The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1842-02-28


aid not promote industry 1t promo.ed specu
i''ion' people stopped developing the resources
and went to specializing in products. The de.
mand Tor and consumption of produce increased
while the quantity was diminished. Bank credits aecu
muiaed while their basis the exchangebls valves of the
country, was diminishing. Al that time Industrious
and sku farmer, in the interior of New York. was pos
sessed Of 200 acres Of good land through which ran
alter course The land valued at two dollars per
acre or $4,000. The owner had no other capital 1t
struck him that he could bald mill upon his water
course hereby immediate market for the grain OF
the neighborhood could be created it would be prota
bic operation To do this he must borrow the money
on mortgage Of his farm. He Immediately applied to
many farmers who were known to be rich, in his own
and neighboring counties and who in former years had
always ready money after the sale Of their
crops On applying TO these people, however, he disco
vsred that all their funds had been absorbed in the CAPT
tai Of the many banks that had been started in that
part Of the country develope s resources" Pie then
applied to the banks themselves-the Canandagua, the
Ontario the Rochester and others They could all lend
the money but at SIXTY days only VIII it must be paid
This, OF course was of use; he could not build mill
make -FOUR and send to New York and pay his bill in
sixty days. He went to Albany for loan all the eap
tai there was however, employed in developing the
resources Of the country through the medium of bank
capital. He cane down to New York and found the diff
6culty Of obtaining money great that he offered
bonus Of $500 to obtain loan Of So at per cent
half his farm. At last almost in despair he applied to
merchant in Wall street, eminent for his commercial ia
lents general intelligence and keen foresight well
for his wealth He stated his case and offered to sell
halfthe farm at two dollars il the purchaser
would advance funds to build the MILL when the future
business should be conducted on joint account. The
merchant rejected the proposal but told him that IL he
would procure certificate that the farm was what he
represented he would lend hin the money at per
for Ave years. rejecting the bonus The certificate
procured and the loan made. Time on, and at the
expiration Of four years the farmer returned to take up
the m .rtgage "Wel how did the operation turn out 7
said the merchant. "BsyOnd all expectation was the
answer; "Ao sooner my mill in operation than the
neghbsring farmers, finding they could have imns-
date market for their wheat began to cultivate the lands
tn the vicny-the price rose, and have sold $50 900
worth at twenty dollars per acre, have mortgage of
$4,000 On some more, have extended my milling to
great degree and have now come to take up my loan"
Here is instance of the proper application Of capital
in the agricultural part Of the community. Not only
was this 5000 brought under lucrative culv
but from 900 to 900 in the neighborhesd
Influenced by it, and their products increased probably
100000 annually being real augmentation of the
wealth of the country to that extent The banking bust
then int play in order facilitate the
fer and interchange wealth after existence
The operation this. Thearmer drove his load of
wheat to the mill the miller, having money
hand gives his nste at sixty days to the armerthe far
takes it to the bank gets discounted and receives
the credit Of the bank in exchange and with discharges
the claims upon him The miller converts the wheat
into four sends forward to Market and gets back the
proceeds in time to take his note At the bank and the
operation il letsd by the cancelng Of the credits
originally exchanged h. in the Hrs instance exchang
cd his credit wihth bank because the bank Is better
known, in order TO effect the exchange The facilitating
this exchange all the bank had to do in the matter
The sxchangeable commodities were brought into
being BY the application Of capital, not only without
the agency of the banks but in opposition to them
From this little history Of which give names
and dates to the curious arrive at the conclusions
that the demand for bank capital follows the develop
nsnt efthe SOIL and does net lead it, The capital
tivaon Of the ssil in other words the the trad
ing classes benefited the agricultural classes in
ured The increase Of bank credits only increases the
sv-beeause il initiates that credit beyond the mera re
presentations Of the actual wealth Of the country which
Is its legitimate boundary, and leaves
eei WHICH 49, 6aani ecnnt
carefully excludes the danger the creation of such ex
cessive credits and tends con6nng banks strict
y Legitimate business drive back the capital that hes
been unfortunately drawn into to its old useful and e
gtimse employ nent, described in the above anec.
dote. That employment, as we have sesn rapidly in
creases the exchangesble valves of the comm unity
which then become basis of legitimate banking ope
ratisas. This dsnctionlA the employ Of apita
10 natter Of the utmost importance the agricultural
community, who alone are the people of the United
illustrations bearing upon the operation Of the proposed
fiscal agent