The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1857-10-19
Ths rvu Commercial Systems-Cash an
Credit Operations

Tns Two Commercial Systsms-Cash and
Creoit Operations.
TAose who are observant of the times and who
note the changes that are being brought about by
the frarcial reyultion. cannot fail to perceive
that while the credit system Of business is falling
to pieces TIE cash system is being strengthened
AID exttpded. In fact, this is the natural result
Of such a fnanciA storm as that which the coun-
try is now passing through storm to which the
Oldest and best established commercial houses
have had to succumb, and which has exposed to
the penalties Of insolvency ninety-nine out OF
every hundred banks in this and the neighboring
States Such lesson as is read to us by this re
vulsion in the financial world thould not be uu-
noted or unprosted by. If we understand it
Alright and have the common sense to profit by 1t,
we may avoid henceforth the perils that now en-
compass the country, and may go on building up
our trade and commerce on firm and abiding
foundations
In former article on this subject, published
some days since, we alluded to the fact that
while some weeks before the amount Of exchange
at the Clearing House showed that the credit
operations amounted In this city alone In one day
to the enormous gum Of s25, 100000, the sudden
contraction by the banks had reduced that figure
to come sl2, 900. II may be fairly assumed
that the diminution then noticed has been going
on ever siDce, and that figure one-third less
thar sl2,o00000 would now chow the daily
credit transactions in business in this city. At
the same time tie great cash system of business
has been advancing With strides proportionate
TO the retrogIession OF the credit system For
every twenty millions worth Of operations that
mey have fallen of under the credit system, at
least FIVE millions worth will have been added to
the business done for cash. And as eventually
the same or nearly the same, amount Of con-
sumption win have taken place, nobody will be
the losr by the change, but the community
generally will be the gamer, because oil the
heavy discounts and bad debts with which the
merchant used to saddle bis goods viii have been
avoided, and the consumer will not have to pay
therefor.
The blow struck OF the credit system by the
recent exposures CT its rottenness will therefore,
we have 20 doubt. rebound to the advantage Of
trade and commerce. II may, aud will, limit,
for q tine, mercantile operations Jobbers aud
importers viii henceforth exercise some little eau
ton as 70 the persons TO whom they will give
Foods on credit and also az to the amount to
which they will trust them Heretofore, Tom,
Dick, or Harry, hailing from some hamlet Of ten
log cabins situate at the farthest limits Of civil
lization, had hardly anything more to 90 than to
present to a jobber or importer letter Of intro
duction from some neiehbor, and, on the strength
thereof, obtain goods to any amount be chose to
order. Business men seemed to ptide them.
selves mere on the extent than on the
direct net profits of their operations.
Ane as natter Of course, the Losses sustained
by this reckless extension Of credit had TO be
betrayed b, the honest dealer and cash-paying
consumer. This itself was an evil 20 great an
injustice 70 gross o. to damn the system Of trade
which gave rise to it. II the financial crash had
done nothing else than exroee The rottenness of
that system, and thereby to break II Up TO a
great exsnt, il was visitation for which-eyen
with lie accompanying evls-this community
ought 70 be grateful.
As to the banks there cac be little doubt tha,
their too great readiness heretofore to give facili