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Cash And Credit

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Politica! economy is now called a science. Ünüke most other eciences, howeverr but few of the principies upon which it is based, are fixed and settled. So inucb, indeed) has the subject been obscured and confused by different and contradictory theones, that it is no uncommon thing to hear intelligent men, after diligent endeavors to arrive at settled conclusión?, confess their ignorance, and tbeir utter inability to under&tand the complicated and widely differing schemes, that have from ütne tó time been spread befo're the pubKc. In soying a few words on the advantnges of Cdsh oi'er credit, l shall not attempt to examiné thé theories above refered to, in their connection with thisbranch of political economy. Such en examinition wcwld only tend to confuse what I wish to present in o plain and practical manner. Indeed, so clear are the truths in support of cash transactions under nll circumstance?, that tliey secm almost self-evident. So much error prevails,Kowever,and so false, mistaken and ruinons are the current opinions and practices, that such a view of the BUbject as I propose, will not, I hope, be entirely useiess.By cash, I mean an immediate payment for whatever is purchased or sold, either in rnoney or its equivalent, so that no farther claim ivill exist. either on one side or on the ether. By credit I mean the purchasing or rolling of property o mere promies of payment, without any express or certain appropriation of means for so doing1. The purpose for which this essay s desigued, renders it recessary that I shall be brief in my statement?, and affords but litlle loom for proofs and il'.ustrations. I shall procsed, first, wilh an enumeraticn of some of the advanlagea of cash transacticn to purchnsers. The first anu most obvious advantage is in the cost of the article purchased. As a general fact, this is fully eqnal to twice the common interest, or soy twelve and a half per cent. - To one whose earnings or whose incomsafford a mere support,this would equal one-eightli of eaid income or earnings - whilst to the mechanic or trader who buys to sell again, it would equal nearly or quite the wlioJe of the net profits of his sales. To this may be added the savings of time, much of which invaluable treasure, worth indeed, infiniteiy more than inoney, is iuevitably lost in pioviding for, and making pa) ments.The next advantage is security against ( cess in expendilure, overlrading in business, ¦ and bazardous speculaüons. The tcnrlency ' to these errors, wlülst credit is free: is almost universal. How many individuals and 1 lies are thus led into nabits of life which they ore unable to sustain, and the result is 1 poinlment if not disgrace! How many ! chanics,merchants,and farmers are tempted to contract engagements which they cannot fulfi!,from the cvil eifects of whicli they never recover! And how many of all classes are led into unjustifiable spoculations, which end in irretrievable ruin! He who piys for.every thing and owes nothing, can hardly fall iato these errors. Again- the cash principie guards one almost wbolly against sudden changes and reverses. Could tliis principie be gcneraüy a dopted, the changes and reverses now so common, would be almost whoily unknown. Indeed, they are now nearly or quite unfelt and uuknown by those wlio 6teadily pursue this principie, except in the ïncreased advantages their position afFords them during periods of ceneial disaster.The cash payer is free Trom the anxiety ïneeparably connected with credit. The debtor who has noí the means in hand, or certainty within his control, to meet his engagements, is Bubject to an anxiety by no means favorable to happine3s or improvement in mind, body or estáte. The cash payer knows, too, at all times, the exact state of his affairs, and is in no way liableto do injiistice to his feilow-men, from inability to pay hisju=tdues. The cash payer, and he alone, is truly independent. Whatever he possesses is his own, without any incumberance or drawback; whilst no one can feel that the food he eats, the coat he vears, or the house he lives in, are truly his own, until tliey are paid for. Not only the cash payer's possesaions, but his opinions, his actions are his own, subject to no man's will or caprice; In the words of a recent poet,'Ho looks the whole world in the face, For he owes not any man;1' whilst unerring wisdom declares ihat "the borrower is scrvant to the lender." Again- the cash payer encourages no false expectations in lus fumily or others, by the pogsesfiions of property unpaid for. He can expend for himself or family, or if charitably disposed, he can give to objects of benoveJence, without injustice to any one. And then, aboveall, htí can die without the reproachful consideration that his affairs are cmbarrassed, and that he will leave his family a legacy of perplexity, and perhaps disfrace. Oneother consideration I will name, and by no meana the least, in favor of cash payments, viz: they promote integriiy of character. - The man who contracts debts that he finds it Jifficult or mconvenient to pay,is of ten strongly tcmpted wholly to get rid of paying thern. This is true to a lamentable extent in ourcountry; whole coir.munilies, andeven states, having been led tü forgel their ob igations to creditors, I will next enumérate a few particulars applicuble to those who sell tbr cash. And first, as in the case of those who l uy for cash, thereis a dieet pecuniary advantage. He who sells wholly for cesh, can aflbrd to dispose of his property on more favorable ternis to puichasers, and yet at a better profit, as his expences are less, and therc? is :jo drawback for Iossc3. He in general too, buys tor cash, and consequenlly at less prices; and in case of depreciation in the value of property, he can better bear it. The next considcration is the trouble, ex pense and loss of time, inseparable from sales on a credit, all of which are avoided by those who sell for cash . In large trading establishment?, the whole time of one partner, and one or more clerks, is often entirely accupied with the outstanding accounts. In smaller concerns, the attention is constan tly diverted from useful and profitable employments by writing up accounts, collecting debts, &c. Lawiuits and misunderstandinys, too, are some of the direct resulta of credit sales. The most important consideraron, however, in favor of cash sales, is the entire uncertainty of sales on a credit. Open book accounts are proverbiully uncertain. No dependence whaiever can be placed on them by those who have engagementsto meet. Various expedients have been resorted to, in order to insure promptness in payments, such as notes at banks, aceeplances, Sec. But