Portage sentinel. [volume] (Ravenna, Ohio) 1845-1854, 1848-11-29
The Credit System.

business transactions is one Of the abuses
If legitimate credit. Our present credit
ystem is often represented as favorable 10
'oung mon commencing business with
mail capital. and at first glance this would
'ppear to bel true, but close observation will
how that where one rises from poverty to
lffluence by its aid, ter are crushed down
~ its weight and eventually ruGed. If
he young mechanic gets creditefor the
,tock he works into the wares of his trade.
he in turn has to credit those wares to which
he has added double or treble value by his
labor and skill, if he would effect sales:
here the credit system is far from being in
his favor, for he has to credit much more
than he gets credited with. But its disad.:
vantages do not stop here, while the me-
chanic has to pay all his dues or finds his
credit stopped, many Of the larger circle
Of his debtors never pay at all, or only af-
ter long delays, and after half the debt has
been consumed in legal charges for collec-
ton. Again, he never gets his stock as
cheap on credit as if he paid down for it,
and yet he has to enter into competition
with older and weal,hier business men,
whose capital enables them to give credits
sell low, and pay for their stock on IFS re.
ceipt yet he must sell as low nnd credit as
LIBERAL as they do, or give up trade.
Upon the ready pay system his capital
on starting business might be less, but it.
customers paid him on receipt OF his wares,
by energy, industry, and irugality, he
could soon enlarge his capital. No way
trammelled by the id!eness, negligence Or
dishonesty Of others his progress would bs
sure, and his gains certain, and he would
be free from the risk of insolvency and
failure TO which the credit system exposes
him.
10 the merchant and the farmer the cred
it system is little better. To it we owe the
excess of small dealers which overrun the
country, and who trading on borrowed cap
ital, can pay the farmer cash for nothing
they buy, but help very effectually to drain
the country Of money to pay their foreign
debts. Having their existence from cred
it, they see no advantage in better state
Of things, and make no effort TO reach it.
These shut out real capital, and prevent
the settlement Of genuine business men,
They credit the farmer, it is true, and
charge him we'll for The credit given, and
in return take his produce at their own
price in payment of his debts due them
But cash and the liberty to trade where
they please they cannot give the farming
community. In consequ ence ofthis state
Of things money does TO. circulate; much
Of the farmers produce possesses no cash
vo1po. ha is Honiod tho rf
the mechanic, and the mechanic has thus
no opportunity of meeting his engage
ments in cash. Barter and high prices
are the natural result of this excsssis G cred.
it, driving US still further from ihe hope Of
prompt payments and prosperous times.
John Randolph once said that the secret
cf the Philosophers stone was contained in
four words. Pay as yeat go. But who
can avail himself of it under the present
rules of business! There are few who deny
the evils Of the present system, but still!
fewer suggest remedy; and many sup
pose that the excuses of the credit system
are wholly owing to the newness of the
country, and the consequent want Of sest
lers who are capitalists. This has un.
doubtedly lis effect, but cannot have even
an approach 10 the effect attributed TO it,
In the earliest stages Of settlement, iher c
is no surplus beyond the wants Of the sel!-
lers, bul this condition is Of short contnu.
ance. Luxury and extravaganza are not
the produce OF new settlements-idlers ore
almost unknown. Each inhabitant produces
more than sufficient for his wants, and his
family land this surplus should bring mon-
ey into circulation, but that those who pur-
chase it have no. money TO give in ex-
change.
The city merchant has large credit with
the banks. In addition to his capital, he
uses this credit to enlarge lis stock. This
he not unfrequently presses upon country
dealers often with recklessness, that re.
turns upon him in wide spread bankruptcy.
The merchant or mechanic is equally unx-
ious to push sales. and but few refuse libe-
raj credits to the farmer, so long as there
is prospect that he will have any thing
to pay. Each puts tariff OH their credit
charges with view to cover losses, inter-
esi, &c.
The farmer uses his credit 10 pay store pay
10 his DlTeu Huuus, ullu III tliis way ti'o oy D
tenn of credit extends itself throughout the
whole framework Of society.
We hear much about foreign overtra-
ding, but the excess of home trading is lit
tie dwelt upon. Yet the the habit OF deal
ing on credit is at the bottom OF the evil
1t interposes no check TO extravaganza, OF:
fers no inducements TO economy, while
the tax it imposes and the wastetulness
and ruin to which il. leads are incalculable.
Banks possess privileges exclusive ard
extensive beyond all parallel, and which re-
turns them enormous profits. By this
means they absorb the surplus capital Of
the country, aid fix it in the bank vaults,
to become the basis of an unnatural credit.
Banks hoard capital and prevent its being
freely circulated, and as they depend upon
extensive credits, they necessarily promote
what to them is a source of profit and es-
sential to their. existence byseyery means in
their power. Quick returns OF their loans
being also an ingredient Of their system
their credits are almost confined 10 those
who deal in the exchange and transfer OF
commodities rather than to the producer or
manufacturer. This circumstance still
further stimulates credit, and forces 1t INTO
irregular channels, promoting fever!sh
activity on the one hand, and stagnatlon
,b otbor Tins from