The daily exchange. [volume] (Baltimore, Md.) 1858-1861, 1858-06-28
BALTIMORE.
MONDAY, JUNE %, 1858.

MONDAY. JUNE %, 1858.
Financial crises are as natural to the UNITED
Sr,rrs rs earthquakes are to the people of Chilli
and It'll at least doubtful whether the monetary
commissions are not really productive of more
serious results than the physical disturbances.
There is, however, this difference between them
Earthquakes arise from causes over which men
have no control, while monetary evils may geuer
ally be averted by proper observance of the laws
that govern the operations of trade. How fire.
quenty we neglect those laws, and how little wis
dom we acquire from past experience the periodical
of similar disasters significantly proves.
Every ten years we suffer the consequences of our
reckessness-the money panic returning at the ex-
piration of each decade, with almost as much GER
tainty as the quartan ague returns every fourth
day. Each time the malady re-appears, we pro-
coed to enquire into the causes that produced it.
and when we have satisfied ourselves upon this
important point we commence over again the
process of forgetting our prudent resolutions
commit the old business errors and launch out into
the old social extravagances until ''the whrligig
of time brings about its revenges' For the past
and have instituted some researches into the
origin of the financial panic of 1857, which might
be turned to good account if we felt disposed
to profit by the knowledge we have acquired =
The custom of giving long credits requires, upon
the part of the merchant who buys on less time
than he sells, either large stock of money on
hand, or facilities for loans at Bank superior to
those of ordinary traders. If he buys at four
months and sells at twelve, as many of the larger
mercantile houses are accustomed to do, he must
charge profit proportionate to the additional risk
he runs, and to the embarrassments into which he
may be thrown by sudden stringency in the mo-
ney market. There are many merchants, not only
in this city but also to the eastward, who sell their
goods to the traders from the interior upon six
months time, coupled with the understanding that
the notes of hand, thus given for purchases, may
be renewed for six months longer if the customer
desires it. To the temptation thus held forth to
buy lavishly and inconsderately many of the evils
TO which the American trade is subjected may be
very reasonably ascribed. The rival merchant,
whose capital is small, and whose line of dis
count at Bank is limited, cannot possibly COM
pete successfully with his weather. neighbor,
who, in addition to his own capital, is sus-
tanned in his operations by the means of
incorporated institutions, whose Directors more
frequently look to the amount of business done
by the enterprising depositor, than to the ac-
tual amount of capital he has invested in that bus
mess. Where in the operation of buying and
selling on credit, the time is exactly equal, the re-
cprocal action indicates a healthy trade; but
where credit is limited to four months on the one
hand and to twelve months on the other, the bal
ance of trade becomes manifestly unequal; for the
longer credit is thus pushed TO excess, and great
quantity of individual dealings being carried on
by persons having comparatively little property,
the commerce of the country remains unsupported
by proper capital. There is no doubt moreover,
that these liberal extensions of the time of pay
ment, increase very materially The amount of bad
debts incurred in commercial transactions The
encouragement which the merchant gives to the
retail dealer, stimulates him to extend n like en-
couragement to the consumer, and induces the lat
ter to break through those habits of frugality and
prudence which are so difficult to acquire, and so
easy to overcome We have reference more par
ticuarly to the long credits conceded to the West
ern merchants. There was, indeed, period of
tlule WleH llliS very liberal nOue OF ueallng WITH
the traders from the Interior essentially neces
sary The custom which is now ''more honored
in the breach than the observance, had its origin
in the days of pack mules and Conestoga wagons;
but since the introduction of the railway SYSTEM
those inland places which were formerly reached
Only by long journey through difficult country,
have become, for the most part easy of access and
with this Improvement in travel the conditions I'M
der which we formerly traded with the merchants
residing there, are radically changed. Now that
this rapid and certain mode of communication has
been established, it is well to consider whether some
modification in The system credits is not required.
Whatever may be the confidence of a merchant in
the honor and probity of his customer, there is
point beyond which he cannot extend his credit
without endangering his own safety. That point
is over-passed when he buys his goods at short
dates and sells at long ones. This important fact
is just now beginning TO be appreciated in the
Northern cities, where the system of extended
credits is growing into disfavor. The old proverb
that 'the nimble sixpence is better than the slow
shilling" contains useful and important lesson
in pithy sentence and he is the ablest master of
his business who has it perfectly under his COM
mand, that he can gather in his ventures when the
storm threatens, and launch them again when the
sky clears.