Front Page Titles (by Subject) LETTER XXVII.: SOCIAL IMPROVEMENT. - Society, Manners and Politics in the United States
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LETTER XXVII.: SOCIAL IMPROVEMENT. - Michel Chevalier, Society, Manners and Politics in the United States 
Society, Manners and Politics in the United States: Being a Series of Letters on North America, translated from the third Paris edition (Boston: Weeks, Jordan & Co., 1839).
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Charleston, September 1, 1835.
The United States are certainly the land of promise for the labouring class. What a contrast between our Europe and America! After landing in New York, I thought every day was Sunday, for the whole population that throngs Broadway seemed to be arrayed in their Sunday’s best. None of those countenances ghastly with the privations or the foul air of Paris; nothing like our wretched scavengers, our ragmen, and corresponding classes of the other sex. Every man was warmly clad in an outer garment; every woman had her cloak and bonnet of the latest Paris fashion. Rags, filth, and suffering degrade the woman even more than the man; and one of the most striking features in the physiognomy of the United States, is, undeniably, the change which has been introduced, in the train of the general prosperity, into the physical condition of women.* The earnings of the man being sufficient for the support of the family, the woman has no other duties than the care of the household, a circumstance still more advantageous for her children than for herself. It is now a universal rule among the Anglo-Americans, that the woman is exempt from all heavy work, and she is never seen, for instance, taking part in the labours of the field, nor in carrying burdens.† Thus freed from employments unsuited to her delicate constitution, the sex has also escaped that hideous ugliness and repulsive coarseness of complexion which toil and privation every where else bring upon them. Every woman here has the features as well as the dress of a lady; every woman here is called a lady, and strives to appear so. You would search in vain among the Anglo-Americans, from the mouth of the St. Lawrence to that of the Mississippi, for one of those wretched objects, who are feminine only with the physiologist, in whom our cities abound, or for one of those haggish beldams that fill our markets and three fourths of our fields. You will find specimens of the former class only among the Indians and negroes, and of the latter, only among the Canadian French and Pennsylvania Germans; for their women labour at least as much as the men. It is the glory of the English race, that they have ever and every where, as much as possible, interpreted the superiority of the man to the woman, as reserving to the former the charge of the ruder and harder forms of toil. A country in which woman is treated according to this principle presents the aspect of a new and better world.
Figure to yourself an Irish peasant, who at home could scarcely earn enough to live on potatoes, who would look upon himself as a rich man if he owned an acre of ground, but who, on stepping ashore at New York, finds himself able to earn a dollar a day by the mere strength of his arm. He feeds and lodges himself for two dollars a week. and at the end of a fortnight he may have saved enough to buy ten acres of the most fertile land in the world. The distance from New York to the West, is great, it is true; but the fare on the great canal is trifling, and he can easily pay his way by the work of his hands. It is also true, that the poorest Irishman would not think of buying so little as ten acres; the least that one buys in the West is eighty. What of that? The savings of a few months will enable him to compass them; besides, Uncle Sam favours emigrants, and if, in theory, he does not sell his land on credit, he is, in fact, very indulgent to the pioneer who comes to subdue the savage wilderness, and he allows him to occupy the soil temporarily without charge. Thus the Irish, who would go to fisticuffs with any body for denying in their presence that the isle of Erin was a terrestrial paradise, and who, under the inspiration of whiskey, sing the glories of that first pearl of the sea, quit it by fifty thousands for the United States. On their arrival, they cannot believe their own eyes; they feel of themselves to find out whether they are not under some spell. They do not dare to describe to their friends in Europe the streams of milk and honey that flow through this promised land.*
