Lawrence John Lumley Dundas Zetland.

Cause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system online

. (page 3 of 6)
Online LibraryLawrence John Lumley Dundas ZetlandCause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system → online text (page 3 of 6)
Font size
QR-code for this ebook

must likewise depend on the sum of all the incomes. A
tax, therefore, merely alters the distribution, without
altering the sum of the income of a state, as is the case
with a direct tax ; or inconle could never vary the pric-
es of commodities, nor the dctriarid for commerce could
never raise the prices. Consider for a moment the
stafte of our commerce; Europeans rival us in our ow'n
markets, ifi some of the staple commodities of our otfn
soil. The immense quantities of pork, beef, butter, &c.
tvhich are annually imported from Europe, and sold in
our markets, proves the falsehood of that allegation.
The rate of the market, as has been before observed,
does ndt depend upon the number of \ :; ^chasers, but on
the quantity of their tnoney, while that and the


ty of commodities remain the same, without variation ;
the prices will inevitably be the same, whether the pur-
chasers be few or many in number, or however une-
qually the money may be divided among them.

If, for example, the number ef buyers in the market
amounted to one hundred, with twenty shillings each,
all the commodities must be sold for one hundred
pounds. If, instead of one hundred, with one pound
each, fifty had gone with two pounds each, or if a tax
had taken five shillings from one fifty and given it to
the other fifty, it would make no alteration in the prices
of commodities in the market, for the sellers could only
get the hundred pounds.

Suppose, that in a nation where all the incomes
amounted to one hundred millions, the government
should levy a tax of ten millions ; it would be evident
that every man's income would be lessened one tenth.
If, therefore, the quantities of commodities remained
as before the tax, the prices must have fallen one tenth,
or the commodities remain unsold ; but if the ten mil-
lions taken from the whole, were added to the incomes
of a few, the whole amount, or aggregate income, would
be restored again to one hundred millions, and con-
sequently the prices of commodities would remain the
same as they were before the tax was levied, but could
not possibly be increased.

The prices of commodities, therefore, can be increas-
ed only by indirect taxes, which, by being levied on ar-
ticles of consumption, must create a fictitious increase
in the national income, in the same manner that bank
notes do ; for as taxes, raised in tliis way, do not re-
duce men's income nominally, the sum of all the in-
comes in the state is increased equal to the amount of
taxes. It is not observing this effect of indirect taxes,
which matte some men in England imagine, that in-


creasing the taxes increased the national riches, and
others have asserted, that as they increased the national
debt they increased their ability to pay it ; but, as a
nation, they \vere neither enriched or impoverished by
taxation ; for as the real riches of a nation consists
alone in its productions, and \vhilc they remain the
same, without either increase or diminution, it cannot
be said to row either richer or poorer, whatever may
he the fluctuation of the nominal income, or whatever
alteration may take place in its distribution.

Great pains have been and still are taken, to prove
that the landed and monicd interests are inseparable,
and that promoting the one necessarily advances the
other ; but this is certainly an untruth, for there can-
not be but a certain quantity of wealth, power and con-
sequence, in any state or nation, whatever the numbers
may be among whom that power is divided, or whatever
may be the amount of wealth, it is certain that whatev-
er one party gains the other must lose.

Suppose that all the lands in these United States were
rented for a term of twenty-one years, for twenty mil-
lions annually : when the revenues from money amount-
ed to exactly the same sum, then would not the landed
and monied interest, or the monied men, have the same
income, or an equal share of all the productions of the
country, and an equal share of all the power and influ-
ence arising from wealth ? Ifcut if the monied men
were, during that time, to increase or double their in-
comes by increasing their money, by means of bank
notes, at the end of twenty-one years, their respective
power and wealth would be in the proportion of one to
two ; that is, the landholders would have one third less
of the products of the country, and also one third less
of the influence in society ; and the monied men one
third more than thev had at the commencement of the


above period. Thence it is certain (bat Ihe bankers,
by increasing their own incomes, through the means of
bank notes, do absolutely rob the landholders of a part
crTtheir power, and a very considerable part of their pro-
perty.* It will be undoubtedly alleged, that increasing
the circulation of money .raises the price of land, and
that may be the case nominally, but not really; there
may be more money given in exchange, but the value
will remain the same ; for \vhat is the reason that a
greater number of pieces of money are given for an acre
of land now, hut because that money has lost so much of
Us value.

