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INTERNATIONAL MONIED RELATIONS.
The rapid development of the resources of the United States, since the general peace of 1815, has attracted the attention of political economists, and opened many new relations between the old and new world. It is highly important that these relations should be fully understood, and properly appreciated, in order to derive from them the utmost mutual advantage. Peace has become the settled policy, as it has always been the best interest, of all civilized nations ; the relations, therefore, of which we speak, are such as are consequent upon this happy state of things, namely, those of trade and commerce; and particularly such as naturally grow up between a country like ours, of boundless extent, unexampled fertility, and inexhaustible resources, requiring additional population, and increased means, for their full development, and nations like those of Europe, whose territories are overburdened with population; whose fields of enterprise are all occupied ; whose capacities are all tried, and whose surplus capital can scarcely find any profitable investment.
The intimacy of these relations are most sensibly felt between the United States and Great Britain, Ireland, France, Holland, and Germany; nations which, while they have furnished us the greater part of our population, are at the same time those with which we have the most intimate commercial intercourse. It is therefore the nations above-mentioned, to which the remarks we have to offer will more particularly refer.
In examining the relations which naturally subsist between different portions of the world thus situated, we are forcibly impressed with numerous reciprocal benefits which they can confer on each other, and are led to contemplate the various ways in which they can promote each others' prosperity. It is not only in the ordinary and regular transactions of trade and commerce, that these advantages can be secured ; but, in the peculiar situation in which these countries are placed, there are other movements, hardly less important in their results. We allude to the furnishing of population and capital by the old world, to develope the resources of the new. Let it be borne in mind, that we have boundless tracts of untouched, virgin soil, which the hand of industry, fostered with a little capital, can in a few years make more rich and productive than the best cultivated fields of England. Take, for example, the state of Indiana, which a short time since was a wilderness of prairie and forest, producing nothing for the support of man, except wild game and fish, but possessing an uncommonly fertile soil
, throughout its whole extent. Imagine a population of five hundred thousand inhabitants, rapidly emigrating, to occupy this rich but rude region; most of them poor, for the wealthy, and even those in comfortable circumstances merely, rarely emigrate. As soon as the new settlement numbers fifty thousand people, they form themselves into a state, and are admitted into the confederacy. As the tide of emigration increases, and sweeps over a greater extent of territory, the enterprising, hardy, and intel
ligent citizens begin to turn their attention to rail-roads and canals, as necessary facilities to get their produce to market. Churches, schools, seminaries, and various benevolent and useful institutions, spring up, on every hand; men who went there comparatively penniless, and who perhaps borrowed a few hundred dollars, at exorbitant interest, to commence the improvement of their farms, become shortly independent land-holders; and the land which a few years before cost them a dollar or two an acre, in fee, now yields them a clear income of as much or more than the original cost per annum. The same principle extends to the community, and developes the same increase of the aggregate wealth of the whole people.
The state being organized, and advancing rapidly in prosperity, issues its stock, or
obligations to pay money, perhaps twenty or thirty years ahead, bearing interest at five or six per cent. per annum, and devotes the proceeds of the sale of these bonds, to making rail-roads, canals, and other improvements, which enhance the permanent value of lands, by opening facilities to market; and before the expiration of the twenty years, have added several times the amount of the debt thus contracted, to the substantial wealth of the state. It has also been proved, by abundant experience, that the income from tolls on these improvements, is sufficient to pay the interest on the debt incurred for their construction, even in the early stages of the settlement, before much of the country through which they pass is reduced to cultivation; and of course, as the settlement advances, with renewed vigor, under the fostering auspices of so wise a policy, the revenue from the works themselves must increase with proportionable rapidity. It has even been found, on some of the routes of these improvements, (we may particularly instance that of the Wabash and Erie canal, running through the states of Ohio and Indiana, and connecting the navigable waters of the Mississippi and its branches with those of the great lakes, and passing entirely through a wild country, where the lands, at the time of the undertaking, belonged almost exclusively to the government,) that the sale of one half of the lands embraced within six miles of each side of the canal, has amounted to enough to defray the whole expenditure, leaving the other half to the government, increased in worth four fold, beside the enhancement in value of the lands more remote.