Even in this section of the country, where the workman in the towns and the labourer in the country, instead of being as in the North the sovereigns of the country, are slaves, there is more plenty, more physical comfort among the labouring class than is found amongst us. The coloured population, therefore, increases in numbers faster than our rural population. Not that our peasant gives birth to fewer children than the blacks of Virginia and Carolina; but death, led by the hand of want, is active in keeping down the excessive multiplication of arms that would soon become formidable competitors of the fathers, and in closing forever mouths that would cry for bread which their parents could not supply. The attention of the benevolent in Europe has long been directed towards the reduction of the public expenditures, and a more equal distribution of the burden of taxation, as a means of improving the condition of the poor; but all these plans, supposing them to succeed according to the views of the projectors, would merely amount to taking a few coppers less from the pockets of the poorer class. Whilst a system of measures concerted in such a manner as to diffuse among them a love of order and habits of regularity and industry, to enlarge the field of labour, and to render its terms more favourable to them, would have the effect to fill those pockets. The relief of one class of the community by merely shifting its burden to the back of another, has a revolutionary character which ill agrees with the notions of a generation that is weary of revolutions, or with the nature of a government established for the very purpose of staying the revolutionary flood; on the contrary, all that develops the resources of industry is in harmony with the present leaning of all minds. Labour is an admirable instrument of concord, for all interests gain by the prosperity of industry. This is the pure and true source of all wealth, public and private. Labour alone creates; and it is it alone that can relieve the wants of the needy, without impoverishing him who has enough, or even reducing the luxury of the opulent; that can give wealth to some, competency to others, and to all the fowl in the pot, which, since the revolt of Luther, has been the great social problem in the material order of things.
The admirable prosperity of the United States is the fruit of labour, much more than of any reform in taxation. The soil has not the luxuriant fertility of the tropical regions; roasted larks fly into nobody’s mouth; but the American is a model of industry. This country is not a second edition of the Greek and Roman republics; it is a gigantic commercial house, which owns its wheat-fields in the Northwest, its cotton, rice and tobacco plantations in the South, which maintains its sugar works, its establishments for salting provisions, and some good beginnings of manufactures, which has its harbours in the Northeast thronged with fine ships, well built and better manned, by means of which it undertakes to carry for the world, and to speculate on the wants of all nations. Every American has a passion for work, and the means of gratifying it. If he wishes to cultivate the ground, he finds waste land enough for his farm in the Northwest or the Southwest. If he chooses to be a mechanic, that he may finally become a manufacturer, he has no difficulty in getting credit; he finds unemployed waterfalls all along the rivers, of which he takes possession, and on which he sets up his wheels. If he has a taste for commerce, he puts himself into the hands of a merchant, who after some years of apprenticeship and trial, sends him to take charge of his business in the interior, or to the Antilles, or South America, or Liverpool, or Havre, or Canton. He may labour without apprehension, and produce without stint; having no rent to pay, his flour, his salt provisions, fear no competition in the markets of South America and the sugar islands. As for cotton, the United States alone almost supply the world, and he cannot plant enough. The career open to the Americans, as active, bold, and intelligent merchants, is unlimited, and is entered with admirable spirit and success; they beat their rivals, even the English, on every field. If the American devotes himself to some branch of domestic industry, here he finds ample room for activity, for the home consumption is indefinite; every body here enjoys himself, or at least spends. Every one produces much, because all consume much; each consumes freely, because he gains freely, has no fears for the morrow neither for himself nor his children, or at least takes no thought for it.
The most efficient measures of the public administration for the amelioration of the condition of the people in France, would be such as would tend to increase the industrial qualities of the mass, and to furnish them with the means of putting these qualities in action; such are, a system of industrial education; the establishment of institutions of credit, which should place within the reach of all, the instruments of industry, or, in other words, capital, which is now inaccessible not only to the operative and the labourer, but to a great proportion of the bourgeoisie; the execution of a complete system of routes of communication, from village roads to railroads, for manufactures and commerce are impracticable where facilities of transportation do not exist; the modification of many laws and customs, judicial and administrative, that now embarrass industry, without being of the least advantage in any point of view.