Therefore, although the landholder, who wished to
sell his estate, might receive two hundred pounds, in-
stead of one hundred, yet as the money had lost so
much of its relative value, in employing it in any other
way except in paying old debts, the two hundred pounds
will purchase no more of the products of society than
the one hundred would have done before tbe increase
took place, and even if the real value of land should be
iacreased, it by BO means indemnifies him for the loss
sustained in his annual rents therefore, th.e effects of
an increased circulation, in raising the value of land,
are of no more service to the landlords than the increase
of the nominal value ; for, suppose his lauds to be Jet
for a term of twenty-one years, he cannot raise his rents
until the end of that term, though the value of his in-
come has been gradually decreasing : for if one hundred
dollars would have gone as far in maintaining a family,
at the beginning of the term, as two hundred at the end
of the term, he must have sustained a great loss, and

* Any man who will take the trouble to examine critical-
ly, into the conduct of a majority of the legislature of this
state, in 1812, will be satisfied what share of power and in-
fluence bankers have with our legislative authorities.


although he raises his rent at the expiration of the
term, to double the former rent, it neither makes up the
loss he had before sustained, nor secures him against
further loss ; while the circulating medium continues
to increase, it will be impossible for him to bring his
estate at par with the increase but once in twenty-ono

It is evident, therefore, that the landed part of the
nation reap no advantage from the increase of the cir-
culation by the banking system ; but, on the contrary
they are greatly the looscrs. All those who have fixed
salaries, such as officers i the army and navy, and ma-
ny officers in the civil departments, who have either fix-
ed salaries or stipulated fees, must sustain greater loss-
es than the landholders, for the latter sometimes have
it in their power to raise their rents, while the former
are at the mercy of those Avhose interest is to oppress
them. What their reai tosses are, is difficult to ascer-
tain exactly ; but whoever will take the trouble to
compare the expences of house-keeping now, with what
it was twenty years ago, will find that it has been in-
creased one half in value, by the depreciation of money
and the circulation of paper money or bank notes.

But whatever injury may be done to the rich, the in-
jury done to the laboring part of the community, or na-
tion, is by far the greatest and most to be deplored ;
for the rich are onty deprived of superfluities, which,
may, perhaps, be a benefit rather than an injury, and
may excite a laudable sympathy in some of their minds,
of which, in the full enjoyment of luxury, they are ge-
nerally totally destitute ; but the laborer is deprived of
necessaries besides, the advanced price has been much
greater on necessaries than on superfluities; every man
is effected by this in proportion to the part of his in-
come employed in either, consequently it falls heaviest



on the smiles! incomes, where there must be the great-
est part, or the whole, applied to the purchase of ne-
cessaries. The laborer, therefore, whose whole in-
come is employed in this way, must be the greatest suf-

The injustice done, by the circulation of bank notes,
to this cla$s of citizens, is, if possible, more palpable,
by far, than that done to any others, for although
the injustice of depriving any man of that share of pro-
ductions of society to which be is entitled, by his pro-
perty or his money, must be extremely unjust ; jet the
injustice of depriving the productive laborer, the man
bv whose industry his family is* indebted for their sup-
port, conveniences and even ornaments, of any part of
the small share he has been able to retain of the pro-
duction of his labor, must be peculiarly striking; what
words can be found sufficiently expressive of our indig-
nation against, and abhorrence of the conduct of a
set of men who should combine to deprive the produc-
tive laborer of his wages ? well might the curse of om-
nipotence be denounced against them ! Yet this have
the bankers positively done, for there cannot be any dif-
ference between taking six pence out of a shilling, or
reducing the value of a shilling to six- pence. A man
is equally injured by having the value of his money re-
duced one half, as by having one half stolen away ; the
TVJigfs of a laborer will not now purchase one half of
the most necessary provisions, absolutely necessary for
him in his condition, that his wages would have done
before the establishment of banks in this country.
Therefore, the issuing of bank u>tes has as effectually
robbed him of one half of his wages, as if they had put
their hands into his pocket and stolen it out, or formed
a combination to reduce his wa&es- Whatever may be
the reduction at present, it must go on increasing con-


