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I
THE REFLECTOR
MILLEDGEVILLE, G. TUESDAY, JULY 14, 18l‘s.
Nil.
BANKING.
OM NILES’ WEEKLY REGISTER.
PAPER SYSTEM—NO. VII.
LAST or THE SERIES.
aving in my last letter detailed the
liner, and means by which bank
have sometimes been obtained, I
proceed to explain how their capi-
or the most part constituted,
honest tradesmen, and persons hav-
money to spare, are persuaded
nowing ones—the speculators—to
, and these in reality are the only
tioiis that are ever paid until
arrives, when the great speculators
ut to advantage. The residue is
y a knot of speculators, and di-
to the amount of hundreds of thou-
ay in some particular cases millions
fur which in reality they never
a farthing of real value. The first
of the hank is to discount for tlies •
T enable them to pay each instal-
bccomes due. For these discounts
ators pledge their script, and give
and, renewed ad infinitum. It is
t to dissect this plausible security,
lidity of which the people are ever,-
rely, for the redemption of a grea
of the notes of the institution. Tir
os pledged, is simply the represeo-
f the very instalment, for which u
pledged. It is merely pledging one
bank paper, for the payment of an >
e of bank paper ! Thus this mighty
is nothing but the simple process of
‘lig of a man some of his own money,
e as security for its payment—except
per is here the substitute for money,
change is fair enough between two in
’s for their mutual accommodation ;
n it is practised as in the case of the
hr the purpose of deceiving the people
einblance of real capital where none
whatever may be its polite denomina-
banks & brokers’ shops, it is nothing
rrant swindling. For let it be re-
d, that unless the capital of a bank
de paid in, its script is of no real
hatever, and the only security the
as for the stability of an institution
tuted, is the personal security ol the
rs. If by practising the usual arts
i public credulity is made subservi-
e gains of the worthless, the stocks
nks can be raised above par. tin
r sells out and pays the bank ; bu
contrary it should depreciate by a-
ntal insight into the true state of
r, he cannot redeem his pledge, the
or goes on secretly renewing debts
lie which it ran never pay. Thus
ly perceived that the basis of the
aper system, is.nothing more than
sibility of a knot of desperate spe-
dependant altogether on the public
for their existence, and who will
d run away or take the benefit of
enient bankrupt law, wherever the
11 burst. The system, sir, is a pa-
throughout—paper guarantees
all sides—speculators bolster up
rokers are cats-paws to bank (fi
nd it is in vain that we look f.«r
3, can and ought to bo the basis of
institution—silver and gold. The
ot even gilded on the outside, and
gudgeons we swallow the naked
, sir—one may suppose almost any
mpossible in this age of banks ana
es—suppose one of the great spe-
the stock of the bank of the Unit-
hould fail, in debt to the bank a
a half, for money borrowed of
pay his instalments to the bank,
t in order to prevent the dopres-
stock by such an amount coming
nto the market, the remainder of
speculators assume the whole,
like manner, the script, and their
hand for the payment—renewa-
y can sell out to a great profit,
n that the additional weight of
assumed by the remainder, and
al discounts required to enable
! n this enormous amount, till the
y blown, should bear so heavily
;tors of the institution, at length
ble at the situation in which
s placed the nation & the stock-
had appointed them to a trust
ad thus shamefully abused and
at they should at length, to
t of a desperate case, or refuse to
ccommodations to the specula-
aud the payment of these mil-
Ji a case, might not the exag
h of the mightiestof these migli-
prove inadequate to this sud-
y ? Might not his property—
quite certain that it would—
unexpected pressure of this e-
, when sacrificed as property
ch cases? Far be it from me
sir, to insinuate the remotest possibility of
men whom the world gives credit for being
worth millions, being in reality and to all in
tents and purposes bankrupts—and still fur
ther be it from me to even hint, that the
men of real substantial wealth, have alrea
dy quietly sold out, and realized a moderate
profit on their stock, leaving the bank entire
ly to these beggarly speculators in millions,
who if the stock were by any chance to fall
below par, would be bankrupts to-morrow.
Thus is the public left with the security of a
script, depending for its value, on the pled
ges of men, who in turn are dependant on
this very script, for the means of redeeming
their pledges ! Such, sir, is the situation
of a great portion of the newly erected banks.