I dare hardly speak of popular education, where I now am. The people in the Southern States, are slaves. The maxim here is that they need no instruction; to instil into them a sentiment of fear is the only moral nature suitable to their condition. They have, therefore, no other education than that of their own hands, and that, of course, must be limited, because their intellectual and moral nature is in fetters. In the Northern States, the labouring classes are whites, and there the law makes a liberal provision for popular instruction. Almost every where in the North, all the children go to the primary schools. Elementary education is there of a more practical character than with us; it is our primary instruction, with the omission of the ideal, and the addition of some instruction in commercial and economical affairs; but there is no practical industrial education here except by apprenticeship. There are no mechanical or agricultural seminaries. It is not thought necessary here to shut up the young in such institutions to inspire them with a taste for commerce, agriculture, or the mechanical arts; they suck it in with their mother’s milk; they breathe the air of industry under the paternal roof, in the places of public resort, in the public meetings, every where, at all times, and in every act of life. When an American wishes to learn a trade, he goes into the workshop, the counting-house, the manufactory, as an apprentice. By seeing others act, he learns how to act himself; he becomes an artisan, a manufacturer, a merchant; all the faculties of his firm and watchful mind, all the energies of his ambitious spirit are centred in his workshop or warehouse. He directs all his powers to making himself master of his business, to learn the lessons of others’ experience, and he succeeds of course, as every one does who obeys the voice of his destiny. I do not pretend that the Americans are right in not having recourse to a theoretical preparation for a particular branch of business, for which we have instituted such costly establishments. I only record the fact, with the observation that they get on very well without it. Our national character has little disposition for business; we work from necessity and not from choice. Our ideas have little of a commercial or mechanical turn. To make a Frenchman a skilful husbandman, an able merchant, a dexterous mechanic, a long and painful training is necessary; he must change his natural bent, and metamorphose all his thoughts and habits; in a word, with us a special professional education must precede apprenticeship. The American learns by example merely; we must learn by general principles; we stand more in need of them, and we have a greater aptitude for mastering them, than they.
* * * * * *
Before passing to the institutions best suited to develop industry, I would observe that a political system which should be particularly calculated to create and sustain them, cannot be taxed with materialism. Industry influences the moral nature of man; the material prosperity of a people has an important bearing on the public liberties. Men cannot practically enjoy the rights secured to them by law, when they are manacled and fettered by poverty; the English and their children in America call competency, independence. The Anglo-Americans have reached wealth through their political liberty; other nations, and we, I think, are of the number, must arrive at political franchises by the progress of national wealth. I now come to the consideration of a credit system.
Suppose, on one side, the land-holder who has granaries bursting with corn, his stable filled with cattle, his storehouse crowded with barrels of whiskey and salt meat; then, the merchant with his warehouses full of cloth, and the grocer, well supplied with tea, coffee, and sugar; and on the other, the labourer, the mason, the carpenter, the smith, all skilled in their trade and wanting work to supply them with daily food. A canal or a railroad is projected; the country has capital enough to construct it, since it contains the arms to execute the works, and the necessaries for subsisting the labourers. The construction of the work is indispensable in order to enable the workman to turn his muscles to account, and gain his daily bread, and to give the merchant a market for his goods. Now in this case, amongst us, there is no other medium of communication between the labourer and the holder of articles of consumption, than the engineer, a man of science but not of capital, and the citizens of the towns which are interested in the scheme; these last have a competence and no more, and they have no means of raising, on their lands or their houses, the ready money which must serve as a medium of exchange between the wares of the merchant, the produce of the cultivator, and the labour of the operative. Amongst us, therefore, the most useful projects remain on paper. In this country, by the side of the engineer and the citizen, you have one or more banks, in which all, labourers, landholders, and traders, put confidence, often, indeed, much more than is deserved. The bank guaranties to the cultivator and the trader payment for their produce and merchandise, and to the labourer, his wages; for this end, it offers the share-holder of the projected enterprise, in exchange for his personal engagement renewable at a certain date, and often on the pledge of the very canal or railroad shares, a paper-money, which the labourer receives in payment of his wages, and with which he procures the necessary supplies from the producer or the trader. Thus every judicious and practicable project is at once carried out into execution.