tinually, for as machinery increases its force by circu-
lation, they can have no hopes of obtaining any propor-
tional increase in their wages, for the sense of justice
and the principles of right and wrong seeuri to he oblite-
rated, even from the minds of men appointed as guar-
dians of justice, so that the worthy laborer must starve
or be supported by the public. This is the ease at pre-
sent with vast numbers, and is annually rapidly in-
creasing ; yet we boast of the flourishing state of our
commerce, straining every nerve, mortgaging the labor
of unborn posterity and the fruits of their industry, to
divert commerce from the channel formed by nature
for it to pass through, vainly striving to compel nature
to bow to avarice and art, to facilitate and enlarge com-
merce ! Pray what is that commerce worth that can-
not maintain those who carry it on ?

The merchants of the Cnited States, indeed, may be
allowed to boast of the benrfits of commerce, and par-
ticularly those of New York ; the concurrence of fa-
vorable circumstances, resulting from our neutrality
for many years, during the convulsions of Europe, is,
perhaps, unparalleled in commercial history. They
tax the community by the profits on their gooc's, and
likewise tax the public at large in making thjem rich
by maintaining the poor.

The condition of tradesmen is equally deplorable ;
they are no longer paid for what they do ; they must lay
Qirt of their money for months and years. Before the
establishment of banks, tradesmen and mechanics, were
far more punctually and regularly paid, than they now
are; their losses now, by delays and disappointments,
insolvencies, by taking bills on distant and depreciated
banks, which they are obliged to pass at a discount, &c.
amounts to at least 30 per cent, on all their labor, be-
sides paying double for every thing they need. It also


amounts io al most a prohibition to a young man to get
into business for himself, for want of large capital. Un-
less he can give credit he can get no custom ; neither
can he borrow at reasonable or legal interest and dis-
tant payment, because the interest drawn on bank .
shares is greater, and payments more punctual, people
prefer vesting their money in them to lending to indi-
viduals, however worthy or safe ; he is, thereforej
forced to work as journeyman for life, and to maintain,
perhaps, a numerous family ; work for a capricious and
tyrannical master, pay him a tithe out of his wages and
who will deal out his wages how much or how little, as
his humour or interest dictates ; he is utterly excluded
from his political rank, and is a victim to the banking

The worthy capitalist or honest regular trader is also
injured in his circumstances, by the idle and desperate
adventurer being able to borrow money from the banks,
to rival him in trade, compel him to divide his profits
and his business, and thereby reduce him to want and
beggery at the close of life, after all his efforts to avoid
it. Their dissipated lives, extravagance and ignorance
of business, by not learning its principles by practice,
continually exposes them to miscarriage and failures,
to their utter ruin, and their friends who have become
their securities ; the forced sales of their property,
continually injures the worthy dealer* and renders all
property in trade very precarious.

The banking system likewise injures all minors ; if
they happen to be young at the time property is left
them, they will not receive more than half its value
when they arrive at the age of 21, if the bankers should
be permitted to increase in numbers, and in the increas-
ing the circulation of their notes ; all those who have
monies in the funds to receive at a future day should
look to this.


It is to this prodigious increase of paper that England
is indebted principally for the frequency of her wars,
for bank notes not only enables the minister to contract
debts and raise supplies, with infinitely greater facility
than he otherwise could do, but it renders war absolute-
ly necessary for promoting the interest of a very power-
ful body of men I mean the bankers. The increasing
the quantity of money to be lent, without a similar in-
crease in the quantity wanted to be borrowed, must ne-
cessarily reduce the interest therefore, if the demand
for money were not from time to time increased, the
constant increase of the quantity to be lent, by means of
bank notes, would in time reduce the interest to almost
nothing. War, therefore, is the most effectual means
of increasing the demand and raising the interest on
money, but when war cannot be conveniently resorted
to, the enormous expense of a Canal may serve as a
temporary substitute, to serve the interest of money-
lenders in this slaif.

