The enquirer. [volume] (Richmond, Va.) 1804-1815, 1804-08-22
EN- OUR L r..
RICHMOND 4.
WEDNESDAY, AUGUST go, 1904.
ON Is n NKS.
NO. v.

ETY. at large, and ITS own RoekboideyJ; and ha-
wing attempted to examine fome of the aprnc-
pal obieaiont, which may be urged againit fuch
inititutionS it may be fuppoied to be time to
cloie this difcufion. Such fuggcfion ihoud
Certainly be complied with, if another queftion
OF great speculative curiolity, and practical i'm
portance, did not demand fuinmary inveRiga-
ton. This queftion may be introduced to the
attention or thoie, who have read the four pre-
ceding Efays on Banks, in the following man
ner
The author of thefe Efays in fpeaking of the
advantages which indiz,idnais receive from
banks, attempted TO express himfef in the mott
abitratt and general manner. He attempted to
fpeak OF the benefits, which would reiult to
stockholders in general, without defending to
the particular enumeration of the effects which
they would produce upon the different kinds of
ftockhoders. In the illuffation of fome of
his petitions indeed, he fometimes found it
neceiiary to fpeak particularly of merchants
but 1t was only in the form of an illuftration, &
without meaning TO convey Il belief, that the
operations OF bank would be neceilarily con-
fined to the mercantile clafs. The important
queftion, whether it may not extend its influ-
ence to all the clafes of tockholders, to the far
mers and manufacturers, as well as the mer-
chants, was reierved for future examination
and it is this queftion which he now wihes to ex-
anime, and to which he wilhes to draw for a
few moments, the attention of bis readers. In
what degree & by what method can banks con-
tribute to the advantage of the three great cIaes
of ftockholders the farmers, the manufacture
ers, and the merchants this is the enquiry
which is now fuggefted to their confederation.
FARMERS. There appear to be three great
operations, by which the banking fyftem may
contribute to the agricultural intereft. Thefe
operations may be examined according to the
order of their pra6tcability and ufe, in the fol-
lowing manner
1T. A company offarmers living in the fame
neighbourhood, may be fuppoied to poilefs very
extenfve tracts of fruitful land, but they are in
want of fixed & circulating capital to cultivate
them. They have no immediate fund, which
may enable them to purchafe the implements of
agriculture and the neceiiary number of labour-
ers. They adopt iingular refource they form
an afiociation, and agree to eftabih bank upon
the following fyftem. They throw all their
land into one great fund, under the express con-
diton of telling it at the end of certain time, to
pay off the debts which may be due on their
bank notes. Thefe notes have fome of the cha
| racteriftics of the common poft notes. They ex-
prefs the obligation topay at future time GER
tain FUN of money, out of the proceeds of the
land, ftipuiated on the note, and to be fold for
this purpofe, unlels the notes are previoully re-
deemed by ready money. ! 'tefe notes, bottom
ed on iuch a fecurity, are thus endued with fome
of the properties of circulating medium. They
pats from the farmers hands into the hands of
the manufacturer, to purchafe the implements
OF huibandry; or into the hands of the labourer
| as fecurity for the wages of his iabour. Such
notes. in fact may be regarded as kind of alb
breviated mortgage upon the land the mort
| gage not being upon one tract of land, but upon
feveral tracts contributed by different indvidu-
| als.-lt would however, require no great fagaci-
ty to forefee the fate of flch an eitabliihnient
Thefe notes, if they even circulated at all, would
ioon iuitain an enormous depreciation. The
great number of them, that might and certainly
would be iiued: the difficulty of afcertaining
the value of the land, on which they were fecur-
ed the uncertainty of receiving money for them
at the expiration of the limited period: all thefe
circumstances and many more would foon de-
itroy their credit, lower their value, and perhaps
| finally arref their circulation. In fact, thefc
notes would want that great characteristic,
whichis 70 ehental to the value of a note /: a
convertbity into actual fpece. 1t is becaufe a
| man can readily exchange anete for money, that
| he is indifferent whether he has 70 much capital
| IN the form of ipece or of paper, and that he
| was willing to receive this note from Others as
| money, and that he finds others equally willing
to receive it from him. l il,all therefore take
this principle for granted, that no banks can be
| properly eltablilhed which is not able to give
fpecie almoft at any time for its paper 8, which
is not therefore bottomed upon an adequate ca
! ptal in actual fpecie. Let us proceed to exa-
mine the fecond way by which fuch bank as
this is, may be competent to afilt the Iabours of
the farmer
| End. A farmer, who poflel1es an extenlive
tract of fertile land, has no fixed or circulating
capital to cultivate it. He applies to the bank
for the loan of certain fun, and promifes to re-
place it by the fae ofhis crops, when they come
in, and in the mean time TO indemnify the bank
| by giving mortgage upon his land. Would it
be the intereft of the bankers to lend their notes
upon fuch fecurity? To determine this queft-
on, we mutt once more recur to the two great
fources ofproft, which banks themfelves enjoy {;
the accumulation OF compound intereft, and the
| power of iiiuing its notes to greater amount
than its actual capital. The firf of thefe adj
vantageS would be deitroyed by this arrange
ment iince notes could not be lately ifTiied up
on the faith of capital, which was not at
that time in the Golfers of a bank, and which
would not be there, before the expiration of a
ditaut period. Nor could the fecond advan-
tage be obtained for Il imiar reafon. I have al
ready attempted to thew, that the real reafoD
why banks can iHue their notes to greater
amount than their actual capital, is, that many
of theIr own notes may frequently circulate for
J feVeral months and even years, before they
| are preiented to them Tor repayment whereas
! the notes oGiudviduas, or The bills of exchange,
| IcAch ar. tf in ef,ttrt- oeueraIty hsco.,s -.