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EFFECTS ON CREDIT. 39 of hving. What they have obtained by the sweat EXAM PREPARATION & TUTORING of their brow, men know the value of, and are careful of. But what they ohtain in a less laborious way, they expend more freely.

The easiness with which they can run into debt, is to multitudes a great misfortune. It is well if extravagant living is the only fault this fa­ cility of credit brings with it. When men accustomed to splendor, have the property of others in possession, and can secure an independent fortune by so simple an act as a false oath in an insolvent's court, the temptation may prove too strong to be resisted. When they break, the ruin that follows spreads far and wide: for a system of guaranteeing has grown out of our present mode of doing business, through which every man's success in life is made to depend quite as much on the FREE DOWNLOAD FOR PDF good conduct of those with whom he is connected, as on his BANKING STUDY MATERAILS own frugality and industry. The Banks are secured BANKING BOOKS 2017-2018  by special assignments in which the endorsers of notes ar~ made" preferred cre­ ditors," but all others with whom the bankrupt has had commercial dealings, are injured. As every merchant de­ pends in part on what is owing to him by others to pay his own creditors, bankruptcies seldom occur singly. One dishonest, or one simply unfortunate man, may break twenty.

When credit has caused such a distribution of wealth as renders that capital productive which would otherwise be unproductive, and gives employment to those persons who would otherwise be idle, or less profitably employed, it effectuates all the good that it is in its nature capable of accomplishing. Left to itself, it would regulate itself­ would reach this limit)" and seldom pass beyond it. Pushed beyond this extent, it becomes pernicious; and FREE BANKING STUDY MATERIALS it is push­ ed far beyond this extent, by our present ~ystem. There is now little buying or selling, except on credit. Even the trade of consumption is on credit. A pass book goes to the grocer's; and the tailor and the shoemaker think them­ selves happy if their bills a-re paid at the end of the year. The retail storekeeper (if he does not commence busi­ ness without any capital of his own,) lends his capital to his customers by selling to them on credit. This forces him to borrow another capital from the wholesale merchant: for, buying g00ds on credit, is the same as borrowing capi-

tal-it is borrowing In the shape of goods instead of money, and giving a note instead of a bond, and an additional price FREE BANKING BOOKS DOWNLOAD PDF instead of interest. The wholesale merchant, having lent his capital to the retailer, is forced to borrow another capi­ tal from the Bank. The Bank, in its turn, borrows the capital of its depositors, and of those who receive its notes. In -.his way, the whole community becomes indebted-the private families to the storekeepers, the storekeepers to the merchants, the merchants to the Banks, and the Banks to the community at large. Nothing is gained by this forced extension of the credit system. It does, indeed FREE BANKING BOOKS PDF, increase the gambling trade of speculation: and that kind of trade in which sheriffs, con­ stables, and assignees, are the active agents. It also in­ creases, in particular years, the trade of consumption: but then it draws from the productive capital of the country, and diminishes the trade of consumption in the following years. The amount of bona fide trade for a series of years depends on the amount of goods produced and to be ex­ changed. The aggregate of this trade would be much increased through the habits of industry and economy which a cash and sound credit system would introduce. On a cash system, men with small capitals could do as much business as they do at present. They FREE BANKING BOOKS would then turn their capItal more frequently. By each act of trade, they would get back their own capital. Now, when they turn their capital once, they turn it. out of their own hands, and. it remains out of their hands for a year or eighteen months. In the interim they must employ themselves in turning other people's capital, or give up business. If an account should be rendered of the amount lost by bad debts in the course of a year, some notion might be formed of one of the evils of super-extended credit: for, nine bad debts in ten may fairly be laid to the account of, this system.

'fhe aggregate must be enormous, as from 600 to 800 persons annually taJee the benefit of the insol­ vent laws in Philadelphia


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