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profited by their position. Ignorance of principle and overweening confidence were too generally found where knowledge and a reasonable degree of scepticism might have been looked for. The great inajority of those engaged in the trade had neither sagacity to foresee the coming storm, nor caution to provide against it; but went on blindly increasing their engagements, and crowding sail even after they had got among the shallows, and the winds had begun to blow.
The consumption of most articles of foreign growth rarely differs materially in any country one year from another; unless there be some extraordinary variation in their prices. So long as these remain nearly stationary, consumption fluctuates but little; its increase or diminution depending on the increase or diminution of population and wealth, and the spread of new tastes and habits which are always slowly diffused. Hence, when we find a sudden and rapid increase taking place in the amount of imports into any country, the fair presumption is, provided it be not accompanied by one or other of the circumstances now mentioned, that its trade has been pushed beyond its proper limits,-that large importations are made upon speculation, -and that a dangerous recoil may be expected. Now, this has been most remarkably the case with the trade of the United States. The imports into the Union—the total value of which amounted, during the year ended the 30th of September, 1830, to 70,876,920 dollarsamounted to 108,118,311 dollars in 1833, and in 1836 to no less than 189,980,035 dollars; exhibiting an increase in the course of half-a-dozen years of from about 71 to about 190 millions of dollars, or in the extraordinary ratio of two hundred and seventy per cent! It is almost superfluous to add, that rapid as is the increase of population, and of improved tastes and bahits in the United States, it bears no sort of proportion to this unparalleled and indeed astonishing increase in the amount of imports. And every merchant aware, as all of them might, or should have been, of so enormous an excess of importation, ought immediately to have apprehended that it was the result of overtrading and speculation; and should forthwith have set resolutely to work to contract his engagements.
But it may, perhaps, be said that this would have been an unwarrantable inference; and that the existence of overtrading is not established by an increase of imports, but depends on the circumstance of their increasing in a greater degree than the exports. This, however, is not really the case. All that an equality of imports and exports establishes is, that the former have been paid for; but any extraordinary increase in the amount of imports shows that produce must be accumulating in the
importing country; and that a ruinous depression of prices, and consequent shock to credit, may be anticipated.
Apart, however, from these considerations, it is true, as respects America, not only that the imports increased enormously during the six years ending with 1836, but that that increase very much exceeded the increase in the amount of exports. Thus, in 1830, the total value of the exports of all sorts of produce from the United States amounted to 73,899,508 dollars; in 1833, it amounted to 90,140,433 dollars; and, in 1836, to 128,663,040 dollars. It consequently appears, that the increase in the exports of the United States since 1830 has been from about 74 to about 129 millions, or in the ratio of 174 per cent. But we have already seen that during the same period the imports had increased 270 per cent; that is, no less than NINETYsix per cent more than the exports ! In point of fact, during the last year the imports into the United States exceeded the exports by the sum of 61,316,995 dollars, or by above L. 12,000,000 sterling. And seeing that the American Customs Accounts represent the real values of the imports and exports with very considerable accuracy, this exhibits, perhaps, the most striking proof of overtrading ever given to the world. We subjoin
An Account of the Total Exports from, and Imports into, the United And it deserves to be remarked, that from a third part to a half of this immense trade is carried on directly with Great Britain ; and taking into account that which is carried on indirectly through this country with the Continent, and with India and China, it will be found that at least two-thirds of the foreign trade of America depends directly or indirectly on her connexion with England.
States, from 1830 to 1836, both inclusive. (From the Official Accounts printed by order of Congress.)
Articles, the Growth, Articles, theGrowth,
Total Value of
Total Value of the Imports into the United States
from Foreign countries.
1830 1831 1832 1833 1834 1835 1836
Dollars. 59,462,029 61,277,057 68,137,470 70,317,698 81,024,162 101,189,082 106,916,680
Dollars. 14,337,479 20,033,526 24,039,473 19,822,735 23,312,811 20,504,495 21,746,36C
Dollars. 73,899,508 81,310,583 87,176,943 90,140,433 104,336,973 121,693,577 128,663,040
Dollars. 70,876,920* 103,191,124 101,029,266 108,118,311 126,521,332 149,895,742 189,930,035
* The imports had not differed materially from this for a dozen years previously.
Owing to the fact, arising out of natural causes, of profits being at all times decidedly higher in America than in England, there is a constant tendency to withdraw capital from this country to vest it in the United States. This circumstance sufficiently accounts for a part of the ordinary excess of imports into the Union ; but it will not account for their sudden and extraordinary increase during the last three years. With the exception, indeed, of coin and bullion valued at 13,400,881 dollars, of which 5,167,733 dollars were re-exported, and iron valued at 4,023,042 dollars, almost all the vast imports of 1836 consisted of manufactured and other articles for the use and accommodation of the population. The value of the silk manufactures imported during the course of that year is estimated at the immense sum of 20,331,896 dollars, or above four millions sterling ; and other articles in the like proportion. It is clear, therefore, that the excess of importation was not occasioned by the fetching of articles from England to assist in the construction of canals, railroads, or other public works. The imports into America consisted mainly of those suited to the wants of a rich and luxurious society. And though it might be the intention of parties in England to vest a considerable part of the value of the exports from this country in American slocks and securities, still it is clear that that circumstance could in nowise mitigate the pressure upon the importers of such an excessive quantity of produce into America. The difficulty with them was, owing to the vast increase of imports, to effect sales except at a heavy loss; for when they had effected a sale and got the money, it was immaterial to them whether they laid it out on English account in America or remitted it to England.