This is by no means a singular instance, but has proved true in relation to the grand Erie canal, the Ohio canal, and all the other great thoroughfares through extensive sections of the vast valleys of the lakes and of the Mississippi. The object of these great internal improvements through these fine valleys, of unexampled fertility, is to form a navigable water communication from them to the Atlantic sea-board, making a great entrepôt at Buffalo, the Constantinople of the West. All such improvements as are west of the state of New-York, connect these two valleys together, and bring their products into the great lakes, and through the lakes to the entrepôt at Buffalo. There these products meet the merchandise of the east, brought through the Erie canal, and there the warehousing and exchanges take place. Standing at the point of exchange between the merchandise of the east and the produce of the west, and reaching, by these channels, through a territory of a fertility never before equalled, and of greater extent than was ever before coinmanded by any metropolis, the city of Buffalo, already feeling the impulse in an unrivalled growth, is destined rapidly to become one of the greatest towns of the new world. There is not, upon the face of the globe, a territory of one quarter the extent of the valleys alluded to, embracing the western part of NewYork, Ohio, Michigan, Indiana, Illinois, Missouri, Wisconsin, Iowa, and Upper Canada, together with the Lower Mississippi, which possesses such uniform fertility, and such vast natural resources. There are millions of acres, now unproductive, which, upon a very trifling expenditure of capital, may be made to yield as much as the best English farms; and except for the English corn laws, the productions would bring as good a price to the farmer, deducting expenses of transportation; and this development of wealth can continue, as long as Europe and our own eastern states continue to send population and capital into that region.
Having thus seen the resources, developing and to be developed, in the new world, let us inquire in what manner the old world can aid in the vast and benevolent enterprise, with mutual profit and advantage. We have already said, that it is by furnishing us population and capital. The former flows here from Europe, by the natural course of events, perhaps as fast as is desirable, particularly since the general pacification of Europe has allowed the population to accumulate ; but the latter is more regulated by conventional rules, or affected by whim and caprice. It is desirable, if practicable, to have them both flow in the same channels, in due proportion, so that their fertilizing influence can be more immediately and generally felt, throughout our whole country. Capitalists in Europe may feel assured, that if Europe sends us her poorest but industrious inhabitants, and at the same time furnishes our states, or monied institutions, with capital, to afford them facilities for improvements, we can in a few years convert them into thriving and prosperous land-bolders, mechanics, or artizans. Experience has proved this, so far as the system has worked hitherto, but the difficulty has been, that Europe has furnished too much population, in proportion to the capital she has provided. While she has sent us the population, to perceive and seize upon the resources, she has not furnished adequate means for their development. The effect of this state of things is at present severely felt, throughout our whole country. Stimulated by the certain prospects of rapid increase of wealth, and confident, with good reason, too, of unparalleled returns for enterprise and industry, our people have undertaken too much, for the capital at their disposal. Many an undertaking, which, with sufficient means, could not fail of being attended with the most successful results, is now compelled to languish, for want of funds to carry it on. We allude not here to speculative enterprises, of doubtful result, which in all countries are more or less prevalent ; but to the regular, substantial business and ordinary pursuits of the country, which are,
with sufficient means, sure to meet with success. Hence the value of money has become exceedingly disproportionate to that of other things, though in a country like ours, presenting fields of industry and enterprise on all sides, it will always be higher than in an older country, where those fields are more occupied. In some of the new states, where emi
gration is very rapid, and there is great activity in the development of resources, a rate of interest of twenty per cent. per annum can be paid, profitably, in many undertakings. Still, this is no criterion of what ought to be allowed, for the use of capital, but only demonstrates the fact, that we actually need more, and could use it to advantage.
The question now arises, in what way can foreign capitalists safely invest their money here, and derive the benefits of its superior value and productiveness, in our new and growing country? We reply: First, in our state stocks, issued by the individual sovereign states of the Union, redeemable at some future period, at a fair rate of interest, the proceeds of the sale of which are almost uniformly devoted to making internal improvements, and thereby strengthening the security of the holder, by increasing the ability of the debtor to pay, when the securities become due. It is not like lending money on Spanish bonds, to be thrown away in civil wars, which devastate the country, and make the money itself an instrument of diminishing the ability of the people to pay when called upon; nor is it even like lending money to Great Britain to discharge old debts, which hang like an incubus upon the nation, and which, whenever a failure of the crops creates an agitation about the corn laws, are threatened to be cancelled by a general revolution. The state of New-York has incurred a debt of some magnitude, for money expended in internal improvements, the income of which is sufficient to pay the interest, and form a sinking fund, adequate, in a few years, to extinguish the principal. The people not only can afford to pay this income, for the facilities of transporting produce and merchandise, but the prices of their produce, where it is raised, has been so much increased, as to refund to them, in this way, several times the cost of all their public works. The same may be said of the other states, though perhaps the result elsewhere has been hardly as favorable as in New York. What, then, can be more secure, than an investment in loans, funded in this manner, for which public faith is pledged, and by which resources are developed to repay the debt four fold?
