Arkansas true Democrat., 1857-12-15
"The Credit Svstem." !"

goes with It."
 This is true. The present fictitious system of credit, and fictitious money are so connected, that the one cannot exist without the other. Well may it be called "te credit system" It is nothing but credit. Credit is the capital of the banks, and credit is the currency they issue Rut as credit cannot exist without debt, call II "ae debt system,' and then men will have correct idea of its nature.
 Under this system, banks are Instituted, not by men who wish to lend, but by men who wish to borrow. Having exhausted all the common modes of borrowing, they resort to the issue of notes of small denominations, and through the means of these get from the farmer, the mechanic and others, the produce of their labor. Loanable capital to any great extent, the banks have not, and never had. But they so cunningly contrive matters as to make their own indebtedness yield to them just as much revenue as private men derive from solid capital. Bank notes differ not in their essential characteristics from the common notes of hard of the farmer, the me- chanic, or the merchant All are alike promises to pay But while the farmer, the merchant, and the mechanic, pay interest on their promls- sorv notes, the banks draa0 interest on theirs.
 Destroy our paper money, and with it goes "the credit system" as it now exists. Sche- mers and speculators will then no longer have the facilities to borrow that they now enjoy. But what harm will be done by compelling the schemer to take to some honest branch ot ln- dustry, and by compelling the specuator to con6ne himself within the limits of legitimate enterprise?
 It does not follow that by destroying the pre- sent fictitious credit system, we should be ielt without any. As a false credit system IS the natural concomitant of fictitious currency, so sound credit system is the natural accompanl- ment of solid money.
 One of the advantages of a natural credit sys- tenn would be, that its benefits would be gener- ally dffused. A few men would not then, as now be able to borrow to the amount of thou sands and hundreds of thousands of dollars, while others, quite as trust worthy as they, can- not borrow to the amount of hundreds.
 Another advantage of natural credit system would be, that such stability would thereby be given to business, that loans on mere personal security, would, if made with only common caution, be quite as safe they now are when secured by pledges of stock.
 The loanabe capital of every community con- sists of that portion of its wealth, which the owners thereof do not wish to employ in their own business. It is not possible for paper money banks to increase the amount of this loanable capital. They can, however, by col lecting it into large masses, place it under the control of few men, and thereby deprive the many of all advantage from it. They may by their various contrivances givea forced and un- natural direction to this loanable capital; but, however advantageous this may be to the schemer aLd speculator it is very injurious to the industrious classes of society.
 Into the composition of paper money banks, very little real capital of any kind, enters. But few large dividends will raise the stocks in the market, and thenthey eagerly bought up by persons who have money to invest. In this way are annually absorbed millions of loan- able capital which would otherwise be lent on bond and mortgage, or in other wholesome modes of lending.
 According to the most accurate calculations, the amount of gold and silver at present in the country, is hardly less than 300 millions. But of this amount it appears, as if from one half to two-thirds is boarded; and its owners act wisely in hoarding it, for, if they should lend it out, there would be little chance of their ever seeing it again. This would not be the case under a solid money system. The stability it would | give to business would inspire confidence, and these hoards of gold being brought out, would be so much added to the active capital of the country.
 Under solid money system, we should have banks-not, indeed, as many as now, but enough to do all the legitimate banking business of the country. In every town where there is com merce enough to require it, there would be in dividual or corporate bankers, who would re- ceive money on deposit, discount business notes, and negotiate bills of exchange. But these banks would be very different from those we now have. Their deposits would be gold and silver; not, as now, mere pieces of paper. The bank check and the bank draft would then be actual representatives of specie: not as now, mere representatives of promises to pay specie.
 According to their returns, the banks had, on the first of January last, an aggregate capital of $37O, ,834. 696. If they truly had this amount of real capital, they had twice as much as is necessary for ell the legitimate banking business of the country. Adopt bid money system, and one half of this bank capital will be applied to better modes of lending
 The eastern papers are preaching up the doc Urine of "short credits" It is well for them so to do: for, under paper money system, none others are secure. The current that daily flows into bank must be equal to the current that daily flows out, or it cannot sustain its credit. Loans and discounts for 60 or 90 days, are all, consequently that paper money bank can pru- dently make; at least it must confine to short dates, all such of its operations as are based on its deposits and circulation. But loans for few hiOileho aiO Oi NOiy litlio uoc tO tIc CouubIy merchant, and of hardly any to the farmer and planter. Long loans are what the condition of the country requires. Give us a solid money system, and the good old fashion of lending on bond and mortgage will revive in all its vigor Then loans will be, not for months, but for years. For, solid capitalists, when they find the principal well secured and the interest punctually paid, are not anxious to shift their investments.
 It is said that some years back, in Philadel- phia, at time when lending on bond and mort gage was the usage, the foreclosure of mort gage was rare occurrence because, if one man wanted back the money he had lent some other man had money ito put out" and would take the mortgage from its original possessor There was regular mortgage market, managed, not indeed by the stockholders but by the scriven | [ i