The national Republican. [volume] (Washington City [D.C.]) 1866-1870, 1868-03-12
THE NATIONAL RANKS.

In pursuance Of our object, we devote to-day
some further space to the consideration of the
National Banks.
What Is intended to be avery serious objection
to these Institutions Is the difficulty to effect
loans at their counters upon any security that
docs not carry with It ample eollaterals. In our
issue yesterday we endeavored to establish the
doctrine that the practice was a wise, just, and
healthy principle upon which TO manage banking
institutions. The more we consider this rule, as
applied TO both the lender and the borrower, the
more thoroughly are we convinced of Its wisdom
and Its utility; indeed, 1t is undoubtedly the only
Justand safe method. It gives proper safeguards
and pcrmanency to business, affords the only
correct principle upon which credit can be based.
and must prevent those ruinous failures which
PROSTATE trade and engulf business, and will
forever put stop to those disastrous bankrupt
clcs which have heretofore swept our business
communities as with bosom OF destruction.
The periodical panics which have swept over
the country may be traced directly to the system
which was In vogue before the establishing of
the national banks. Credit under the old forms
OF banking was a very cheap thing. The idea
prevailed that such and such indiyid engaged
In business were smart to use q common Ameri.
can phrase, and II did not matter so much that
man should have capital as that he should ex-
hibit enterprise-very good qualities, by. tie
way, but qualities that cannot, in the long run
answer the purpose of capital. Smartness and
enterprise are very good things and indis pensabe
to successful business maR and merchant, but
more solid and Indispensable requisite to BUSH
ness is capital The policy that a man can get
all the credit he needs because he exhibits smart
ness and enterprise has led to ruinous specula-
tions and, as consequence, to disastrous fail
ures. We say, therefore, that 1t has been this
cheap credit system which has led TO our peri.
odical panlcs and to ruinous stagnatiou In busi.
ness.
Walter Scott, In his great novel OF "Iyanhoe u
puts into the mouth OF Isaac of York, the
money-lender, the true theory OF banking, Ivan
hoe sends his servant to Isaac for money Oh
course this rich Hebrew, like all his tribe In
those days, has the appearance OF being very Moor
but Is nevertheless rich in that gold which IN,
gallant knight much needs. For a certain CON
sidcration Isaac furnishes the much. coveted poIs
but In doing so gives the following sage advice
Commencing to count he says-"Sixty-one. sixtr
two"-'your master Is very nice gentleman,
-"sixty-three, sixty-four'-'and when he wan,
money"-"sixty-hve, sixty-six"-"let him com,
to Isaac OF fork"-"sixty's seven, sixty.eightm-
but tell him to always be careful OF security {,
Doubtless the present managers OF our National
Banks have discovered the sound philosophy nj
old lsaac's reasoning, and have wisely concluded
10 act upon his suggestions to the borrower and
demand the security. IT, therefore, the estab.
ishment of the national banking system has led
the money-lenders to adopt this rule 1t is one of
the strongest arguments that can be adduced in
favor OF these institutions. The effect will b,
to put an end to the cheap credit system, proven,
ruinous speculations, give healthy growth I,
business, save thousands from bankruptcy. ant
the laborer and the mechanic from the loss n
their hard-earned wages and the cry of their chi
dren for bread.
BY the adoption OF this plan fewer men ma,
be able to engage in business, but more men viii
succeed therein. There may not be so man,
suddenly accumulated fortunes, but more mel
will acquire competency, and a more genera
prosperity will I'LL the land.
How often have we heard 1t said that of on
hundred men who engage In business ninety.ay
OF the hundred fail. This is a humiliating cor
fession, and must be traced directly to the chea
credit system, and the former easy facilities 4
obtain money upon the mere promise to pa
without predicating the distinctive collatera
which In all contingencies makes the promis
sure. So far, therefore, as this objection apple
10 the practice OF the banks, It becomes rather Al
argument In their favor, and may be set up A
one OF the principal reasons In defence of tn
system.