The batiks, by having a great deal of money helong-
ing to other people, which they cannot employ but in
such a manner as to be able to call it in on any emer-
gency, will always be investing large sums in the funds $
and as the interest they receive will be high, in propor-
tion as the prices of stocks are low, war, which reduces
the prices, must be to them particularly desirable.
But the banks, that have the revenue in their posses-
sion, have an interest in war distinct from that of other
banks ; for as all the money raised by taxes is lodged
there, the revenue becomes a fund for circulating the
notes of the bank,* and as the profits of the proprietors

* The sound of a great capital abroad may gain credit to
the bank, but is not absolutely necessary for an extensive
circulation. This will be clearly seen by the operation of
the Farmers Exchange Bank, in the state of Rhode-Island,
an account of which is hereafter given.


depend on ihe "quantity of their paper in circulation,
and as that must depend on the largeness of their funds,
war, which* bv increasing the national deht and taxes,
increase their funds, must greatly contribute to their
advantage. Even if war was not so immediately for
the advantage of the. bankers, they would be still oblig-
ed to support it if the government thought proper ; for,
as their very existence depends on deception, it is in
the power of government to annihilate them in a mo-
ment, by refusing their notes iu the payment of taxes.

They are, therefore as much dependent on them,
and as much at their command, as if they depended on
them for their daily subsistence ; nor is it to be sup-
posed that men who get rich by the plunder of their
neighborsr can have many scruples in promoting the
\iews of others, however pernicious, and even where
they themselves are to share in the profits there can be
no doubt of their most cordial support.

Having shown the great interest that monied men and
jnonied institutions have in creating war, and in sup-
porting it after it is created, what then can any man
think of the wisdom and morality of the general go-
vernment, in leaving all the revenue in the hands of the
bankers for many years, averaging an amount equal to
twenty millions annually, thereby assisting the bankers
if not to bring on war, at least to rob their fellow-citi-
zens of an immense amount by enabling them to circu-
late a vast deal more paper.

Suppose a general alarm was jexeited by the immense
quantity of hank notes now in circulation, and n general
demand made on the banks for cash for their notes, and
the people to accept of no more of their paper, would
not the bankers paj their notes with any bod\'s cash in
their possession sooner than fail ? Has the general go-
vernment any special security, that in case any such de-


mand should be made on them, that they will not pay
their notes with the revenue.

The banking system also supports an enormous sys-
tem of speculation and monopoly that racks the poles.
This may bo seen by the conduct of the British mer-
chants in the year 1793. In eonsequence of war
with France, commerce then received a sudden and
deadly blow. Notwithstanding all their commercial ad-
vantages, and the immense aid they received from the
bunks, it was still insufficient, at those times, to save
them from ruin and general bankruptcy ; had not the
minister stepped into their aid, by lending them three
million pounds sterling, in exchequer and navy bills ! a
general bankruptcy would have been the consequence.

Since then it is evident that the commodities in their
possession did not bHorig to them, in whose possession
they were, but had been engrossed by them for specula-
tion, by means of paper borrowed from the banks se-
condly, that this speculation was with a view to iiiono-
poly. If this had not been the case, or it they had com-
modities double the amount of their debts, would they
not have brought a part of them to market, equal to the
amount of their debts, rather than have pawned double
the amount ; but it is presumed that the commodities,
in their possession, were not, at a fair market price,
worth the amount of their debts ; then nothing could
Lave saved them from ruin but screwing up their mo-
nopoly to an exorbitant price. With this view, it was
of but little consequence to them how much of their
commodities were pawned ; their object was to keep
them out of the market, and as the loan, borrowed of
government, served to pay off their first bills, it enabled
them to bring their commodities to market as slow as
they pleased, so as to inhance thre price two or three


