The large field opened for enterprise, the free institutions of the country, and the indomitable energy of the people have produced results astonishing and without parallel in the history of other nations. A wilderness has within forty years been converted into the abode of six millions of civilized and industrious people. Expensive communications have been opened, superior in extent and importance to those of continental Europe. The American commerce and navigation extend to every quarter of the globe, and are inferior to those of no other country but England. But there are evils which, to a certain extent, appear to be the necessary consequence of a state of high commercial prosperity, and which in America are much increased by the want of a capital proportionate to the extent of commercial and other undertakings. Overtrading has been the primary cause of the present crisis in America. Abundant proofs of the fact are found in the immoderate use of foreign credit, as well as in the excessive importations, and sales of public lands, in the years 1834-37. Of Imports: During the nine years 1822-1830 the average annual amount was. The average annual excess of imports over the exports amounted to four millions during the first nine years; to eighteen millions during the three next ensuing; to thirty-four millions during the four last, and to sixty-one millions in the year 1836 alone. The average annual sales of public lands, which during the first nine years did not exceed 1,300,000 dollars, and which during the years 1831-35 had reached 4,500,000 amounted in 1835 to seventeen and in 1836 to twenty-five millions. Speculations in unimproved town lots, mines, and every description of rash undertakings increased at the same rate. The fault, or error, originated with the people themselves. The traders and speculators have attempted to ascribe their disasters altogether to legislative acts; to those of the administration, or to other collateral causes, which have indeed aggravated the evils, but the effects of some of which have been exaggerated. Still, although it would be improper to abridge the freedom of action which all individuals should be permitted to enjoy, it is certain that the spirit of enterprise did not require any artificial stimulus. The prodigious increase of State banks was the result of State legislation. From the 1st of January, 1830, to the 1st of January, 1837, three hundred new banks were created, with a capital of one hundred and forty-five millions of dollars. This increase was undoubtedly due to the eagerness for capital applicable to commercial accommodations or other purposes. It may be ascribed in part to the expiration of the charter of the Bank of the United States, and to the anticipation of that event. It was thought necessary in some places to fill the chasm in capital and commercial accommodations that must follow the dissolution of that institution. The same effect had been produced in the years 1810-16 on the occurrence of the expiration of the charter of the former national bank; and in both cases the increase far exceeded the apprehended loss and the wants of the country. The great increase of banks took place, accordingly, in the Western States, where capital was most wanted. During the years above mentioned the increase in the banking capital of the NorthWestern States amounted to near twenty, and that of the SouthWestern to almost fifty-five, millions of dollars. But that increase was far beyond what might have been wanted for useful purposes. Near three-fifths of the foreign merchandise imported into the United States are imported into New York. That city is also the principal place of deposit for the sale of the domestic manufactures of the country; and it is also the centre of all the moneyed transactions of the United States. In the year 1837 the capital of all the banks of that city hardly exceeded twenty millions of dollars; and it was sufficient for all the legitimate operations of commerce. When an unexpected increase of the public deposits enabled and induced those banks to expand their discounts beyond their ordinary rate, that excess excited overtrading, and was applied to extraordinary and dangerous speculations. In order to obtain or to assist in obtaining the capital wanted for the new banks, for internal improvements, and for some other miscellaneous purposes, debts were incurred by several States amounting, from 1830 to 1838, to near one hundred and fifty millions of dollars. The debt contracted by the Atlantic States was almost entirely for internal improvements; no part of it for banking purposes; and it fell little short of sixty millions. That contracted by the North-Western States amounted to about thirty-eight millions, of which thirty-one millions five hundred thousand dollars were for internal improvements, and the residue for banking capital. That incurred by the South-Western States was about fifty-two millions, of which more than forty-four millions were for banking capital, and the residue for internal improvements. The population of the United States by the census of 1840 exceeds seventeen millions, of whom ten millions seven hundred and sixty thousand are in the Atlantic, four millions one hundred and thirty thousand in the North-Western, and two millions two hundred and thirty thousand in the South-Western States. It may be observed that the reason why so much more capital was applied in the South-Western than in the North-Western States to banking purposes is to be found in the difference of capital wanted for the employment of slave and free labor respectively. The Northern farmer advances no more than twelve months' wages to the laborer he