In order to arrive at the same result amongst us, it would be necessary, in the first place, that we should possess somewhat more of that genius for business which is the characteristic of the American, and, in the next, that the banks should be able to accept with confidence the engagements of the share-holder of the work; the latter requisite, could not be obtained as in the United States, because amongst us, except in the manufacturing towns, the bourgeois in general does not engage in business; he is a proprietor living on his income and not increasing it. The American bourgeois, on the contrary, is actively engaged in business, and is constantly employed in increasing his means; and besides, the banks have more hold on his real property, than they could have in France.
Finally, it would be necessary that the public, proprietors and labourers, traders as well as landholders, should have full confidence in the bills issued by the bank, which is impossible in a country where all paper-money suggests the idea of assignats. Even if the people had not that disastrous experiment before their eyes, it would be difficult to teach them to look upon a scrap of paper, although redeemable at sight with coin, as equivalent to the metals. A metallic currency, has, in our notions, a superiority to any other representative of value, which to an American or an Englishman is quite incomprehensible; to our peasants, it is the object of a mysterious feeling, a real worship; and, in this respect we are all of us more or less peasants. The Americans, on the other hand, have a firm faith in paper; and it is not a blind faith, for if we have had our assignats, they have had their continental money, and they need not go far back in their history to find a record of the failure of the banks in a body. Their confidence is founded in reason, their courage is a matter of reflexion. Last winter, for example, it was known to the public that certain banks in New York had on hand only five dollars in specie for one hundred paper-dollars in circulation, and even less. In France this would have been the signal of a general panic, and the bill-holders would have thrown themselves in crowds upon the bank to exchange their paper for coin. The bank, thus stormed, would have stopped payment; fifty or seventy bills in a hundred, would have become mere rags in the hands of the holders, and what would be more fatal, the banks, which lean upon each other, and hold each other’s notes to a large amount, would have failed one after another, as those of the Federal District did last April. Each bank failure would have been followed by numerous individual failures, which would have involved other banks in their fall, and the country would have been ruined. The Americans in this fearful crisis, did not quail; they stood firm, like veterans under the fire of a battery or encountering a cloud of Arabs at the foot of the pyramids with bayonets crossed and serried files. None of the New York banks stopped payment, and scarcely six or seven small banks failed through the country.
Let us not deceive ourselves; it will be a long time before we shall be in a condition, in France, to enjoy such a system of credit as exists in the United States or England; in this respect we are yet in a state of barbarism, from which we cannot pass to a more perfect condition of things, except by a complete revolution in our commercial habits and ideas, and even to a certain degree of our national manners.
I do not pretend to decide beforehand what the precise organisation of a system of credit for France should be; but I think it may be safely affirmed, that the system which prevails here would not do for us. In appropriating to ourselves the improvements of the English and of their successors in America, we must modify them in conformity with the genius of the nation, or they will wither on our soil. As the East is the cradle of religion, so England in our day is the mould in which the political and commercial institutions that seem destined to rule the world have been cast; but as the religious conceptions of the East have had to undergo a radical change in order to gain a footing in the West, so the political and commercial creations of our neighbours, must undergo a transformation before they can become fixed amongst us. Coming into the world under circumstances of a peculiar nature, amidst a people of an original and peculiar character, born under the unhealthy shadow of conquest and civil war, they are not suited to be transferred bodily to another soil. They are already undergoing modifications in America, although they are here amongst the scions of the English stock. Among the people of the south of Europe and among us, when they have taken their final shape, it is probable that they will no more resemble their British type, than a Benedictin or a Sister of Charity resembles an Indian fakir or dervish. It would be presumptuous to attempt to pronounce at present what precise form the institutions of credit will assume; yet it is reasonable to presume, that to be in harmony with our character and disposition, they must lean upon the government, combine their operation with its action, become, in a word, public establishments, and they must be ready to extend a large share of their benefits to the agricultural interest.
