THE NATURAL SYSTEM

Plaindealer, August 19, 1837.

The opposition party and the monopoly democrats are alike the friends of an exclusive banking system, but differ widely, as to the authority on which such a system should rest. The one side advocates the monarchical principle of a great central bank established by federal authority, and the other is equally strenuous in favour of the aristocratic principle of state institutions. They both agree in the most extravagant eulogiums of “the credit system,” and consider it the source of all the blessings and advantages which we enjoy. They alike disclaim, with seeming enthusiasm, on the resources of wealth which our country contains, on the activity of its industry, the boldness of its enterprise, and the fertility of its invention, ever on the stretch for new and speedier modes of gain; and they alike demand, with an air of triumph, what has caused these resources of wealth to be explored, what has given energy to industry, confidence, and enterprise, and quickness to the inventive facilities of our countrymen, but the happy influence of “the credit system?” It is this, they tell us which had dug our canals, constructed our railroads, filled the forest, and caused the wilderness to smile with waving harvests. Every good which has happened to our country they ascribe to the credit system, and every evil which now afflicts it they allege may be effectually remedied by its aid. But they differ widely as to the mode of remedy; a cordon of state monopolies being the object aimed at on the one side, and a great central money power the darling project of the other.

For our own part, we are free to acknowledge that if we were confined to a choice of these evils we should not hesitate to decide in favour of the central bank. We are not alone in this sentiment. There are myriads and tens of myriads of truehearted democrats in the land who, if the unhappy alternative were alone presented to them of a federal bank or a perpetuation of the system of exclusively privileged state monopolies, would decide promptly and earnestly in favour of the former. Better a single despot, however galling his rule, than more galling tyranny of a contemptible oligarchy. While a federal bank is not more dangerous to the principles of political liberty, its influence would be less extensively pernicious to public morals. They who live in the purlieus of a monarch’s court may draw out but a sickly existence; but the moral health of a whole country suffers, when it is under the domination of a league of petty tyrants who fix their residences in every town, and taint the universal atmosphere with the contagion of luxurious example. Bad as is the monarchical principle of a federal bank, the aristocratic principle, which would distribute the same tremendous power among a thousand institutions scattered throughout the confederacy, is worse. Mankind suffered heavier oppression under the rule of the feudal barons, than they had ever before suffered when the political power was centered in the throne. But they arrived not at the rich blessings of freedom, until monarchical and feudal tyranny were both overthrown, and the doctrine of divine right and exclusive privilege gave way before that of universaI equality.

He who compares the financial history of Europe with its political, will be surprised to find how perfect is the analogy between them. Her ingenious and philosophical mind would be well employed in running the parallel. It would be found that political revulsions, as well as commercial, are the inevitable result, sooner or later, of conferring exclusively on the few privileges that belong, by nature, in common to all; and that all violations of the holy principle of equal rights, while in politics, they produce tumults, insurrections, and civil war, in economy, exercise a corresponding influence, and are followed by panic, revulsion, and a complete overthrow of all the established commercial relations of society.

The fundamental maxim of democracy and of political economy is the same. They both acknowledge the equal rights of all mankind, and they both contemplate the institution of “a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labour the bread it has earned.” The preservation of man’s equal rights is the be-all and the end-all of the natural system of government. The great maxim which acknowledges human equality is, in the political world, what gravitation is in the physical—a regulating principle, which, left to itself, harmoniously arranges the various parts of the stupendous whole, equalizes their movements, and reduces all things to the most perfect organization. Monarchy, aristocracy, and all other forms of government, are founded on principles which deny the equal rights of mankind, and they all attempt to substitute an artificial system for that of nature. The effect is sometimes to produce a seeming increase of prosperity for a time; but nature avenges her violated laws sooner or later, and overthrows the unsubstantial fabric of presumption and pride.

The great end which is alone worthy of the efforts of the champions of democratic and economic truth, is to institute the natural system in all matters both of politics and political economy. Let them aim to simplify government, and confine it to the fewest purposes compatible with social order, the mere protection of men from mutual aggression. We need but few laws to accomplish this object. We need particularly few in regard to trade. What is the whole essence and mystery of trade, but an exchange of equivalents to promote the convenience of the parties to the barter? Leave the terms, then, to be settled by men’s own notions of mutual convenience and advantage. There is no need of political interference.

Extreme simplicity is usually considered as the condition of barbarism, before man has raised himself by science and art from the degradation of mere animal nature. But the saying that extremes meet is as true in politics as in any of its applications. Simplicity may be the goal, as well as the starting-point, of social effort. Is it not a fact verified by the observation of every man of cultivated mind, that in religion, in literature, in art, and in the conventional manners of a community, simplicity and refinement go hand in hand? As society advances it throws off its cumbrous forms and ceremonies; it follows more and more the simple order of nature, which does nothing in vain, but carries on its stupendous operations by the directest processes, linking cause and effect, without superfluous complication, and adapting its means with the utmost exactness to the end. Compare the nations of the earth, and see if simplicity and refinement are not always found together, in whatever respect the comparison is instituted. In architecture, why are the gorgeous edifices of Constantinople, glittering with “barbaric pomp and gold,” deemed inferior to the plainer structures of the cities in western Europe? In literature, why are poems crowded with oriental splendour of imagery, and heaped with elaborate ornaments of diction, thrown aside by the reader of taste for those which breathe the unstudied sweetness of nature? In manners, why do those seem the most refined which seem most truly to flow from the promptings of native amenity and elegance of soul? It is because that is most excellent which comes nearest to the simplicity of nature. Nature does nothing in vain.

Simplicity in government is not less a proper object of those who wish to raise and refine the political condition of mankind. Look at those governments which are the most complex, and you will find that they who live under them are the most wretched. As governments approach simplicity, the people rise in dignity and happiness; and all experience as well as all sound reasoning on the certain data of induction, bears us out in the conclusion, that when they conform most nearly to the simplicity of nature, then will mankind have reached the utmost bound of political prosperity. Then will the cumbrous artificial and arbitrary contrivance of “the credit system,” be abandoned, for the harmonious and beneficial operation of natural, spontaneous credit, the free exercise of confidence between man and man.

37.
Jean Baptiste Say, French classical economist, was author of
A Treatise on Political Economy, the fifth American edition of which was published in 1832, from which this quote is likely taken.—Ed.

“SPECIE BASIS”

38.
In the free banking system of Scotland, which Leggett praises elsewhere, almost all banks operated with unlimited shareholder liability for bank obligations. They experienced no runs for specie, though their specie reserves were a small percentage of their note and deposit liabilities.—Ed.

THE CREDIT SYSTEM AND THE ARISTOCRACY

39.
Roughly, “it stands to reason that painted falsehood, in much it is more likely, occasionally conquers the naked truth.”—Ed.

40.
A reference to Daniel Raymond,
The Elements of Political Economy, the second edition of which was published in 1823.—Ed.

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