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its effects; and when their hopes had been raised, and their judgment somewhat disordered by the fever in their veins, and they saw the means of accomplishing these great objects not only within reach, but almost thrust into their hands, it is not strange that they seized upon them with incautious eagerness, and expended them with a prodigality somewhat in proportion to the ease with which they were obtained.

We repeat, therefore, that great injustice must be done to the people of this country, if the general state of men's minds and of financial affairs is left out of view in considering the subject of their indebtedness. They have been rash, but it was at a time when rashness was epidemic. They have been improvident, but it was when prudence was generally considered little better than narrow-minded timidity. Their fault

may have been very great, but it was very general, and it was a fault of which the creditor largely partook with the debtor. If it was rash and improvident in them to borrow, it was rash and improvident in others to lend ; for, in these cases, the lenders had almost as good means of knowing the grounds of credit as the borrowers had. The , borrowers were States, whose resources and means of payment are necessarily made public, so that all may know them. The works on which the money was to be expended were public works

; their character and purposes were known; and when the loan was obtained for a specific and declared object, which it often was, the reasonableness and the probable results of the undertaking were open to the judgment of all intelligent men. In our opinion, it was the duty of the lender to exercise his judgment on these points. It is reasonable to expect, that creditors will not only be vigilant, but suspicious ; for those qualities naturally grow out of the relation of debtor and creditor when it is formed, and they spring up whenever an attempt is made to form it. The fears of creditors, and of those who are asked to become creditors, not seldom lead to untrue judgments and harsh constructions, which are not to be blamed, because they contribute to the general safety. But when we find rashness where we had a right to expect caution, and a blind confidence in place of a careful examination into means and plans, we cannot doubt, that the general infatuation must thereby be increased, and that they who have departed so widely from the qualities which usually belong to their position have done much to produce the mischief.

Let us not be misconstrued into saying one word that tends to affect the legal and moral obligation of any contract made under these circumstances. What we have said does not touch that obligation. The parties were competent to make contracts. The borrowers were free States, whose public acts were done by the responsible agents and immediate representatives of the whole people. Of course, it is not intended to intimate, that such a degree of infatuation might exist as would relieve one of the parties from the obligation of its contracts. This would be to stultify a sovereign State ; a process which would certainly be entirely new in the history of public law, and one to which, it is presumed, no State would very willingly submit. Our remarks have no reference to the binding force of the contracts. They are applicable, not to the will to pay, but to the ability to pay. They tend to excuse insolvency, not fraud. They present some reasons why a people, who admit their indebtedness, may, at the same time, without dishonor, admit their inability to make payment. It is often dangerous to run too close a parallel between public and private duties. The rules for the conduct of States and of individuals are not identical, though it is not always easy to see just where they differ. But in this matter, we can perceive no distinction between the case of an upright and well-meaning man, who cannot pay his debts, and a State which is in the like predicament. The mere fact of insolvency furnishes no ground for inferring bad faith, or even bad judgment. The circumstances under which the debts were contracted, and

especially the inducements which led to them, must be taken into the account, before any decision unfavorable to the debtor can justly be made. And if it is found, that a State has been led astray partly by the insane confidence of its creditors, those creditors must bear some of the blame which always attaches to unsuccessful rashness.

There is another fact, which it is important to keep in view. The real prosperity of the States at the time when these debts were contracted, especially when seen under the bright sunshine which then rested upon all things, was a cause, and, to a great extent, a just cause, of confidence. Their progress in every thing which makes a people great, and powerful, and rich, had been unexampled. Look at their population ; in thirty years, it had increased from seven few began at last to doubt, whether they, or all the rest of mankind, were mad. The bubble was so strong, and lasted so well, that it seemed almost impossible that it should be a bubble.

But at last, the fixed laws of trade began to produce their long deferred, but necessary, effects. Contracts of all kinds had multiplied to such an extent, that a great deal of money was wanted to fulfil them. Prices were so high, that much more money was needed to effect the transfer of

property than in the ordinary state of the market. In the midst of the greatest apparent prosperity, there was a great demand for money. The supply had increased enormously, but it was not sufficient. The banks did their utmost, but they could not keep up to the demand. Money became scarcer and dearer. There was now a choice among borrowers, and a discrimination between those whose credit rested on something, and those whose credit had no solid support. It was difficult for any one to get money. Many could not get it at all, and failures began to take place. The process went on, and confidence fell lower, and failures were multiplied daily.