The public credit, which, in France, must be the bulwark of private credit, still feels and will continue to feel the effect of our former bankruptcy. It should be our aim to make the breaches of the public faith under the monarchy and under the republic forgotten, and to strengthen the foundations and enlarge the sphere of the national credit, which will thus become a suitable basis for the banks, for in France we shall not trust in the bankers, nor will the banks have confidence in themselves, any further than they are propped up by the government, and become in fact public establishments. Many sound heads consider it indispensable that the system of credit, should be, in many respects, amalgamated with the financial system of the State. This is no rash speculation, or untried novelty. In the Southern and Western States, which, like France, are chiefly agricultural, the principal banks are dependent on the State governments, they are employed in collecting the taxes, and transferring funds on account of the State treasury. This is the case, in a greater or less degree, in the Carolinas, Georgia and Alabama, and still more so in Indiana and Illinois.
The greatest change, which institutions of credit will have to undergo in their introduction amongst us, will be the adaptation of them to the wants of agriculture. We are more an agricultural than a manufacturing people; three fourths or four fifths of our population live by agriculture. The English are especially devoted to manufactures and commerce; their banks are most easily accessible to the merchant, next to the manufacturer, and but little or not at all, to the agriculturist. The feudal traits, which landed property still retains among them, contribute to this result. In this country, the banks have been organised on the English model. They have become excessively numerous in the Northern States,* which are inhabited by a people eminently possessing the manufacturing and commercial spirit. Those which have been established in the agricultural States of the South and West, have fallen through at different crises, of which the most disastrous was that of 1819. In 1828, the local banks had ceased to exist in Kentucky and Missouri; each of the States of Tennessee, Indiana, Illinois, Mississippi, and Alabama, had but one, or had not yet established any. At present they are created in the South and West with something of a public character, the state either becoming the principal share-holder or guarantying the loan for raising a capital. Several of them have a decided tendency to connect themselves with the agricultural interest. Louisiana has adopted the most comprehensive and important measures in this respect.*
It is evident that the extension of credit in France would be the means of a greater saving to the people, than any reform in the budget. The average rate of interest on all transactions of all kinds is at least 15 or 20, perhaps, 25 per cent. Suppose that this could be reduced only two per cent., a result which does not seem very difficult to be obtained, it is plain, that as positive a saving would be made to the country as could be made by a diminution of the expenses of government, and that the former would be applicable to as many millions as the latter would be to thousands. It is not possible to give an exact estimate of the amount of the annual transactions in France, it must be enormous, for every time an article of property changes hands, there is a transaction affected by the rate of interests; now the total annual produce of French industry is estimated at nearly 2,000 millions dollars; and we must suppose the amount of transactions to be ten or twelve times greater. The annual amount of commercial transactions alone is about 4,000 millions. Admitting the average credit to be four months, and the mass of transactions to amount to 16,000 millions, a saving of two per cent. a year would be equal to 100 millions. Add to this that the creation of institutions of credit would make a saving once for all of 300 or 400 millions, by the substitution of paper for a portion of the metallic currency. (See Letter V.)
It would be superfluous to dwell upon the salutary influence of a judicious system of public works on the prosperity of all classes, and more especially of the lower classes. On this point every one is already convinced; it would be an enterprise worthy of a great people to undertake such a system, which should include canals, local roads, and railroads on the great routes; which should drain our bogs and supply water to the districts that need irrigation; which should convert Rouen and Havre, Lille and Calais, Orleans, Reims, and Troyes into suburbs of Paris; should consummate the union of Belgium with France; should make Strasburg one of the greatest entrepôts in the world; should restore life to Bordeaux, which is now pining away, by giving it a more easy access to the central and southern departments; should revive Nantes, which is dead, by connecting it with the flourishing interior provinces, and particularly with Paris, the heart of France; should bring Lyons into contact with the Rhine and the Danube; should develop our mineral wealth, which now lies useless in the bowels of the earth, for want of means of transportation; should not, as is too often the case, overlook our peaceful and laborious country population, but should deliver every farm and village from the six months’ blockade, to which they are now condemned by the mud of every winter. This would be a grand and noble enterprise.
