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to take his place in the higher course of competition, he may succeed for a time, or he may not, before some


some plate-glass warehouse. The lenders of the purchase money of the stock in trade, are said to be in the practice of taking a warrant of attorney to enter up judgment; which enables them to sweep off every thing, if matters begin to go wrong, to the sacrifice of all the other creditors. This is their security under so great a risk. Some noblemen, as well as other great capitalists, are said to have large sums of money so invested.

The subject of trading with borrowed capital is one of enormous extent and effect, in promoting all the evils alluded to in the text. The system of renting the stock and money with which a man trades, as well as the land or house in which he carries on his concerns, that a man may carry on the most extensive transactions, having nothing of his own, —is comparatively new in the history of commerce. But the system goes farther than this. A man may rent and borrow money which is altogether fictitious, and which does not exist. As I do not mean to pursue this investigation at length, I will merely quote some passages from a recent pamphlet upon the subject.

The author says, “To what primary cause are these periodical panics to be attributed ? We reply, at once, to overtrading solely; to the overtrading of all classes, whether traders of property, or persons who possess nothing—to the principle and facility of credit—and last, though not least, to that vile system which gives currency to credit, and creates a feverish circulation, upon a rotten foundation ;-we allude to the bill system.'

“ As a partial confirmation of this conjecture, we will state a fact, upon which perfect reliance can be placed. Sometime since, nine bills of exchange, all dated within a short period the one of the other, and each bill for an amount at or about 20001. were sent into the city to be discounted. The bills were drawn A. upon B.; B. upon C.; C. upon D.; and so on; but not two bills out of the nine had the same drawer and acceptor. They came by degrees under the inspection of an individual who felt a curiosity in ascertaining their history; and the more so as the parties, whose names were attached to them, were all respectable, and in fair credit. The curiosity of the individual alluded to was gratified. He ascertained that a quantity of goods, of the original value of something short of 20001., was the basis of the trans

new scheme of attraction requires a fresh outlay ;-but the nine chances to one are, that, before this, he is sold off, and completely ruined.

action. A. had sold them to B., and drawn upon him for the amount; B. had sold them to C., for a small profit, and had drawn upon C. for the amount; C. had sold them to D., and in like manner passed a bill

upon his purchaser; and so on through the list. Here then was a bonâ fide circulation to the extent of 18,0001., based upon the actual existence of property to the extent of 20001. only! Bills to the extent of 18,0001. were thrown into circulation, of which 20001. were the representatives of goods, and the remaining 16,0001. were the representatives of — nothing !

“ In this instance, which we admit was an extreme one, there was no suspicion that the sales were fictitious, and merely made to obtain acceptances; though it is clear, from the desire that each individual showed to discount the bill he had drawn, that he was trading to an extent far above his means; in fact, over-trading in the fullest sense of the term.

“ It is a system which unfortunately pervades, but in too great a degree, almost every important branch of British commerce; the object being, not unfrequently, merely to raise money, and the effect at all times equally pernicious. “ These drafts are drawn and discounted for the


of raising money to pay for other acceptances in previous transactions falling now due; and thus the wheel of the overtrader is kept continually in motion, his credit finding a capital, until, &c.

“ In some instances there is an intermediate buyer, or jobber, as he is called, by whose assistance the number of bills is augmented.”

Fortunately, the number of these intermediate purchasers is now

very limited.”

“ Is it not clear that by this mode, the needy and overtrading manufacturer has the means given to him of inundating the country with a superfluity of cloth, to the manifest injury of his more solid and prudent neighbour ?

“ We can affirm, upon the testimony of one of these brokers, the fact of his having granted such assistance prior to the moment of his sale, with the sole object, as he himself stated, of enabling his sale to • go off well,' that is, of increasing the competition amongst the buyers,

So all shopkeeping is rising to a more artificial scale, and profits are falling to a more and more unprofitable

so as to force up the prices from a half-penny to a penny per pound higher than the wools would otherwise have realized.

“ Let the corn-dealer, the silk-merchant, the metal-dealer, the cheesemonger, the provision-dealer, the manufacturer in every branch, review the mode in which our remarks apply to the particular branch of trade in which he is engaged; he will find no difficulty in satisfying himself that there is overtrading in all branches, to an alarming extent, that there are people, with little or no capital, carrying on large business, manufacturers starting up, in some cases with their whole capital invested in machinery, and, in others, without any capital at all, hiring and paying a rent for the factory and its contents;—all issuing bills, drawing and accepting, and absolutely existing only upon the credit attached to such paper.”— Remarks on Trade und Credit, London, Effingham Wilson, pp. 9, 11, 12, 14, 15, 16, 17, 18, 23.

