"In England confidence is _almost_ universal. The banker credits the
manufacturer and the farmer. They are willing to give credit to the
merchant, because they have confidence that he will pay them. He gives
credit to the shopkeeper, who, in his turn, gives credit to the
labourer.
"Immense masses of property change owners without examination;
confidence thus producing a great saving of labour. Orders to a vast
extent are given, with a certainty that they will be executed with
perfect good faith; and this system is continued year after year,
proving that the confidence was deserved."
Now, after this admission what more can be required? Confidence proves
security of property, and should any change take place so as to render
the security doubtful, confidence would immediately cease. It is,
therefore, rather bold of Mr Carey, after such an admission, to attempt
to prove that the security of property is greater in America than in
England; yet, nevertheless, such is his assertion.
Mr Carey bases his calculation, first upon the losses sustained by the
banks of England, in comparison with those sustained by the banks of
Massachusetts. Here, as in almost every other argument, Mr Carey
selects one state--a state, _par excellence_, superior to all the others
of the Union; a pattern state, in fact--as representing _all_ America
against _all_ England. He admits that, as you go south or west, the
complexion of things is altered; but notwithstanding this admission, he
still argues upon this one state only, and consequently upon false
premises. But allowing that he proved that the losses of all the banks
in America were less than the losses of all the banks in England, he
would still prove nothing, or if he did prove anything, it would be
against himself. Why are the losses of the American banks less? Simply
because they trust less. There is not that confidence in America that
there is in England, and the want of confidence proves the want of
security of property.
The next comparison which Mr Carey makes is between the failures of the
banks of the two countries; and in this argument he takes most of the
states in the Union into his calculation, and he winds up by observing
(in italics) that--"From the first institution of banks in America to
the year 1837, the failures have been less by about one-fourth, than
those of England in the three years of 1814, 15, and 16; and the amount
of loss sustained by the public bears, probably, a still smaller
proportion to the amount of business transactions."
Now, all this proves nothing, except that the banks of America are more
careful in discounting than our own, and that by running less risk they
lose less money. But from it Mr Carey draws this strange conclusion:--
"Individuals in Great Britain enjoy as high a degree of _credit_ as can
possibly exist, but _confidence_ is more universal in the United
States."
_Credit_ is the result of _confidence_; and if, as appears to be the
case, the American confidence in each other will not procure credit, it
is a very useless compliment passed between them. It is simply this--"I
am certain that you are a very honest man, but notwithstanding I will
not lend you a shilling." Indeed. Mr Carey contradicts himself, for,
two pages farther on, he says:--"The existence of the credit system is
evidence of mutual confidence."