and silver, and even copper, might be entirety dispensed with. I had given a death blow to the "specie humbug."
Told Member I was herein only following the advice of Doctor Franklin. "I say," says the Doctor, in his essay on the Corn Laws, "I say, when you are sure you have got a good principle, stick to it and carry it through." Now I am sure that I have got hold of a good principle in the paper money principle; and I am for carrying it through consistently.
Friday. Hearing that a certain Loco Foco was going to make a demand on our bank for specie, I determined to be equal with him: and, borrowing a hint from Charles O'Malley, had a quantity of coin heated red hot. When Loco made his appearance, Teller asked him very politely "would he have gold or silver, American or foreign ?" "American gold, if you please," said Loco. Teller accordingly shovelled it out to him. "How beautiful it looks," said Loco, but the sensation he received on touching the first half-eagle was such as I hoped would cure him of his hard money fever then and forever. I saw the whole transaction, peeping from behind a screen in one corner of the bank, and was near bursting with laughter.
Loco remonstrated with Teller in such terms that I deemed it prudent to step forward. Told Loco that we had literally complied with the provisions of the law. Congress had not said what temperature the coin should bear, in order to make it a legal tender, and we had a right to pay it out hot or cold as we saw best. But perhaps he would prefer American silver, or may be foreign gold ? Either was ready for him, and we were anxious to oblige the public in every way in our power. Loco thanked me: stepped out of the bank, and in a few minutes returned with a coal scuttle, in which he carried off his American gold in triumph.
These Locos, these Locos ! There is no coming over them, any how.
Saturday. Had the pleasure of being present to-day at a convention between McThwackem, and a noted Loco. How Mac did put it into him ! "Your leading men," said he, "your Calhouns, your Bentons, and others, are, I admit, sensible enough on most questions; but on the subject of hard money they are downright mono-maniacs. Not that I would be understood to say that they are wrong in the abstract. I have always said that it would have been better if paper money had never been introduced. But we must conform to circumstances; and in the present degenerate state of society, the old Adam will show itself, and we must have some chimneys to let off the smoke of human corruption. In certain countries in which there are no paper money bankers, there are banditti, and who knows but we should have them in the United States, if our present banks were abolished ? In a debate in the British Parliament on this subject, some of the Lords explicitly asserted that the decrease of highway robbery in England was owing to the establishment of paper money banks: and Thomas Moore, the celebrated poet, deemed the opinion of so much importance, that he has embalmed it in verse.
" ' Much grave apprehension expressed by the Peers,
Lest calling to life the old Peachums and Lockitts
The large stock of gold we're to have in three years.
Should all find its way into highwaymens' pockets!'
Now I ask, which is worst, to suffer what the community suffer at present from paper money banking, or to have the Directors of many of our banks formed into banditti, with their Presidents at the head of each troop, acting as captains over them, infesting the highways between the principal cities, rubbing and perhaps doing personal violence to travellers, and carrying off women to the mountains ? Take my word, my friend, it is for better to endure the ills we suffer than fly to those we know not of."
Loco replied that for his part he would prefer the bandits to the bankers. Against the wiles of the former, he might be able to guard; against those of the latter, there was no protection." I admit," said he, "the high personal respectability and excellent moral character of many of them as men, but the system which they work under is so evil in its very nature that the highest intelligence and the staunchest integrity in those that manage it, cannot prevent its being pestiferous to society.
"Reverend Sir," said Loco, addressing Dr. McThwackem in the most respectful manner, "Reverend Sir, permit me to call your attention to a volume entitled, An Inquiry into the Principles of the Policy of the Government of the United States, written about the year 1811, but not published till the year 1814. The author, John Taylor, of Caroline County, Virginia, was a soldier of the revolution, a farmer, a lawyer, and a Senator of the United States. Of all American writers on the philosophy of politics, he is the deepest. He treats at large of paper money banking, and in my opinion expresses the exact truth when he declares that
"A nation exposed to a paroxysm of conquering rage, has infinitely the advantage of one subjected to this aristocratical system. One is local and temporary: the other is spread by law, and is perpetual. One is an open robber, who warns you to defend yourself: the other a sly thief, who empties your pockets under pretext of paying your debts. One is a pestilence which will end of itself: the other is a climate deadly to liberty.
"After an invasion, suspended rights may be resumed, ruined cities rebuilt, and past cruelties forgotten: but in the oppression of the aristocracy of paper and patronage, there is no respite. So long as there is any thing to get, it can not be glutted with wealth. So long as there is any thing to fear, it cannot be glutted with power. Other tyrants die: this is immortal."
