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THE PRESSURE—THE CAUSE OF IT—AND THE REMEDY - William Leggett, Democratick Editorials: Essays in Jacksonian Political Economy 
Democratic Editorials: Essays in Jacksonian Political Economy, Foreword by Lawrence H. White (Indianapolis: Liberty Fund, 1984).
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THE PRESSURE—THE CAUSE OF IT—AND THE REMEDY
April 29, 1837.
Text abridged and extracts deleted.
These three phrases embrace the only topick which now has interest for the publick mind. Amidst the desolation of the financial tempest raging on every side, men regard nothing but the ruin it is spreading through the land, and think of nothing but staying its progress, or escaping from its wrath. Consternation is painted on every face, and anxiety throbs in every heart. “What shall we do to be saved?” is the question that falters on myriads of lips; while the incoherent and contradictory statements of those who attempt to reply show how feeble are the struggles of reason in minds paralyzed with fear.
It is one of the inevitable consequences of popular institutions, that no subject of general interest can arise, which publick writers will not endeavour to turn to the uses of party. It would be strange, indeed, if wide spread pecuniary embarrassment should constitute an exception to the remark; since, while it obviously furnishes a prolifick theme of criminatory declamation, but few persons, are sufficiently acquainted with the principles of commerce to detect the real cause of derangement, and ascertain what secret spring has interrupted the revolutions of the stupendous machine, and thrown its vast complication of wheels and levers into disorder. While trade is in prosperous operation, it seems governed by laws as fixed and harmonious and to most minds as inscrutable, as those of the universe. Each link in the mighty chain, each part of the prodigious whole, performs its allotted office, and contributes to the grand result—the improvement of the physical and intellectual condition of mankind. But when derangement takes place, when any thing occurs to interrupt the harmonious movement, such are the mutual relation and dependence of the various parts, that the inquirer is bewildered in his attempts to investigate the cause of the confusion, and is ready to listen to any explanation that fixes the blame of the disaster on those whom he had previously regarded with dislike.
That party writers should take advantage of the present commercial embarrassments to impute censure to those of opposite politicks is therefore not surprising; nor need we be surprised that the wildest of their theories are listened to with credulity by some. Those who impute all the disorders of the community to the operation of that order of the General Government which requires that gold and silver only shall be received in payment for publick lands, find themselves followed notwithstanding the monstrous absurdity of their creed, by a numerous class of disciples; while they, on the other hand, who charge the calamity solely to the distribution of the federal revenue, have also their followers who give full faith to the explanation. Our own opinion has been so frequently expressed, both in this journal and elsewhere, and not only since the embarrassments commenced, but long before the activity of commerce received its first check, that it would be idle to repeat it now. Overtrading has been the cause; and the multiplication of specially chartered banks, with the prodigious amount of paper currency issued by them, has been the main cause of the extravagant spirit of traffick and speculation which the whole people have displayed. One branch of this extensive credit business, carried on entirely through the assistance of the false capital of these paper money institutions, is ably exposed in the annexed article from the Journal of Commerce of Wednesday morning.1
. . .
There is another branch of enormous overtrading, the data in relation to which are precise and certain. We allude to the speculations in the publick lands—lands yet lying in a state of nature, over many of which the foot of the white man has hardly ever trod, and which, in the ordinary course of events will remain untrodden for years. The speculators have far outrun the tardy operations of nature. If men had the fecundity of fishes, it would yet take a long time for population to increase sufficiently to realize their projects. Their cities, towns, villages and watering places, are yet in the same condition with the cotton on which the New Orleans bank and cotton monopolists have advanced their two hundred millions of paper credit. The seed of the cotton is not yet planted, and the very building materials of those cities and towns are yet to be sought in the quarry, the clay-pit and the forest. But in the meanwhile all engaged in these speculations—in this enormous overtrading—have been living as if their wildest plans had been realized. Bank credit has supplied them with the means of present luxury, and they have not scrupled to use it at the most lavish rate. Much of the real profits of the country have gone to the vintners and lace workers of France. People have worn out in costly clothes, and drank up in costly wines, the products of labour.
But we are tired of contemplating this side of the picture. Let us turn to consider in what manner the evil can be remedied. There are those who eagerly avail themselves of the present condition of affairs to demand the reinstitution of a federal bank. But, to say nothing of constitutional objections, and nothing of the political evils to be apprehended from such an institution, has a federal bank ever prevented commercial revulsion? Let the history of 1819, 1825 and 1834 answer the question. As for remedy, there is but one—a steady exercise of industry and frugality. The remedy for a whole community in bankrupt circumstances, is preciseIy the same as for a single individual. When a man contracts debts to a larger sum than the amount of his earnings, he can pay the balance against him only by increased industry and economy. But the means of avoiding a recurrence of the evils now experienced is as important a subject of consideration, as the means of remedying them. In our judgement, they are exceedingly simple. Perfect freedom of trade presents an effectual safeguard against commercial revulsion, and all the thousand horrours which speculation, stimulated to madness by the intoxicating cup of bank credit, inflicts upon the community. Do you want a banking institution to regulate the currency and exchanges? Freedom of trade will supply you with one. It will supply you with all the facilities of trade which a federal bank could supply, and will be free from all the political objections which rest against such an institution. If the restraints on trade in money and credit which exist in this state alone, were repealed to-day, a voluntary banking association would be formed to-morrow, with an aggregation of capital sufficient for all the mercantile purposes of the community. The liability to boundless competition would lead it to place the most unquestionable security for its issues before the publick. The natural rivalry of trade would cause it to return the notes of other institutions for specie, whenever they accumulated beyond a certain point, and this would prevent overissues. We should have a vast banking institution, in effect monopolizing, to a great extent, the financial business of the country, but without anything odious or oppressive in the character of the monopoly, since it would be hedged round by no special enactments, would be open to universal competition, and would depend for its success, and the continuation of its advantages, on the correctness with which it conducted its affairs. It would partake of the character of a monopoly, simply because of the extent of its real capital; and only in the same way that large capitalists, in all branches of business, monopolize, in proportion to the amount of their means, and the intelligence and activity with which they are employed, the peculiar traffick in which they are engaged. Such an institution, subject to the rivalry of jealous, vigilant, and active competitors, would be the immediate offspring of free trade. We see that all attempts to regulate credit and currency by political intermeddling, both in this country and in Europe, have signally failed. We see that in Scotland, where the business of banking is left as free from legislative interference as the business of boot-making, no revulsions, no panicks, no general bankruptcies, have ever taken place. What obliquity of vision is it then that hinders us from perceiving, that the course which wisdom points out for us is to emancipate commerce and finance from legislative thraldom, and leave them to manage their own affairs, subject only to their own irrevocable and immutable laws?
[1 ]This extract, and another following it, described speculations in cotton financed by bank credits.—Ed.