Destitute of any real capital, they are every
lay increasing debts to tiie public, to an a-
mount almost beyond the reach of calcula
tion, while the besotted continue to take their
notes with as much confidence as if they were
silver and gold, although one every day
hears of banks becoming openly insolvent
til many parts of the United States. In ad-
tivssinga people, thus voluntarily bowing
'o wholesale imposition—so docile in
submitting to be cheated by every piece of
pictured paper—I feel as if I were wasting
iiy time, and occupying a space in your va-
1 ua’ule paper, that might be devoted to more
salutary purposes. This letter shall there-
‘ore conclude the series for the present, and
;ke many a well meaning man, I must sit
-I >wn and solace myself with the example of
pour Cassandra, whose pr .phecies though
always fulfilled, were never believed, until il
. as too late.
It is utterly impossible that the present
system of banking can endure five years.—
It cannot impose on the people much longer,
and if it could, it would perish by its own
corruptions. A little while, and it will be
come necessary for the hanks to pay specie,
and then will their solvency be severely test
ed. It will not be long before some great
question will be agitated, and decided in
this country—
•' Some village Hampden, that with dauntless breast.
The l.ttle tyrant ot his fields Withstood”—
Will enroll his name among the benefactors
of his country, by prosecuting these privi
leged gentlemen who do not choose to pay
their debts like other people, and finally as
certain whether the spirit of justice yet
wakes in this bank-ridden land. But sav
the jackalls of the banks—we do not refuse
to pay specie—we pay every body that asks
for it. True sir, but it is well known, that
whoever dares ask for it is from that time i
.narked man—he becomes obnoxious to a bo
dy of men that can destroy him if he be i
trader—mechanic or merchant—and which
will assuredly make an example of the offen
der, in order tif deter others. What unheard
i f insolence then, to pretend to pay specie,
and annex a penalty to the demand.
The belief of the generality of banks being
able, to pay now or at any future period th
amount of their debts in specie, is worthy of
the people who have submitted to the gallin
impositions of the paper system. The rerk-
I. ss, and unprincipled issue of notes, by which
they arc enabled to make such enormous di
vidends, will forever preclude them from the
possibility of specie payments. There is not
specie sufficient in the whole universe, to re
deem the paper of England and America
True it is, that the difference between bank
notes and specie is but a few per cent,
jest now, hut only let the public confidence
in this paper system be once fairly shaken,
and one shall then see the real difference iu
the value of specie and bank notes. The
first will he worth twice as much as now, and
the latter will he wonli nothing—it will gra
dually sink as the public confidence is with
drawn from it, and finally like continental
money, be stowed away in old pocket books,
to remind the owner of past delusions, and
afford another lesson, from which his poste
rity will derive no benefit.
Among the many privileges of chartered
banks, that of running in debt to three times
the amount, and only being liable for the a-
mount of its capital, is not the least prepos
terous. I should like to know hy what au
thority any legislative body can thus exempt
inen from the pay mentof their debts—are not
all men obliged to pay their debts, or sub
•nit to the disgrace of open palpable bank
ruptcy ? Yet here is a case where men may
grow rich out of the spoils of the bank, and
then quietly retire, leaving the funds of the
institution, no matter what they arc, to an
swer for debts to three times their amount.
I am no great special pleader, sir, but I will
venture to say, that such a practice is at war
witli every principle of law, equity and com
mon sense. It is a privilege abrogated by
its own palpable absurdity—by its direct op
position to all the laws and customs of gene
ral society—and above all by its unequalled
partiality and injustice. You will forgive
this digression, but the truth is, that as I ad
vance into the subject, so many points of fol
ly, injustice, iniquity and abuse present
themselves, that I am embarrassed with a
multiplicity of materials.