There is a common bond of union between the various branches of social improvement; a good system of public works would exercise a powerful influence on the extension of credit, and, reciprocally, a liberal system of public and private credit, would communicate activity to public enterprises. I go further; it is impossible that our public works should be carried forward with vigour, without the aid of credit. To pretend to execute them wholly by means of taxes, would be madness. Without public and private credit, the Americans would never have had any public works. They have entered upon the construction of their great canals and their innumerable railroads only through the instrumentality of the banks and their loans. In 1828, the three cities of the Federal District, Washington, Georgetown, and Alexandria, having together a population of 32,000 souls, with little trade, no manufactures, or agricultural resources, for the country around is sterile, subscribed 1,500,000 dollars towards the construction of the great canal from the Chesapeake to the Ohio, raising the funds by a loan in Holland. Our large towns Bordeaux, Marseilles, Rouen, Lyons, will have canals and railroads, whenever they shall see fit to do with moderation what Washington, Georgetown, and Alexandria have attempted on too great a scale.
The improvement of the means of transportation often causes such a fall in the price of articles, that the construction of a canal or road relieves the inhabitants to an extent much exceeding the amount of the most oppressive tax. In France, where wine is abundant, and where it is a light drink which does not brutify a man, it is important to bring it within the reach of the poorer classes, and to accustom them to the daily use of it. There are still several districts in central and southern France, in which wine is transported on the back of mules, for a distance of 40 miles. Transportation, the same distance, by a canal, would only be one sixth of the price of mule carriage, or would make a saving of five cents a gallon, which is more than the excise on the common wines; so that the construction of a canal, considered in this light, would be a greater relief to certain consumers, than the suppression of the excise.
In regard to legislation, we have reason to congratulate ourselves on having a uniform system of laws, instead of a jumble of rules and customs derived from all ages and various sources. The spirit of Napoleon pervaded the creation of this noble work; but Napoleon was wholly pre-occupied with Roman ideas; he wished to found an empire of adamant on the Roman model; his counsellors were possessed with the notion that the Roman law was pure, absolute, immutable justice. They have, therefore, given us a code of laws, protecting various interests rather according to the degree of importance which they possessed eighteen hundred years ago, than that which they have acquired in modern times. In the time of the Romans, landed property was almost the only property; agriculture was the only branch of industry held in respect; manufactures were merely a department of domestic labour, and were carried on by the slaves in the house; commerce was abandoned to foreigners and freedmen. At that time, no one dreamed of the possibility of those huge factories on the English plan, or of that powerful machinery which is the soul of our industry; or those immense docks and and store-houses, which enable a man, in his closet, to arrange and direct the most extensive operations, without touching an article of merchandise, or even inspecting samples, merely by setting his signature to a warrant or a receipt. The system of accounts was then unknown; the idea of banks did not occur to the most far-sighted intellect. Governments took little thought for the means of making exchanges sure, easy, and speedy; the great roads opened by the prætors and emperors, were military roads. Little care was given to economy of time; for time has a value only in an industrious community.* On the contrary, there was every reason for endeavouring to keep property in the great families. Landed property, with reference to which all the laws were framed, is inconsistent with the idea of constant change. The object of legislation was stability and permanency; the forms which it established, were favourable to delay.
Following this example, Napoleon and his counsellors have given us a code of laws, in which every thing is sacrificed to landed property. The law treats the manufacturer and the merchant with suspicion; it looks upon them as the sons of the slave and the freedman, or at least, as persons of no consideration, commoners whom it is permitted to treat without ceremony. On the other hand, the presumption is always in favour of the proprietor; he is protected not because he is a cultivator and producer, but simply and abstractly because he is a proprietor, the owner of the soil, the successor of the Roman patrician and the feudal lord. Thus our laws overlook the importance of manufacturing industry, and the great destiny which awaits it; they shackle and check ti by the complicated formalities to which they subject it, and the vexatious details with which they embarrass its movements.