these, loo, have in a considerable degree, failed to insure the object. The result is, and the truth ia undeniable, that the greater number of those whc sell on credit, whether merchants, manufacturers or mechanics, and more especially if they buv on a credit, sooner or later meet with ruin. Those who do not, ar e eo few as to form mere exceptions.It would be easy lo illustrale all those particulars by examples. Every one can, however, find confirmatoin all arotjnd him, ïf not in his own expcrience. They are alike applicable tooll pursuits nnd to all classes; but especially to the aboring part of the community. If ai)y one thing more llian others tends to keep a day laborer or working man poor, (aside ironi vicious liubits,) it is the credit system. As n general remarle, the moment such an one, in whatever pursuit, comniences living in advance of lus earnings, or obtaining his nocessary supplies on credit, his fate is sealed. He vvill probably er better i his condition. For aside from ihe depresslng and discouraging iufluences of being always in debt, and being often cumpelled to labor disadvantageously to himself for those to whom he is indebled, he must neccssarily pay more Tor hateer he purchases. No one:ould afford to sell hira provisions or property of any kind on as favorable terras as he could for cash. The farmers, too, that largest and most importanl clas3,are great sufferers by this system. The practice of obtaining supplies for his family, in aniicipation of his crops, is full of iiarm. The increascd prices of all he buys, the tendency to purchase more than he ought to do, and the disadvuntage under which ho is often compelled 10 dispose of his products, are amongst the evib to which he is subject. Then the failure of crops for a single year, or a great depreciation in pitees, to which a prevailmg credit 6ysieir. consiantly exposes him, uften loads him with a debt from which he can never extiicate himself. As his embarrassmsnts increase, his disadvantages accotnula'.e. He slrugg'es ogainst the current wiih coplinuaJJy weakening powers, until lie sinks in desp a r. This is the history of thousands and tliousands ofour farmers. But it wil! be eaid, that "credit quickens industry," and 'encourages enterprise.'"Credit quickens ndustry," as alcohol stimulates the bodily energies, and with the 6ame resultviz: prostration in the end. It leads rnen to undertake injudicious and hazardous enterprisos - it diver'.s labor from its natural channels- it gives a fictitioua value to property theeviiincreases! - the bubble bursts! and what diásappointment to individuáis! What loss to the country ! Credit "encourages en terprise in individuals, by inducing ihem to eave the paths of steady industry, and tho guidancc of prudence, and then ernbarking them on an ocean of tincertainty, without chart, compase, or anchor! Now and then, a favorable gale wafts tlie advenlurcr to the desiied beaven. But many in the mean time are involved in irretrievable ruin. Is itwise to promote a system so full of hazard, when its opposite is so safe, and ordinnrily so sure in its results? The one is a iottery, a game of chance - the other is naturally just, and has all the certainty that can attend any pursuit in life. The cash system, as defined m the beginnirjg, being the best and only safe one for individuals, is the only one that should in any woy be encouraged by the government of the country; for whalever is best for the people individually, is best for the whole. Any action by tlie government, therefore, which tends to promoten system of credit, or whatever tends to excess,should be steadily avoided. A credit on dulics at the custom house, for instance, encourages undoe importations. A high tariffleads individuals to enter largely into the manufacture of thosc goods upon which Iurge dulies are imposed. Every exertion is made, money b irrowed. extravagant expendituree incurred, and when a reaction takes place, as it surely wil!, for high duties never raise the pricesofgoods in pioportion to the increased rate, and moreover will never long be submit ted to by the people, ruin ensues. So too, ! v.-ith any action by which an excessivo priccfor wlicat or cotton t-hall be oblained - the advuntage is pnly temporary - the reaclion in the end will su;ely be in full proportion to the excessive ad vanee; and, indeed, worse, becaii6e the equilibriuni once disturbed in such vaat concerne, the natural course of things is not soon resunied. Not oiily should the government avoid steadily every thing calculated lo divert labor from i'.s natural channels. and well tried wave, as well os all undue slimulants to enterprise, but men of principie and of infiuence every where should do so likewise. Let industry ar.d enterprise be free - Iet no undue advantage be given to any one, let the road of wealth be open to all alike, no one having any privilege snve such as his industry, bis enterprise, and bis character oñbrd hirn. A course of undue stimulants and encouragement mast inivitably, sooneror later, as has already been said, result in disaster. W ha te ver edetice is erected, no matter how high il tower, nor how fairits proportions, except the foundation be sure it must fall to ruin. The whole hiatory of the financial concerns of our country, as connected witn tariffs, imports and exports, banks, and land sales, all confirm this. The policy of the country has not only been stimtilaling, but unsteudy. Commerce, manufacture?, and agriculture, each in their turn, have suffered; aiid our existing difficulties and derangements have their origin solely in these causes.I um aware, tbat to effect exchanges between individuáis, and between different parta of the cour try, and different nuiions, as well as to transmit proceeds of 6ales of property, and to convey money from place to place, a circulating medium or representative of money, some'Jiing besides gold and silver, is indispensable. So also is confidence in individuáis acting as agents. Cash, however, or its equivalent, being the government principie, and credit merely an exception, care would be taken, both by individuls and governments, that whatever professed to be the represenlative of money, or of property, should indeed andin truth,beso. Breadles of trust vvould be rare, the opportunities for fraud and thereto much fewer- integnty, uprightness and promptitude would be indispensible in order to gain the public confidence. - In short, could the principies and policy here advocated become general in this country, in connection with our unequaled advantoges in other respeets. we mighl go steadily on in the paths of prospenty and honor, ñsing higber and higber amongst tho nalions of the earth. Farmington. Con., Jan, 3, 1843.


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