I have little doubt but it will be argued by
many, that the banks will in time acquire a
basis of real property, by exchanging rags,
for houses and lands, and the creditors be
thus Secured in the last resort. But, sir, let
it be remembered, that when the time ar
rives, thafjlie. hanks must sell their real pro
perty to pay their debts, a state of things
will occur, fatal to its value. Universal dis
tress, doubt, apprehension and dismay, will
deter almost every man from purchasing,—
all will he sellers, where none will he found
to buy, and the consequence be that the
banks will never be able to realize, the amount
for which this property was originally pledg
ed. Thus, the debtor bank, and the holder
of its notes, will share one common fate,
and wide spread distress, difficulty and ruin
be 91 attered over this smiling land. This is
no fancy picture. In the. event of a loss of
confidence in bank paper, which must very
soon res dt from the present mode of admin
istering the great paper system—and when
the public shall cease to believe in this new
doctrine of the transubstantiation of rags
into silver and gold, the demand on tho banks
f< r specie will he general—consequently the
sale of real property pledged to them will be
general. The inevitable consequence of such
-i vast property being all at once thrown into
the market, will be a depreciation in the land
lmost equal to that of the paper money.
But, sir, the advocates of the true paper
‘‘nth—who believe against the experience of
all ages, and the evidence q£ facts occurring
very day—will tell me that this ratastro
phr of the paper system is so distant as to
pass the limits of a distinct anticipation—
oat it is like the end of the world,—nobody
hinks of predicting it but crack brained en
thusiasts, laboring under the delusion of fan
d inspiration. Sir, they may tell us so
—bat they don’t believe it—they know bet
ter—they feel that the bubble will soon burst
—the knowing ones are at this moment qui-
>,tly extricating themselves from the rouse
]iiences that will soon take place, by ex
-hanging their bank stork for real property
iving it to the wretched beggars or dupes
to stand the storm when it shall roine. Not
only this, sir, but toe more prudent banks—
those that really merit confidence, and mean
to pay their debts, are gradually withdrawing
their notes from circulation, but at the same
time are too many of them practising an un
pardonable imposition on the public, by as
sisting to circulate the notes of petty banks,
unworthy of the public confidence. The
consequence will be, that ere long the great
mass of notes in circulation, will be those of
the most worthless and Unprincipled institu
tions, which never meaning to pay their
debts, are anxious to run in debt to the pub
lic as deeply as possible. And here, sir, a
most momentous question arises, which I
hope to see one day decided in this country.
Whether the hank which thus pays me a debt
with the notes of another hank, does not in
effect guarantee the validity of these notes?
Common sense says yes— A justice says yes
—and analogy will fully justify the doctrine.
If 1 pay a man a debt in counterfeit dollars,
am 1 not liable to be made to pay it again,
whether I know of the counterfeit or not ?
If I pass away a note of hand received from
another, am l not obliged to guarantee, the
payment of the not''—and does not this rule
•un through every transaction of business ?
Under what statute of law, or principle of
justice, then do these hanks hope to escape
the penalty which every individual incurs in
similar cases, and how will they screen them
selves from the consequences of thus paying
their debts, in the worthless paper of our in-
olvent banks ? Let them reflect seriously
n this ; and assure themselves, that as yet,
there is no power in this country that can
•xonerate either individuals or corporations
from the operation of the fundamental and
inflexible prim iplcs that lay at the root of e-
ery system of law.
Such, sir, are the great features of the
present paper system, as I have faithfully
ndeavored to delineate them in this and the
preceding letters. It was, and is still, my
intention, todevelope some of the moral ef
fects, certainly not the least important con
sequence of this system, that have fallen un
der my observation. But this I shall post
pone awhile, for I am conscious that your li
berality in affording me so large a portion of
your valuable paper, has been not a little
inconvenient. My letters have been too long
—but the honest truth is that the subject o-
pened so many views of mischief, that 1
hardly knew whereto begin, or where to end.
For the present, I shall conclude this series
with a few observations, leaving it to you
to bring forward those statements, which
your practical knowledge, and more exten
sive, sphere of observation, may have ena
bled you to collect.