Let me not, however, be too severe on our code; I do not know any other, which, all things considered, is more advantageous to industry. Even the American legislation has retained the defects of the English laws; it partakes in their vagueness and uncertainty; it is under the almost exclusive dominion of precedents which it still borrows from English decisions as if North America were still an English colony. In most of the States, the undefined and conflicting pretensions of the common law and equity jurisdiction still remain in force. In some of the old States, as Virginia, the legislation yet bears many of the features of the feudal system. American law, however, has the great advantage of a simpler and less expensive process than ours or the English, and especially of a great economy of time by a reduction of the delays attending the English and French practice. As for the use of the jury in civil cases, it is of doubtful expediency. I often hear it said, that it would be better to leave them to three judicious and irremoveable judges, than to twelve citizens, who often carry their individual prejudices, or party passions, or class jealousies into the jury-box. With a jury, the influence of a skilful advocate often weighs much, the merits of the cause too little. Finally, in this country, the commercial tribunals have no compulsory jurisdiction; the ordinary courts take cognizance of all causes, unless there is a previous agreement between the parties to submit all differences that may arise between them to arbiters or a committee of the chamber of commerce, which is merely a voluntary association, and is not to be found in all parts of the country.
[* ] The legal condition of all classes of females in the United States is the same as that of the women of the middle classes in England. The same is the case with their moral condition, except that they have even more liberty before marriage, and are more dependent after.
[† ] In England a woman is never seen, as with us, bearing a hamper of dung on her back, or labouring at the forge.
[* ] An Irishman, who had recently arrived, showed his master a letter which he had just written to his family “But, Patrick,” said his master, “why do you say that you have meat three times a week, when you have it three times a day?” “Why is it?” replied Pat; “it is because they wouldn’t believe me, if I told them so.”
[* ] In 1811, out of 88 local banks, there were 55, or two thirds, in New England and New York, although those States contained but little more than one third of the population. In 1834, the States north of the Potomac had 414 banks, with a capital of 106 millions; the Southern and Western States had only 88 with a capital of 60 millions, about one half of which were in a few commercial towns. The population of the former was then 6,500,000, of the latter 7,500,000, the ratio of the banks, therefore, was as 4 to 3, while that of the population was as 6 to 7. Massachusetts and Connecticut alone, in which the character of the mother-country is most strongly preserved, had 174 banks or one third of the whole number of local banks, with a capital of 40 millions, or one-fourth of the whole banking capital of the country, although their population was only one thirteenth of the whole population. The extension of the culture of cotton, and of the trade which it creates, has since, however, tended to turn the balance in favour of the south, and several large banks have been established in the southern capitals with branches in the interior.
[* ] Several bank charters in Louisiana contain a provision obliging the bank to lend a large proportion of the capital to the planters. The Citizen’s Bank is bound to advance one half its capital to landholders, beside which they have the advantage of being share-holders without having paid up anything. The bank borrowed its effective capital of European capitalists; its nominal capital is double that sum. It gives in return mortgages on the estates of the share-holders to that amount, with the guarantee of the mortgage by the State. Each share-holder is entitled to credit to the amount of half his stock at the rate of six per cent. The other half of the capital is devoted to the commercial operations of the bank. The share-holders then, have their share in the profits. It will be seen that this system depends on the legislation in regard to mortgages.
[* ] The Neapolitans are said to have made the following objection to a company, which proposed to run a steam-boat between their city and Sicily “Your boat takes us over in one day, and yet you demand the same fare, as a sail vessel which is three days. That is absurd; how can you expect that we will pay as much for being found one day as for three?” This is the reasoning of a people, who have no idea of setting an economical value on time.