The same author observes that, formerly, no such thing was known as a bill drawn by one party upon another, both residing in the same town, the only object of which can be to " gain time.” The chief bills in use used to be foreign bills. “ We can remember the period when even no mercantile firm of respectability in a country town would have dreamt of drawing a bill upon his country customer for goods sold.” The continental merchants in general are where we were,

and have not yet learned of us our modern practices. " Let us turn our attention for one moment to the mercantile affairs of the continent. To what part can we look for • feverish excitement and distress,' during the last twenty years, to the extent which has existed in Great Britain. To no part.”

“ If we look to the manufacturing districts of Germany, we find a degree of sober, methodical and plodding steadiness, totally opposed to our 'go-a-head' system at home.” “ He purchases his raw material with cash, or upon a small open credit only." " If sales of his fabric flag, he cautiously diminishes his production; if trade improve, and his goods are demanded, he increases, according to the demand, to the extent of which his manufactory is capable; but he is not deceived by the excitement of the hour into an increase of his factory:

level. The expenses of setting up and keeping up a trade are increased, while profits are diminishing. Even the large houses can only just bear these great expenses, and succeed through their very extensive custom. But as other houses are becoming large, and are entering into this competition, the monopoly of custom must


He adds no new wing-furnishing it, upon credit, with machinery and a steam-engine, and crippling his means for carrying on even the former amount of his business. Still less is he seduced, by a temporary demand for goods, to build new mills and factories, filling the surrounding country with steam engines and chimneys, all smoking and burning on credit, and he, all the while, dreaming that the existing demand for goods is never to be supplied.

“ If we review the mercantile system of Germany, we find a stated number of commercial cities, upon the inhabitants of which bills can be negociated." Moreover, bills drawn by one party upon another - both residing in one of those towns—are not regarded with favour.”

“ Does any one suppose, that because in Germany credits are less freely given, and bills looked upon as dangerous instruments, trade is necessarily hampered? Let them proceed to the large cities, Berlin, Hamburg, Leipsic, &c., and witness the immense purchases of goods, of corn, coffee, sugar, wool, cotton, &c. made for cash,—not cash with a month prompt,' but cash paid within twenty-four hours after the delivery of the goods. Here then is the secret by which the continent escapes those' rapid and feverish alternations of excitement and distress.'

“Quick returns and small profits’ is an excellent maxim where hard cash is the medium of payment; but it has been unfortunately applied to transactions with the essential part extracted.”— Remarks on Trade and Credit, pp. 27, 28, 29, 30,

33. The Dutch merchant lives on the banks of the canal, and sees from his counting house the masts of his ships ranged before his windows. The same used to be the practice of the merchants of Venice. The merchant stuck to his merchandize, which was as much as he could manage; and he was not a dealer in bills.

In this mercantile country we are losing our knowledge of some of the first principles of trading. I say this most advisedly.

fall away from each, and be again distributed, or continually changing from place to place with the fashion; and so the greater number even of the large houses must fail, which do not make a fortune in the first two or three seasons.

But in a short time some new expense is introduced,—the competing invention of some one trying a fresh mode of attraction; and this at length becomes imperative upon all, and is a fresh additional charge imposed upon the profits of trade in general.

We are quickly approaching towards that stage at which the expenses of trade,- the whole expenses of a a trade, taking the aggregate of those engaged in it, will exceed its whole profits.—And then those who thrive in it must thrive only upon the ruin of others.

The use of Joint Stock Companies tends to the diminution of profits. The principle of that system is, the multiplication of customers, by engaging the interests of a large proprietary; and the economizing of labour, by a few agents and directors doing the work of the many shareholders : the rest being dormant partners. Therefore, profits, which are the wages of labour and character, must diminish. But the risk is proportionally increased; as is shown by the daily examples of loss and fraud, which present themselves. Thus the profits of the whole trade are diminished, both by falling prices and by losses; and the Joint Stock Companies have the greater portion of them. They must ruin the private tradesman. But, when Joint Stock Companies become general, those which now exist cannot maintain this monopoly of customers; and the diminished profits will not compensate them. So then, they must first ruin

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