1 think I have given sufficient proof in the
course of these letters—that the paper sys
tem under its present slovenly, not to say un
principled character, is highly injurious to
every class of people but one.—to wit, the
band of brokers, bank directors and specu-
Idtors. It impoverishes every order of men,
>y diminishing the value of the gains, of
honest labor—by enhancing the pri< c of cve-
y article of necessity, without affording any
quivalent advantage—by seducing the far
mer into ridiculous and ruinous prodigality
and speculation, to which he finally fall3 a
victim--by rendering it impossible for the
manufacturer, to exist in consequence of the
high price of his materials—by lessening
at least rme half, the real value of incomes
arising from any permanent source—and by
depriving our gallant sailors and soldiers of
me half the comforts they could procure, if
their pay were not diminished in that pro
portion, by the depreciation of the medium
in which they are paid. The advocates,
and those who revel in the corruptions of the
system, dare not deny this—they only hug
themselves in the security of public creduli
ty, and legislative folly or corruption, and
smile witli contempt on the ineffectual resis
tance of a few dispersed, and impoverished
victims.
But respice Jincm—Gentlemen—look to
the inevitable fate foretold in the examples
every day occuring, but which are so imma
terial, of so little consequence to the. people
that they pass without notice. If the city
editors make any remarks on them, they as
suredly forfeit their-discounts—the bank di
rectors will throw out their notes, and enjoin
it upon all their wretched dependants on
’change, to withhold their advertisements
from the impertinent meddlers. A y< i<* or
two ago a bank failed in Alexandria indebt
ed to the public several hundred thousand
dollars—another in New-York state in the
same predicament—and the other day wo
Heard of a similar catastrophe happening to
two banks to the westward—the German
bank of Wooster—and the Farmers bank
at Canton.* It is no wonder sir—banks
without capital, administered by people, who
if they are honest, are ignorant of the first
principles of banking, or by hungry unprin
cipled speculators determined to grow rich
at the expense of the public—must and will
fail, the moment they are called upon to p.i/
in specie. For my part, I wonder they don’t
nearly all fail, for fail they most assuredly
will ere long—leaving it to the good people
of these United States, to pocket their loss
es,—to wonder at their delusion—and to fall
victims to the very next bubble, that may be
set afloat. I take my leave for the present,
with a repetition of my thanks to you, for
your exertions in a righteous cause—for the
good you have done already—and for that
which I am satisfied you will yet perform.
Whatever may be the result of our joint la
bors, for the public benefit, if will always he
to me a source of honest pleasure, to recol
lect that I was once a fellow laborer, in a
good cause, with a man, who I have ever no
ted, as always to be found administering
those principles and supporting those doc
trines, most conducive to the glory and hap
piness of our native land. You will hear
iron me occasionally, when 1 shall be fur-
lisln d, as I have been promised, with a free
and true exposition of the occult mysteries
f brokering, banking and speculating, as
they are now generally practised. Be as
sured I will not let this si.eject rest, until
s ime of the evils of the system are cured,
>r all hope of cure is lost.
* Mv friend might have added three in Maryland that
are a«» good as gone.” and several r Pennsylvania are
preparing to “ give up ihe oijoar.” Thu same is about
to happen in other places. I pray the people wh • owe
these hunks to collect their notes and settle off, vbilst
such notes are yet received in payment—and then u be at
ts” roHi.vMi with them.
NOTICE TO FLOUR & RICE MILLERS.
\^STHERKVS Oliver Evans. Esq. the pa-
V ▼ tentee of there improved inventions, hath
regularly given notice in the papers from the year
1810 to 1815 his tariff of patent fees, that begin
ning in January, 1813, he would require of those
ho infringed his patent, and continued so to do,
those rates : that from 1813, he would call for
nterest on a new sum saved in labor, board and
wages annually till license be bought and paid
for ; and all those who continue to violate the
law, may expect suits against them without res
pect to persons immediately. Those owing pat
ent fees, they will be received by his table with
interest in single damages ; but when suits are
brought against them, and judgment rendered,
treble fees and damages will be required at the
bar. The patentee has f»und by many years
dear bought experience, after being involved in
very heavy expences to support his just rights,
that all other modes are unavailable, and have
proved fruitless.
License may be had of John Love, of Puck-
land, for Mills in the Northern Neck, and from
the subscriber for Mills from Rappahannock so
far to the southward as any Machinery may be
found in mills or factories, whither I am buund
shortly for discoveries.
No'other persons in Virginia, but those named,
are authorised to receive payment and grant Li
cense.
I am, with very great consideration and res
pect, the publics’ most obedient.
John Moody, Agent.
Richmond, Va. June 16.