employs. The Southern planter who wishes to increase the product of his land must advance the price of the slave himself, which amounts perhaps to five or six times the net product of his annual labor. The application of banking accommodation to purely agricultural purposes has accordingly been much greater and has been attended with far more fatal effects in the South-Western States than in any other section of the Union. But even the State debts created for internal improvements have co-operated in aggravating the evils under which we now labor. Not only were their proceeds applied to purposes of which the returns were slow and uncertain, but they also supplied the means of paying balances or of obtaining credits abroad. Thus, extravagant importations were encouraged, whilst at the same time some of those stocks became objects of speculation at home, in which individuals and banks were involved, and which proved injurious to all the parties concerned, to the States as well as to the purchasers. Several of the States neglected to provide a revenue sufficient to pay the annual interest accruing on their debts. Additional loans were resorted to for that purpose, and occasionally forced loans were required by the States from the banks, which lessened their resources and had a tendency to produce or to protract the suspension of specie payments. All the banks of the United States are joint stock companies, generally incorporated by the special laws of the several States; in a few late instances established in conformity with the provisions of a general law. In neither case are the shareholders responsible beyond the amount of the capital subscribed. All these joint stock companies are banks of deposit, discount, and issue; they all discount negotiable paper, purchase and sell domestic and occasionally foreign bills of exchange, receive deposits or open cash credits to individuals, and issue bank-notes, always, nominally at least, payable on demand in specie. These notes have become the local and sole currency of the several places or sections of country where they are respectively made payable. Banking in America always implies the right and practice of issuing paper money as a substitute for a specie currency. . . Punctuality in fulfilling engagements should be practiced by all; but it is essentially a commercial virtue. Credit, at least to a certain extent, is absolutely necessary to commerce. Every merchant must, for the fulfillment of his own engagements, depend princi pally on the punctual payment of the debts due to him. This punctuality is so necessary, and the advantages derived from it have become so habitual, that the memory of its origin may be lost. It was indubitably due to the establishment of banks. At the close of the war of Independence, Philadelphia was the only place in the United States where commercial punctuality was general, and that city was indebted for it to the Bank of North America. The same effect was successively produced, as banks were established, in New York, Boston, Baltimore, and the other commercial cities; and finally almost universally, or wherever country banking penetrated. . . CHAPTER XII SETTLEMENT OF THE WEST INTRODUCTION The settlement of the West ought to be regarded as a great example of colonization. From what may be called the sociological point of view, colonization consists of the founding and developing of new communities, of the occupation and settlement of new lands. It is the expansion of a community into new territory. The political relation between the new communities and the old ones from which they sprang may be important; this is, in fact, the only phase of modern colonization which has received much attention; but it is by no means the essential feature of colonization. It may vary from the absolute independence of the new community to its complete subjection to the mother-country without changing the colonial relation between them. The expansion of Greece in ancient times with but little political subordination of the new settlements was as truly a colonial movement as the expansion of Europe in modern times. It is immaterial, also, whether the new communities be widely separated from the old ones. Contiguous territory may be more easily settled by a people and the colonial movement under those conditions may affect a larger proportion of the population, but its social effects are not essentially different from over-sea colonization at a great distance. From this point of view it is clear that the American people should be regarded as the great colonizers of modern times. No other people have founded and built up so many new settlements, or subdued for civilized life such vast stretches of wilderness. Nowhere else in the world has the art of pioneering been learned and practiced by so many people and played so large a part in the life of any nation. Contact with unsettled territory and continual expansion into it is the fundamental peculiarity of American society. There are three aspects of this great movement of internal colonization which should claim the attention of students of American history. The first is the method of forming new settlements together with the conditions which determine their progress a study of the social evolution of new communities. The second is the influence of this movement upon the life and institutions of the country as a whole. The third is the governmental activity of various kinds to which it has given rise - what in other countries would be called colonial policy. Perhaps the most striking peculiarity of American expansion when compared with the similar experience of other countries is the insignificance of the |