Without stopping to recapitulate in detail the previous statements, they conclusively establish the fact of an extraordinary degree of overtrading on the part of the Americans; first, by the circumstance of the imports into the Union having increased no less than 270 per cent in the course of the six years ending with 1836; second, by the imports having increased much faster than the exports, and having, in 1836, exceeded the latter by the immense sum of about L. 12,000,000 sterling; and, third, by the impor is having consisted almost entirely of articles of consumption, and not of articles destined to enter into the construction of public works or permanent improvements.
Assuming, therefore, the fact, of which assuredly there cannot be even the shadow of a doubt, that the Americans have latterly overtraded to an almost unprecedented extent,--we have next to enquire into the causes of this overtrading, and consequently of the embarrassment and bankruptcy which have necessarily resulted from it.
These causes may be divided into two great classes—those peculiar to America and those peculiar to England.
I. It is not necessary, in reviewing the causes of the overtrading in America, that we should enter into any details with respect to the struggle between General Jackson and the Bank of the United States. It is enough for our purpose to observe, that Government did every thing possible, first, to damage the credit and influence, and then to extinguish that great establishment. In this view, it withdrew from it, in June 1833, the deposits of public money; and it succeeded in the end, despite the most formidable opposition in preventing the renewal of its charter. It is true that it has since been rechartered by the State of Pennsylvania, but this only renders it a State, and not a National bank. It can no longer establish branches in other States; and being deprived of the deposits of public money, and of the consideration attached to as a national institution, its influence in the Union has been greatly diminished. Now, we are disposed to look upon this as a very great evil. While the Bank of the United States had branches diffused all over the Union, its notes formed a sort of national currency; and its great capital, and the skill with which it was managed, gave it much consideration, and made it difficult for inferior notes to circulate in company with its paper. In this way it operated as a powerful check on the injudicious or dishonest proceedings of other banks;--putting, as M. Chevalier has truly stated, a bridle upon their abuses, and limiting, if it did not altogether repress them. (Lettres sur l'Amérique du Nord, Letter 4.)
But after the deposits had been withdrawn from the United States Bank, and it became extremely probable that General Jackson would succeed in entirely subverting the institution, a new state of things began. The persecuted establishment lost consideration and power, while, by distributing the public deposits among from sixty to seventy private banks, Government powerfully stimulated that mania for Joint-Stock Banking that has always prevailed to a less or greater extent in America. We do not suppose that General Jackson and the Government párty wished to do this; but such was the necessary effect of their
VOL. LXV. NO. CXXXII.
measures against the United States Bank; their influence in this respect being only in a very small degree counteracted by the regulations laid down as to the conduct of the 'pet banks," as those were termed, to which the deposits were intrusted. In consequence, the mania for new banks went hand in hand with that for railroads. On the 1st of January, 1830, there were in the Union (excluding the Bank of the United States) 329 private banks, having, or professing to have, a capital of 110,192,268 dollars. In June, 1834, the number of private banks had increased to 506, and their capital to 170,123,788 dollars. In the short interval between June, 1834, and January, 1835, no fewer than fifty-six new banks were founded, with a capital of above twenty-four million dollars; and this excessive débordement, as it is expressively termed by M. Chevalier, continued down to July;
new banks springing up like mushrooms in every village throughout the Union, until they formed a grand total of about 700 banks, independent of vast numbers of branches. They had, according to their own statement—which is, however, believed to be very much within the mark—advanced, at that period, the enormous sum of about 600,000,000 dollars, or L.120,000,000 sterling, in loans and discounts!
America being a country with every facility for the ready and profitable investment of capital, and her people being eminently distinguished for their adventurous, speculative spirit, we need not certainly be surprised that this inundation of banks, all issuing notes, and discounting recklessly, should have powerfully stimulated the existing and, as it were, constitutional tendency to speculation; and that every sort of overtrading should have prevailed in the Union. All sorts of produce rose rapidly in price. The middlemen who bought goods from the importers for distribution in the interior, and the shopkeepers who purchased from the middlemen, having unusual facilities for getting credit, rapidly extended their engagements, and augmented their stocks; and hence it is, that, notwithstanding the vast increase of imports, there was no considerable accumulation of stocks in the Atlantic cities, but that the excess was distributed over every part of the country, and consequently escaped the notice of the inattentive observer. To such an extent was speculation carried, that in 1836 the legislature of the state of New York incorporated no fewer than forty-two railway companies, some of them with immense capitals. There grew up, at the same time, a most extraordinary rage for purchasing public lands and building situations, the price of both being, in consequence, elevated far above its natural level. The extent to which this mania was carried may be inferred from the fact, that in 1833 the