Another safe method of investment for foreign capitalists, is in the stocks, or bonds and certificates, of our trust and loan companies. The capital introduced by the sale of our state stocks, is expended chiefly in public improvements, and affords no direct facility to individual enterprise. Foreign capitalists cannot, for several reasons, loan directly upon mortgage of real estate : it is enough to state two difficulties : first, they cannot receive title on a foreclosure; and secondly, they could not, at such a distance, conveniently or safely manage the investment. Our trust companies step in between the borrower and the lender, in a measure as trustees for both, and for a commission of the difference between a liberal interest to the lender, and legal interest from the borrower, they obviate all the difficulties of the former, which would spring from a direct loan, and furnish the latter with means, on easy terms, for developing the resources of his property. The capitalist feels assured, when he receives one of these bonds, or certificates, that it is the representative of a specific mortgage security on real estate, of an unquestionable value, hypothecated upon its issue, and binding also the whole original capital stock of the company; an ample residuary fund against contin.
gent losses. It is through these channels, that private negotiations can be made, to suit the wants of the parties, and that foreign capital can find sound investment, while at the same time it encourages safe individual enterprises. This plan of investment has not yet been very extensively adopted, as it requires to be fully and generally understood, to be appreciated; but it is destined soon to become an important medium for the introduction of foreign capital. The system, so far as it has been adopted, has worked exceedingly, well, and to the entire satisfaction of all parties; and it is not to be doubted that it will rapidly gain a firm hold upon the favor of the foreign capitalist. We can speak with great confidence of the strict integrity, sound judgment, vigilant supervison, and consummate financial skill, with which these trust companies are conducted ; and we embrace in these encomiums the following, constituting, we believe, nearly all that have procured charters, and gone into operation ; viz: The New-York Life Insurance and Trust
Company; the North American Trust and Banking Company; the Farmers' Loan and Trust Company; the United States' Trust and Banking Company; the Morris Canal and Banking Company; the Trust and Banking Company of Buffalo; the American Life Insurance and Trust Company of Baltimore; the Southern Life Insurance and Trust Company, Florida; the Georgia Insurance and Trust Company; and the Ohio Life Insurance and Trust Company.
The prejudice which, for political purposes, was attempted to be created in this country, a short time since,
against the introduction of foreign capital, did not take much hold of the public, and may now be said scarcely to subsist at all. Indeed, nothing could be more unwise and unreasonable. We are in possession of countless treasures, locked up from use, and requiring a golden key from the other side of the Atlantic, to unfold them to our view. Shall we, on that account, utterly reject them, or waste our energies in comparatively fruitless attempts to obtain them in a violent and unnatural manner? We have vast plains of inexhaustible fertility; shall we refuse to reduce them to cultivation, by foreign aid, when perhaps one year's crop, exported to the country that furnished it, would repay it as satisfactorily as the transmission of the gold and silver, and leave us the improved fields, to pour their treasures for ever into our laps ? Surely not; but let both the old and new world, casting aside distrust and prejudice, improve fully the advantages of their respective positions, and mutually enjoy the benefits of a wise and enlightened policy. Then would Europe no longer be burthened with an overgrown population, destitute of employment; nor America languish for want of capital to develope her resources ; then the beggars who solicit one's charity at the cor.
of every street, in almost all the countries of the old world, would be converted into wholesome and prosperous farmers in the new; then the overgrown capitalist, who racks his brain on 'change, to find any investment for his money, or add one eighth of one per cent. to his interest, would at once double his income, and at the same time contribute much to the cause of philanthropy, and the improvement of the condition of man. Then, in short, should we see, in Europe, the poor amply provided with provisions and employment; the rich finding abundant use for their money; and the middling classes possessing far wider fields for enterprise and business ; while in America, the