709. BANKS, Fictitious Capital.—
The
banks themselves were doing business on capitals,
three-fourths of which were fictitious;
and to extend their profit they furnished fictitious
capital to every man, who having nothing
and disliking the labors of the plow,
chose rather to call himself a merchant, to
set up a house of $5,000 a year expense, to
dash into every species of mercantile gambling,
and if that ended as gambling generally
does, a fraudulent bankruptcy was an
ultimate resource of retirement and competence.
This fictitious capital, probably of one
hundred millions of dollars, is now to be lost,
and to fall on somebody; it must take on those
who have property to meet it, and probably
on the less cautious part, who, not aware of
the impending catastrophe have suffered
themselves to contract, or to be in debt, and
must now sacrifice their property of a value
many times the amount of their debt. We
have been truly sowing the wind, and are
now reaping the whirlwind. If the present
crisis should end in the annihilation of these
pennyless and ephemeral interlopers only, and
reduce our commerce to the measure of our
own wants and surplus productions, it will
be a benefit in the end. But how to effect this,
and give time to real capital, and the holders
of real property, to back out of their enfanglements
by degrees requires more knowledge
of political economy than we possess. I believe
it might be done, but I despair of its
being done. The eyes of our citizens are not
sufficiently open to the true cause of our distress.
They ascribe them to everything but
their true cause, the banking system; a system,
which, if it could do good in any form,
is yet so certain of leading to abuse, as to be
utterly incompatible with the public safety
and prosperity. At present, all is confusion,
uncertainty and panic.—
To Richard Rush.
Ford ed., x, 133.
(M.
June. 1819)