What surprised me was, that McThwackem made no reply to this silly ferrago of Loco. He, however, gave a shrug with his shoulders, which shrug spoke volumes: and would have been a sufficient answer to Loco, if the latter had railed on for an hour.
Deacon Graball. You must admit, Brother Maultext, that I have just as good a right to rent or interest for the money I lend, as I have to rent for the houses or lands I purchase with any money ?
Rev. Dr. Maultext. Exactly so, Brother Graball. But as a good, Christian man, you ought to be content with interest on your capital and not expect to receive it on your credit also.
D. G. Why so, Brother ?
Dr. M. Because, as credit is a mere contrivance by which one man's capital is transferred to another, you are, if you receive interest on your credit, receiving, in an indirect way, interest on another man's capital. This is what is done through the agency of our present banking system. The capital of the farmers and other producers, is, through the agency of bank notes, transferred to the traders and speculators: but interest is paid to the debtors, to those who issue the bank notes, instead of being paid, as in justice it should be, to the creditors, that is, to the holders of the notes. Through our banking system, the natural and just operations of credit are exactly inverted.
D. G. But if my credit will serve another man the same purpose as money, why should I not receive the same interest on it as on my money ?
Dr. Maultext. You may, provided your credit is in such a form as not to injure any third person or society at large. But your credit can serve another man the same purpose as money only when it becomes a species of money: and this it can do only when it takes the form of a note or draft, payable on demand, and passable by simple transfer. Such notes, whether issued by the Government, by corporations, or by individuals, become currency. They regulate prices and are received as full discharge of all debts: and although both the makers and the borrowers may be benefitted thereby, society at large is injured.
Deacon Graball. How so Doctor ?
Dr. M. Because, though this paper money may as a mere circulating medium be even more convenient than coin; it never can adequately perform the other and the most important functions of money, namely, those of a standard and measure of value. If "convertible paper" did, as its supporters assert, merely displace an equal amount of gold and silver, its issuers would be entitled to some reward for their ingenuity. But experience shows that this is not the case. Reason shows that it cannot be the case. As a measure of value it is the most deceptive that can be, and leads men to put a false estimate on every thing.
Deacon Graball. If I choose to take another man's promise to pay instead of actual payment, what right has Government to interfere ?
Dr. Maultext. Aye, aye, what right, indeed !
"Surely the pleasure is as greatAnd since you, Deacon, so strenuously insist on your right of being cheated, you may be permitted to enjoy it to your heart's content. Only we can not permit you to cheat others. You are at liberty to receive in payment of debts due you brick bats, corn cobs, rags, or rag money, if you will, but you have no right to impose this worthless trash on others as something possessing real value.
"Of being cheated, as to cheat."
D. G. But are not others competent judges of what I offer them in payment ?
Dr. M. Far from it, Deacon. Your long face and your long prayers impose on many. Few men are equal to you in craft and cunning. There is fraud in your heart at this very moment. In contending for your right of receiving another man's promise instead of payment, you have in reality the intention of making others receive your empty promises instead of payment. You know well enough that circulating notes, nominally payable on demand, are, in the aggregate, never paid. You want to make your promise go as far as another man's payment, and thereby gain a great advantage over your neighbors.
D. G. But if they, of their own free will, receive my promise as full payment
Dr. M. Then, Deacon, you only make them instrumental in cheating themselves.
D. G. But if the business were thrown open to all, then every man would have an equal chance, to use your own rough language, "of cheating and being cheated;" or, as I, with more regard to decorum, would say, "of benefitting and being benefitted by paper money banking.
Dr. Maultext. There would be some plausibility in your argument, if all men were equal, in capital, cunning, and want of conscience. But, as Mr. Gallatin has justly observed, if the business were thrown open to all, none but men of large fortune and sharpers could take advantage of it. Neither are entitled to such an advantage.
Deacon Graball. But, Doctor Maultext, you ought to recollect that the doctrines of free trade are so well established, that merely to call them in question is considered a mark of great ignorance or strong prejudice.
Dr. M. Freedom of trade is one thing. Freedom to cheat and swindle is another. I am not of that ultra-liberal school that is for giving men as much freedom to do wrong as to do right. Trade ought to be fair as well as free. A fig for free trade with foreign countries if we cannot have fair trade among ourselves.
D. G. In my humble opinion, the single sentence "laissez faire et laissez passer" embraces all the practical wisdom of all the books on political economy that have ever been written.
