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THE CREDIT SYSTEM AND THE ARISTOCRACY - 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 CREDIT SYSTEM AND THE ARISTOCRACY
August 26, 1837.
It is curious to observe what studied and elaborate panegyricks are bestowed by the aristocratick press generally on what they term “the credit system.” They seem to be fully impressed with the truth of the sentiment, “interdum fucata falsitas, in multis est probabilior, sape rationibus vincit nudam veritatem.”1 It is for this reason they invent sounding names, and use such a profusion of false colours, to deck out a system, which, if called by its proper appellation, and shown in its true, undisguised features, would repel every body by its ugliness. What is their credit system but a system which bestows exclusive privileges on the scheming few, at the expense of the industrious and hard handed many? Credit, we admit, in the broadest terms, is a useful and beneficial agent in carrying on the great and various intercourse of society. We avow ourselves the friend of credit—so much its friend, that we are unwilling to see it cramped by arbitrary restrictions. We would have it left to the unbounded freedom of nature. We would have it, like the sunshine and dew of heaven, to dispense its blessings equally upon all. We would have it, like a bounding river, to flow wither it listeth in its natural channels, not dammed up between artificial barriers, and forced to run only in particular directions, fertilizing the lands of a favoured few, and leaving the rest to be parched with drought, or lie in sterile loneliness. We are the friend of credit, for the same reason that we are the friend of any other generous impulse or affection of the human heart, and we would no more regulate its action by law, than we would that of hope, benevolence, friendship or love. If by “the credit system,” free spontaneous, natural credit is meant, then we are the friend of the credit system; but if, on the other hand, a system of legislation is meant, by which exclusive privileges of exercising credit, are conferred on a set of men and prohibited to the rest of the community, then are we its determined and unappeasable foe. We are for leaving capital free, and credit free. We are, in all things, for trusting to the glorious principle of freedom—that principle which recognizes the equality of the rights of all mankind, and considers government as having no legitimate functions beyond the mere preservation of those rights. “There is no more reason,” says Raymond in his Political Economy,2 “why a man, or body of men, should be permitted to demand of the publick interest for their reputation of being rich, than there would be in permitting a man to demand interest for the reputation of being wise, learned, or brave. If a man is actually rich, it is enough for him to receive interest for his money, and rent for his land, without receiving interest for his credit also.” We oppose this sentiment not less strenuously than we oppose the opposite system which would annex peculiar privileges to “the reputation of being rich.” We would neither confer upon men by law nor deny to them the right of receiving interest on their credit. We see no reason why a man or body of men should not be permitted to demand interest for their credit, as well as for their actual means, provided the rest of men are left equally free to give or refuse that interest as they please. If you go to a wealthy person, and ask him to lend you his promissory note for a given sum, telling him that, by reason of his known wealth, his note will answer all the purposes of money to you, he has a perfect natural right, and we can perceive no good argument in favour of that right being interdicted, to charge you a price for the accommodation he affords by the loan of his credit.—The true credit system is the free trade system. Leave credit free, and the relations of demand and supply will “regulate and preserve,” far better than all the quackery and tyranny of special legislation.
But when we pass beyond the ground of mere permission to charge an interest on credit, and come to that of express and exclusive legislative authority to do so, the question assumes a very different shape. With this limitation we wholly agree with the writer. What reason is there, which has not its foundation in palpable injustice, why any particular set of men should be specially privileged by law to issue their promises to pay, their mere acknowledgements of indebtedness, and force the community to pay an interest of seven per cent, not on the money they have, but on that which they have not, on their mere credit? It may be said they do not force the community to do so. They virtually force the community to do so, however, by reason of the false character which their exclusive privileges give to the notes they issue. The law considers those notes as money; the government receives them as such, and becomes, in some measure answerable for their punctual payment on demand; and thus they are necessarily received into general circulation as money. This is a gross and crying injustice.
If the money business of the community were left to take its natural course, does the reader suppose that the principal financial stations would be filled, as many of them now are, by men, not of wealth, not of financial talent nor experience, but mere party electioneerers, mere brawlers at pot houses and ward meetings? Does he suppose, under a system of free trade, that mere fidelity to “party usages,” the mere fact of a certain equivocal sort of political influence, the mere having some dozens or some hundreds of voters at one’s heels, would constitute such ability to transact banking business, as would be certain to give those possessing such qualifications the confidence of the community? What made Cornelius W. Lawrence, and Gideon Lee, and George D. Strong, and Walter Bowne, presidents of banks? Were they appointed solely in reference to their ability in financial transactions, or was the office given to them as a reward for party services and sacrifices? These are plain questions, but they relate to proceedings of the utmost notoriety, and on such a subject it is needless to mince matters. The time has arrived for plain questions, and plain answers too, and the argumentum ad hominem is sometimes a very useful division of logick. We have too long submitted to a system of banking founded on political capital, instead of money capital, and hedged around with exclusive privileges, instead of being left open to the wholesome influence of the freest competition. If we do not wish to be slaves forever, we must no longer deceive ourselves and others by honeying affairs over with sweet words. “Let the candied tongue lick absurd pomp;” but the honest tongue should speak out boldly, and call things by their right names.
If the political services of Mr. Lawrence, or Mr. Lee, or Mr. Strong, or Mr. Bowne, were of that magnitude and general importance as to entitle them to publick rewards, let them be rewarded openly and liberally, and we shall never utter a word in censure of the act. We give, from the coffers of the federal government, a beggarly annual stipend to the remaining soldiers of the revolution. The only complaint we have ever heard on this account is that the country is so parsimonious in its gratitude. The great body of the people would be willing that a much larger sum should be given to the remnant of the revolutionary veterans, in token of the sense entertained by the country of their heroick services and sacrifices. A similar sentiment would govern them no doubt in relation to Messrs. Lawrence, Lee, Strong and Walter Bowne, if it were distinctly pointed out in what way the signal patriotism of those worthies has been displayed. But they would still ask, and with good reason, that the reward, or token of gratitude, or whatever it might be called, should be bestowed openly and without disguise or indirection. Such a course is due alike to the character of the state, and to that of the patriots for whom the publick purse is opened. The reward, and the illustrious services for which it was rendered, should be inscribed in enduring letters on the muniments of our state, so that all future times might profit by the example of patriotism exhibited by Messrs. Lawrence, Lee, Strong, and Walter Bowne, and by the example of gratitude exhibited by their countrymen. But we protest against the creation of exclusive privileges for the purpose of paying these men for their political services. We protest, in the name of freedom, against such a violation of its fundamental principle. We protest, in the name of the worthies themselves, against fobbing them off with so poor and equivocal an acknowledgement of their claims on legislative munificence.
But gesting apart—for it is a subject which hardly admits of gest—we desire once more to raise our voice against monopoly legislation on the subject of banking. Our state banking system is an odious system of exclusive privileges, dangerous, in their very nature, to the principles of political, as well as gross violations of the plainest fundamental maxims of economick freedom. It is a system of exclusive privileges built up for the especial reward of party services. It is instituted to provide sinecures for a band of gentlemen pensioners. It was conceived in the stews of legislative prostitution, born in corruption, and smells to heaven with the rank odour of hereditary rottenness. How long will freemen—or men claiming to be free—consent to have this bastard offspring of fraud and folly for their master? How long will they consent to be the cringing vassals of a feudal system instituted for the support of such a contemptible baronage as our paper-money lords?
[1 ]Roughly, “it stands to reason that painted falsehood, in much it is more likely, occasionally conquers the naked truth.’’—Ed.