The Rhode-Island Republican. [volume] (Newport, R.I.) 1809-1841, 1840-03-25
Effects OF the Present Bank
ing System on Credit.

there are none perhaps more frequently resort
ed to. or that have been more successful. in n
farming the fears and misleading the minds o
business men. than the usual political ne~spa
per jsrgon Of the day; such as war upon credit
destruction OF banks hostility to trade and
commerce &c. &c.
During the existence Of every p,oic. this has
become. not only the perpetual war cry, bu,
constitutes the principal, and by far the most
successful part OF their argument. For, like
The old t0oman's dog. they keep up such a con-
hnual cedseation' Of thi, Kind Of bow WOW. tha,
many truly honest men had really begun TO be-
lisve that it actually was. and still is. the pre-
determined and settled purpose Of the govern
ment TO bring all these calsmities upon the
country. No doubt, there are yet some who
are now laboring under sneh impressions hut
We believe they are few, and those not Of the
most intelligent class.
Such arguments being addressed rather TO
The passions than to the judgment Of the pub
Bc. could never make a permanent or durable
impression. The fears thus excited. have now
subsded; and the political smoke that had been
raised 10 obscure the mental vision, and involve
the public in doubt and perplexity, has been
dispersed by tho lapse Of time and the light Of
reason.
Men now begin TO view objects in their true
light and just proportions; and are perhaps as
well prepared 10 examine deliberately and 10
reason correctly, upon the principles Of finance
and the measures Of Government, as upon 9TH
er subjects.
This beibg the present state Of the public
mind We now propose 10 continue the subject
commenced in the last number OF this paper
and. in discussing it, the first inquiry is, what
are We 10 understand by
THE CREDIT SYSTEM
To setlle this question, aud establish some
clear and definite idea Of the term, seems to be
the first step in the progress Of the argument
We call that the Credit System then, uhich
gires 10 eue~y indiridual, Uihoui distinction of
person or profession. such loans as he MAY rant
eracily in proportion TO his soivency and good-
ness Of character. This we believe, to be the
correct and legitimate use OF the term. accord
ing to the common accsptation. and the use Of
the best writers on political economy.
Now il ia to support this system Of credit.
gumcnts Of the friends OF our paper money sys-
TEN. m.-and those on which they chiefly rely
are derived from the influence and connection q
+ Of these institutions with the credit system. In
the FIRST place they assert that it is great bep.
/ eft TO nations and 10 individuals to obtain the
I greatest possible amount Of credit. In the
second place, they assume that our present
Banking system is the means best calculated "a
attain this object. la other words, they pro
I nounes il the credit system and denounce all
attempts Of government to reform It's abuses, "a
nothing less than war upon the credit system.
This, in few words. will be admitted TO be a
correct statement Of the sum and substance OF
all their speeches in Congress. and Of all their
writings on the subject, in the newspaper aud
periodical presses Of the day. Let us no~ ex-
anime the solidity Of this argument
10 the first place. we do not believe that ma
tons or individuals are benefited by the great
est possible extension Of credit; because il may
frequently be pushed to excess. and produce
the widest speeuatons and the most unboun-
ded extrayagance. These results we have be-
fore noticed, and We have all witnessed the dis
astrous consequences to individuals and com
munities.
Second. Though credit in the abstract, may
be a great benefit. the friends OF the system seem
to have overlooked the fact that is never obtain
I'd without involving another element, Of an op-
are two parties. One gives credit, and tbs 9th
er contracts debt: and debt, in the abstract,
is an evil. Itis, therefore, only by comparing
the results Of the TRANSACTION, as exhibited un-
der both aspects, that we can decide whether il
be beneficial or otherwise. /, is not then an
unmlsed good as there may be too much, as
well as too little credit; aud it requires recur-
renee 10 natural fixed principles. to mark its
proper limitation. Where an individual has
capital to loan. and feels sufficient confidence
is The solreney and goodness OF character Of an
other 10 entrust him pih Il, credit is given and
both will probably derive benefit from the trans
action. Because Ce,o not are prudent and in
dUst,,ous could contract debt under such cir
ea'n'idnee', uithout reasonable prospect q some
corresponding future advantage.
This, we presume, will be admitted, by all
who ha's IN the least reflected upon the sub
jeef, TO be concise and candid statement Of
the legitimate use Of and the fullest extent 10
which any credit system can be carried. con
sistently With the reiotre interests Or mutual ad-
ndatage Of both debtor and ereisor. Beyond
this, il seems to be conceded on all sides, ,ha,
no eredi, system can with safety be carried.
Now !, can certainly require no argument to
prove that to credit, 80 thus defined and limited,
our prescott banking system has proved far more
injurious than beneficial. This is so obviously