Dr. M. Properly understood, and properly applied, it is invaluable. But when I hear paper money bankers crying "only let us alone," it strikes me in much the same way as a similar cry would, if coming from pharo-bankers or any other class of gamblers. Free competition in doing evil, will never put an end to evil, unless it be carried so far as to destroy both subject and agent.
Deacon Graball. I have my rights as a man, a merchant, a banker, a Christian, and a citizen of this great American republic; but they will avail me little, Dr. Maultext, if you deny me the poor privilege of freely passing away paper that I have freely received.
Dr. Maultext. But, Deacon, you received it with wrong intentions. You would not willingly take Tom O'Nokes' note of hand, because you know he is not worth a stiver. Or, if you did take it, because you could get nothing better, you would, on passing it away, endorse it "without recourse." Yet you are willing to take Tom O'Nokes' bank note, because that passes by simple transfer, and yon throw all the risk of loss on another.
D. G. But suppose I endorse Tom O'Nokes' bank note ?
Dr. M. That will alter the case. Every man that aids in circulating paper ought to be responsible in the same way that the issuer is, or else he ought to give notice to the receiver that he has not full confidence in it, by endorsing it "without recourse."
D. G. Then it seems that, according to your views, in order to make bank paper an unobjectionable medium, all that is necessary is to have it endorsed by every one through whose hand it passes.
Dr. M. No, this is not all that is necessary. Promises to pay on demand, are, in point of fact, take them in the aggregate, promises to pay never. A definite time ought to be fixed for the payment of each note; and then it ought to be either paid or protested.
D. G. Such a regulation as this would interfere greatly with the operations of commerce.
Dr. M. It would not. It would leave every trader at liberty to employ his cash and his legitimate credit in such a way as he might deem best. If he made a purchase, and it did not suit him to pay ready money for it, he would be at liberty to promise to pay an hour, a day, a week, a month, or a year hence, as might be agreed upon between him and the seller; but when the time was up, there should be either payment or protest.
D. G. On your principles, all the gold and silver in the world would not suffice for the trade of the United States.
Dr. M. So far is this from being true, that the probability is, that after the system was once fairly established, a very small addition to our present stock of gold and silver would prove amply sufficient. We have now various ways and means of economising the use of paper money, as, for example, by bank checks, in this country, and bills of exchange, in England. If our money were metallic, various other expedients of this kind would be resorted to. For example; suppose a single office of deposit, similar to the Bank of Hamburg, established in each large city. A million of dollars might in such cases be made to effect payments to the amount of ten to twenty millions in one day, through simple transfers of credit from one merchant to another. A dollar in specie might then, through the superior activity given to it, effect as many payments as two dollars in paper effect now.
Deacon Graball. Any other way ?
Dr. Maultext. Yes: a system of set offs would be extensively resorted to among traders. Nine-tenths of all the transactions of Lancashire, England, were at one time carried on by the means of bills of exchange, without the intervention of either coin or bank notes, and bills of exchange would be extensively used in this country, in wholesale transactions, if paper money should be abolished.
D. G. After all you have to come back to paper and to banks.
Dr. M. Yes; but not to paper-money banks, or to paper-money. The banks I would have, should be hard money banks, which should never issue a note or certificate, or grant a credit on their books, except as the representative of specie actually in deposit. The sums then mentioned in bills of exchange would be a mere expression of hard money prices, with an addition in each case equivalent for the time for which payment should be deferred.
D. G. I have listened to you attentively, without being able to see the truth of one proposition you have advanced.
Dr. M. And for a very obvious reason, Deacon. It is not your interest to see the truth.
D. G. This is absolutely too bad. I know, Dr. Maultext, that when you are in the pulpit, you have a right to scold as much as you please. It is part of your professional privilege. But you hadn't ought to talk to me in this way in my own counting-house. I know that I am a poor fail-able creature, and that all my righteousness is as filthy rags
Dr. M. As filthy, Deacon, as the rag money to which you owe all your wealth.
D. G. And yet, after all, Parson, my righteousness maybe of as good quality as yours. If we of the laity are a leetle too fond of wealth, some of you of the clergy are a leetle too fond of power; and the love of domination may show itself in a desire to dictate to the minds and consciences of men, when it cannot gratify itself in another way. Even when persons under the influence of this passion speak the truth, they may speak it from wrong motives, and with wrong feelings. Look to yourself therefore, Parson. I do not think you worthy of the name of Minister.
[Exeunt Deacon and Parson, both in a flurry.]