The Madisonian., 1840-01-28

With regard 10 the influence Of banks In these
periods OF speculation Il s 10 be observed that they
rarely ever The sole cause OF the speculation
something ertyaneou, % Ass gives an impulse TO
prices ia The frs, instance and this generates spri,
Of speculation which in lis turn increases the bank
ing credit Mr. Took, 10 his able and practical
work on high aud low prices, has shown most con-
clusivey, that banks rarely set The ball OF specula-
( lion 10 motion, being rather The effect lhan The
| cause.
| Having made these general observations on that
portion oi the Presidents Message, which would
seem to charge all our difficulties upon The banks,
shall now make few observations upon The cha
racler Of the American and British trade, with a
view OF illustrating some Of the remarks already
made, and TO prove that the present crisis under
which suffering, SO far from establishing the
DO icy OF the Sublreasury scheme, as the President
asserts exhibits, the contrary, It's runous tenden-
cy in a light which should remove skeptiesm from
every mind In looking 10 the external commerce
Of our country, there is one commodity which At
once fixes the attention as being the mos, important,
as well as The most valuable Of our exports This
is cotton. II is the atlas which upholds our whole
| commercial system II Is the commodity which pays
for The greater potion Of all our imports and IS pro-
ducsd alone in the southern States Ii is the com
modify herefore whose condition as to quantity and
| price must most influence foreign commerce and
foreign exchanges whilst il eTects and supports at
4 home 10 a great extent the whole system OF our
\ public and private credit. Suppose, ior example,
that this portan article should continue 10 rise IN
price Tor a series ol years in succession II Is easy
10 see how il would generate spirit OF speculation
I which would eventually communicate Itself TO all
commodities and hence the superstructure OF credit,
both private and public, would be prodiyiousiy en-
Iarged. The first effect Of The rise is inordinatey
high profit all the cot on lands. These lands be-
gin 10 rise, and negroes likewise. Then there is 4
rush in The tide OF our population 10 these lands,
here great fortunes are 10 be Tade-the effect Of
inreiy alton added 10 the Influence Of the hghprice
Of cotton, c.Trics up the price VI land sili higher.
Those who bought lue before have become
wealthy BY The change in value alone. Men begin
10 buy now 10 make fortunes by the rise in The price
Of land, not by cultivaling H. Thus The bubble Of
speculation is blown 10 its utmost tension ln The
meantime the hole system OF credit rapidly extends
itself The general Iise in prices produces neces-
SHY for increased currency Upon the same
amount ol property much larger loans can be nego-
tiaed, because Of the increase Of rice; and at the
same time every u an pushes his credit 10 the eI-
treme, because Of The hish profits which lie has al
ready realized, Of his high expectations tor the
iulure. Thus whilst capital and population, from
other portions Of the Union, flowing into this
country, ii is al the same time purchasing labor,
stocking land and buying goods on credit-all de-
pendent on the high expectations of the future.
Lei Us see how this advance Of prices may
finally communicate itself to other portions OF our
Uuion. This is done directly but indirectly.
The high price OF cotton excludes The production OF
all other articles in The cotton country but the great
staple iset-hence this country becomes new mar
ke Tor bread stuffs, cattle horses, hogs, &C.. and
thus has a tendency TO raise other agricultural pro-
ducts while the movement OF labor and capital from
other portions OF the Union 10 The cotton country
enhances still further this result.
! Again, the price Of cotton stimulates the mercan-
tile interest Of the North by the immense amount OF
imports which ii forces into The country because OF
the great amount o. exports and the cotton country
becomes an increasing market for manufactures be-
Cause of The increase OF wealth and Injury. Now,
this stage, il the price of cotton should become
| permanently liked at a high rate, We should have
/ uver-Iauing, but it would not be runous.
| The price Of cotton would permanently support
h gh prices generally, and, OF course, large super
structure OF credit II would be right and proper that
the Liter should exist contemporaneously with the
lormer; and, as long she nature OF man remains
4
instead Of the price of COTTON fixing itself al perma-
high rate after long period Of advance IL sud
denly aud unex peciedly begins TO decline, and finally
sinks perhaps TO hall or onethrd its former value
do we not see, at once, for widespread uin,
! and an immense destruction of private and public
credil1 You have, in fact, pursuing the similie al
| ready used, thrown down the Atlas that upheld the
superstructure The whole round of speculation
| SIN hn ri Of m
who have bought on credit become suddenly and in
extrcaby involved, and unable 10 comply with their
contracts The planter has not only borrowed, on
the faith OF the present CROP but he has anticipated
those to come, at former high ,prices-his creditor
can no longer wait for payments for he, in turn, is
pressed from some other quarter. This brings an
immense amount OF land and negroes into the mar
ket; which, of course, sinks their price to most
ruinous pitch of depression and thus the debt which
on yesterday bore upon the farmer as lightly as the
feather in his cap, when cotton was selling at l8 or
20 cents the pound, hangs to-day about his neck like
a milestone, when prices have suddenly fallen to or
10 ceIts II is impossible for agricultural country
topay great deb, immediaely il must wait for the
slow annual returns oi its crops and take all the ha
yards OF The markets and the seasons. Thus the rate
Of exchange rises 10 extent against the
cotton country, which is the debtor portion Of the
Union: and in favor Of the North, which generally
becomes the creditor by virtue OF its capital. This
rapidly deranges the currency OF the country while
foreign exchange suddeDly and alarmingly turns
against u, nj the same line may be readily ex-
planned. Thus, the high price Of cotton makes our
| exports great--,hose in year or two, will be
10 produce corresponding imports. Besides, ours
being the young country, with an immense field for