It may here be remarked, that, if the Bank of England had curtailed its issues early in 1936, a check would have been felt, which would probably have gradually reduced our headlong speed, and prevented the great calamity of a failure of all our banks. The managers of that bank certainly had the means of knowing, that prices, both in England and the United States, and especially in the latter country, were inflated most unnaturally ; that fictitious credit to an immense amount had been created, and was constantly increasing ; that speculative engagements were enormously multiplied, and that there was a constant drain of specie from Great Britain. Notwithstanding all this, the bank continued to extend its engagements until August, 1836, when, finding its specie slipping rapidly away, it began to fear for its own safety. Still its course was rather vacillating for several months, until it finally gave a decisive blow, by stopping the credit and cutting off the facilities of several of the American bankinghouses in London. These banking-houses were, therefore, obliged to call on our merchants for immediate payment, and our merchants required specie from the banks wherewith to make payments. At that moment, no ordinary supply of specie could have prevented a suspension of payment by In the lifetime of one generation, we have seen an extent of wilderness that seemed illimitable divided into cultivated farms ; solitary inland seas made glad with the presence of an active and prosperous commerce ; great rivers, whose waters formerly reflected only the shadows of the forest, running by the luxurious abodes of civilized men, and bearing the varied products of labor ; cities, which are already worthy of the name, filled with an industrious and intelligent population, springing up in the solitary places ; nay, great states, whose people are reckoned by millions, brought into existence and established during this short period.

What wonder, then, that such a people should have felt confidence in their resources ? They knew their means had been sufficient to accomplish things which the rest of the world looked upon as impossible. They knew, that the tide of prosperity had been rising so fast, that it had borne every thing along with it. Is it strange, that they should have been led astray by hope, and brought into the midst of difficulty by want of caution ? Let us, then, be just to ourselves. Let us not sit down under the imputation, that no more wisdom was to be expected from a government of the people. We deny that more wisdom was to be expected of any government in similar circumstances. Such mistakes are not

Other governments have done such things before, and with far less excuse.

We do not, however, acquit some of the States of all blame for contracting such great debts. They acted incautiously, and bitterly have they repented of it. But we do maintain, that, when the circumstances under which the debts were contracted, and the objects for which the supplies were thus obtained, are fairly examined, those governments will not be found exposed to the sev censure which they have incurred. Being human, they were imperfect. Success is the sole test with common minds. They who are wiser will look at the causes of failure, and see whether these are such as ought reasonably to have been foreseen.

It is easy for observers to see now, that the unnatural state of things which existed in 1835 and 1836 could not long continue. A few sagacious men, so placed as to be able to survey the whole field of commerce, saw this at the time ; though we doubt if any one understood, or even conjectured, how extensive the malady was. Even these

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few began at last to doubt, whether they, or all the rest of mankind, were mad. The bubble was so strong, and lasted so well, that it seemed almost impossible that it should be a bubble.

But at last, the fixed laws of trade began to produce their long deferred, but necessary, effects. Contracts of all kinds had multiplied to such an extent, that a great deal of money was wanted to fulfil them.

Prices were so high, that much more money was needed to effect the transfer of erty than in the ordinary state of the market. In the midst of the greatest apparent prosperity, there was a great demand for money. The supply had increased enormously, but it was not sufficient. The banks did their utmost, but they could not keep up to the demand. Money became scarcer and dearer. There was now a choice among borrowers, and a discrimination between those whose credit rested on something, and those whose credit had no solid support. difficult for any one to get money. Many could not get it at all, and failures began to take place. The process went on, and confidence fell lower, and failures were multiplied daily.

It may here be remarked, that, if the Bank of England had curtailed its issues early in 1836, a check would have been felt, which would probably have gradually reduced our headlong speed, and prevented the great calamity of a failure of all our banks. The managers of that bank certainly had the means of knowing, that prices, both in England and the United States, and especially in the latter country, were inflated most unnaturally ; that fictitious credit to an immense amount had been created, and was constantly increasing ; that speculative engagements were enormously multiplied, and that there was a constant drain of specie from Great Britain. Notwithstanding all this, the bank continued to extend its engagements until August, 1836, when, finding its specie slipping rapidly away, it began to fear for its own safety. Still its course was rather vacillating for several months, until it finally gave a decisive blow, by stopping the credit and cutting off the facilities of several of the American bankinghouses in London. These banking-houses were, therefore, obliged to call on our merchants for immediate payment, and our merchants required specie from the banks wherewith to make payments. At that moment, no ordinary supply of specie could have prevented a suspension of payment by

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