Again, on the 15th of March, 1797, the price of wheat
was raised to 95 shillings per quarter. There was eve-
ry appearance of famine. The government went to
work to strengthen the idea, by ordering a general fast
throughout the island. All the ecclesiastical corps,
and all the orators of government, were to prevail with
the people to believe it to be an approaching famine,
and that they should bear it with Christian fortitude.
However, on the 12th of April, the bubble burst; the
wheat fell from 95 to 58 shillings ; and there was every
reason to believe that it would have been much lower
still, had it not been for the loan lent by government to
the merchants, who had engrossed all the grain in the
country ; the arrangement was proclaimed in parlia-
ment on the 18th of April ; the 17th of May, the mer-
chants received the loan of one and an half million
pounds sterling, from government ; and on the 28th,
wheat bad again risen to 77 shillings. The same
is flow playing by the monopolizers of New- York, by
the help of the banks.

Again, on the 2Mb of May, 1797, the minister pro-
posed a tax of ten per cent, on all Wsst- India sugars.
The merchants in the trade declared they could not
pay it. They alledged that the markets were all over-
stocked, and that they had early payments to make,
and would bo obliged to sell, at all events, to make good
their contracts. The government lent them a million
and a half to pay up their first bills, to enable them to
bring their sugars to market as slow as they chose,
so as to enhance the price to an extravagant amount,
and though the tax was only ten per cent, the sugars,
on which it was laid, rose more than seventy per cent,
in consequence of it.

Is it any wonder, then, that the merchant and minis-
ter are so kind to each other ! These are commercial


advantages with a witness to it. Before the establish
ment of the hank of England, in 1694, there were no
poor people, nor any taxes collected for their support.
Now, at this time, the poor rates in England exceed
fifty millions of dollars annually. The government has
reduced them to the lowest degradation, and keeps then*
down with the hayonet.

Having shewn the baneful effects of the banking gys-
teni in England, I will endeavour to show that it has
produced the same effects in this country ; the like
causes will produce the same effects every where.

It is as notorious a truth as that the sun gives light
when it shines, that our merchants, and speculators of
every descriptions, borrow millions of dollars (in paper)
from our banks annually, to assist them in engrossing
every article in life, and particularly those articles in-
dispensable to life; thereby to enhance the price to an
extravagant amount, double or treble their real
worth, or what they would be had at without monopoly 5
thus compelling their fellow-men, v/ho cannot do with-
out them, to give those exorbitant prices.

And even bankers themselves, by their agents, en-
gage in this fell speculation; witness the butter specu-
lation, which is fresh in every man's recollection in this
city. Whatever might have been the result of that ac-
cursed monopoly, to those engaged in it, it had the
effect of raising that article to a price, from which it
has Bot at present fell to what it ought to be. And now,
while I am writing, there are persons in the city of
New-York, who have it in their power to issue hank
uptes to an amount equal (o the engrossing any article
in the market which may promise a profitable specu-

The merchant and dealer, who follows this practice,
might an well, and with as much justice, put their hands


into (heir customers pockets and steal one half of their
money away, as to compel them, because their need re-
quires it. to give double their real and just value 5 though
the means are different the moral is the same.

This base robbery or extortion, throughout all our
cities, and even country towns, (lor there is petty bank-
ers in them all) has depnived the great majority of the
nation from the benefits and the moral influence of our
revolution. Their condition is very little better ; and
in a few years more, this banking system will reduce
them to a situation as deplorable as that of other coun-
tries, where there are no such words or ideas as Liberty
and Equality. Does not this system tend directly to
reduce the patriotic soldier, who has hazarded his life
lo repel British insolence, to distressing want, and to
compel him to beg his bread on the very soil which his
blood has purchased and been shed to defend ! how
painful the reflection !*

* The moral prospect, which presented itself at the close
of our Re voiulion r was unprecedented in the whole human
history. Our country was a political paradise, with free
access to the tree of knowledge. The wide world was open
before us and without an enemy on its surface ; and all its
inhabitants wishing us well.

1 3 5 6

Online LibraryLawrence John Lumley Dundas ZetlandCause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system → online text (page 3 of 6)