The Ohio Democrat. [volume] (Canal Dover, Ohio) 1840-1900, 1842-03-10

VELOPE THE RESOURCES OF THE COUNIR
We Take the fllowing extract from tie money arti-
Gle of the New Ynk Herald and call the attention of
every thinking man to the facts it contains. sit is
Gvorite notion with bankers and specu'ators and has
been carefully disseminated among the people at large
that the Of bank capital favOrs the develope.
ment Of the resources Of an agricultural county No
gtea:e flacy in political economy exists than this.
That this is particularly agricultural country is suf.
fcenty manifest. In point Of productions capital EN-.
ployed and The pursuits of the inhabitants the agrcu
turNl interest is paramount TO all Ohors. Now care
fn examination Of the operations ofbnnking to show
that the system pursued in this country Of late years
is injurious to the interests Of the agricultural interests
and a curse to the whole country. Legitimate COM
merCial banking embraces only temporary supply of
means to enable transfer of fcommodies, which, with.
out such temporary assistance could not be effected 1t
cannot in any degree tend to create these commodities
which are to be transferred is universally allowed
that this country is in want ofcapta todevelope It's re
sources, ahd yet capital has been diverted from that use
and invested in banks where it is employed only IN
specializing in those productions after they are in exsA
tence' We will illustrate view. by facts that occur
red few years since in this State.
At the time we speak ofthe rage for creating banks
was at its height "We want more bank capital to de-.
Velope our resources, was cry every body's
mouth consequently the funds ofevery in all clas.
If society, flowed into and were locked up in bank
stock The aggregate capital under this impulse in.
creased from $780, OOO 900 to $345 000 000 and yet
the resources of The country less developed than
ever. The paper money Uaiue ofthe exports, indeed
nominaly under this system, but the quantity was
not increased and for two The increase of
bank capital did not promote industry. Il promoted
speculation, people stopped developing the resources
and went to specializing in products. The demand for
and consumption ofprodu' increased while the quan.
tity was diminished. Bank credits accumulated, while
their basis the exchangeabe valves of the country was
diminishing. Atthat time an industrious and skillul
farmer in the Interior of New York, was possessed of
5000 acres Of good land, through which ran water
course. The land was valued al two dollars per acre.
$4,000 The owner had other capital. 1t struck
him that if he could build mill upon his water course
whereby an immediate market for the grain Of the neigh
horhood could be created it would be profitable OPP
Grafton. TO do this he must borrow the MONEY! on a
mortgage ofhis farm He immediately applied to ma
ny farmers who were known to be rich in his own &
neghborng counties, and who in former years had al,
ways some ready money toinvest after the sale of their
crops! On applying to these people however, he dis
covered that all their funds had been absorbed in the
capital Of the many new banks that had been started in
that part ofthe country to deveope its resources He
then replied to the banks themselves. They could all
lend the money, but at 60 days only, when must bo
paid This OF course was of no use 10 him; he could
not build mill, make flour, and send it to New York
and pay his bill in sixty days He went to Albany for
loan; all the capital there was employed in "develo.
ping the resources of the country through the medium
Of bank capital, He came down to New York ard
found the difficulty ofobanng money so great that he
offered bonus Of $500 to obtain loan Of S. 00O, at
7per cent on his farm. AT last, almost in despair, he
applied to merchant in Wall street, eminent for his
commercial talents general Intelligence and keen FORE
sight as well as for bis wealth. He stated his case and
offered to sell hafthe farm at two dollars an acre if the
purchaser would advance funds 10 build the mill when
the future business should be conducted joint account
The merchant rejected the proposal but told him if he
would procure certificate that the farm what he
represented he would lend him the money att per Ct
for five years, rejecting the bonus The certificate was
procured and the loan made Time wore on, and at
the expiration OF four years the farmer returned to take
up the mortgage. "Wel, how did the operation turn
| QUIZ said the merchant "Beyond all expectation"
was the answers mo sooner was my mill in operation
than the neighbong farmers finding they could have
an immediate market for their wheat began to culti-
vate the lands in the vicnity-the price rose, and |
have sold $50 900 worth at twenty dollars per acre.
have mortgage of$2e 900 on some more have exten.
dsd my milling to agreat degree, and have now come
to take up my loan.'
Here is an instance of the proper application of caps
al in the agricultural part the community. Not on-
y was this 5000 acres brought under lucrative culi-
vation but from 70 to 100 900 acres in the neighbor-
hood influenced by it, and their products ncreas.
ed probably $3, 0o0 900 annually, being real aug.
mentation OF the wealth Of the country to that extent.
The banking business then comes into play in order to
facilitate the transfer and interchange ofths wealth af,
ter it is in existe 1ce The operation was this. The
farmer drove his load of wheat to the MILL the miller
having money on hand, gives his note at sixty days
to the farmer the farmer takes tito the bank gets it
discounted, and receives the credit of the bank in ex-
change, and with it discharges the claims upon him.
The miller converts the wheat into -four. sends it for.
ward to market and gets back the proceeds in time to
take up bis note at the bank and the operation is COM
pleted hy the canceng of the credits originally ex.
changed He, in the first instance exchanged his cred
it with the bank, because the bank is better known in
order 10 effect the exchange. The facilitating this
change was all the bank had 10 do in the matter The
exchangebe commodities were brought into being by
the application of capital not only without ihe agency
ofthe Banks but in opposition to them.
From,lhs little history of which can give names
and dates, we arrive at the conclusions that the de-
mand for bank capital follows the development of the
soil and does not lead it. The capital that EN-
poyed in banks the less is applied TO the cultivation of
the soil: in other words the the trading classes
are benefited the agricultural classes injured The
increase of bank credits only increases the evi-be,
cause it initiates that credit beyond the represen-
taons ofthe actual wealth of the country which is its
legitimate boundary, and leaves to cancel
of which there is no actual value.
NnHInIN N A