wealbk02-第10节
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dwelling…houses of his workmen; etc。; of the capital which the
undertaker of a mine employs in sinking his shafts; in erecting
engines for drawing out the water; in making roads and
waggon…ways; etc。; of the capital which the person who undertakes
to improve land employs in clearing; draining; enclosing;
manuring; and ploughing waste and uncultivated fields; in
building farm…houses; with all their necessary appendages of
stables; granaries; etc。 The returns of the fixed capital are in
almost all cases much slower than those of the circulating
capital; and such expenses; even when laid out with the greatest
prudence and judgment; very seldom return to the undertaker till
after a period of many years; a period by far too distant to suit
the conveniency of a bank。 Traders and other undertakers may; no
doubt; with great propriety; carry on a very considerable part of
their projects with borrowed money。 In justice to their
creditors; however; their own capital ought; in this case; to be
sufficient to ensure; if I may say so; the capital of those
creditors; or to render it extremely improbable that those
creditors should incur any loss; even though the success of the
project should fall very much short of the expectation of the
projectors。 Even with this precaution too; the money which is
borrowed; and which it is meant should not be repaid till after a
period of several years; ought not to be borrowed of a bank; but
ought to be borrowed upon bond or mortgage of such private people
as propose to live upon the interest of their money without
taking the trouble themselves to employ the capital; and who are
upon that account willing to lend that capital to such people of
good credit as are likely to keep it for several years。 A bank;
indeed; which lends its money without the expense of stamped
paper; or of attorneys' fees for drawing bonds and mortgages; and
which accepts of repayment upon the easy terms of the banking
companies of Scotland; would; no doubt; be a very convenient
creditor to such traders and undertakers。 But such traders and
undertakers would; surely; be most inconvenient debtors to such a
bank。
It is now more than five…and…twenty years since the paper
money issued by the different banking companies of Scotland was
fully equal; or rather was somewhat more than fully equal; to
what the circulation of the country could easily absorb and
employ。 Those companies; therefore; had so long ago given all the
assistance to the traders and other undertakers of Scotland which
it is possible for banks and bankers; consistently with their own
interest; to give。 They had even done somewhat more。 They had
overtraded a little; and had brought upon themselves that loss;
or at least that diminution of profit; which in this particular
business never fails to attend the smallest degree of
overtrading。 Those traders and other undertakers; having got so
much assistance from banks and bankers; wished to get still more。
The banks; they seem to have thought; could extend their credits
to whatever sum might be wanted; without incurring any other
expense besides that of a few reams of paper。 They complained of
the contracted views and dastardly spirit of the directors of
those banks; which did not; they said; extend their credits in
proportion to the extension of the trade of the country; meaning;
no doubt; by the extension of that trade the extension of their
own projects beyond what they could carry on; either with their
own capital; or with what they had credit to borrow of private
people in the usual way of bond or mortgage。 The banks; they seem
to have thought; were in honour bound to supply the deficiency;
and to provide them with all the capital which they wanted to
trade with。 The banks; however; were of a different opinion; and
upon their refusing to extend their credits; some of those
traders had recourse to an expedient which; for a time; served
their purpose; though at a much greater expense; yet as
effectually as the utmost extension of bank credits could have
done。 This expedient was no other than the well…known shift of
drawing and redrawing; the shift to which unfortunate traders
have sometimes recourse when they are upon the brink of
bankruptcy。 The practice of raising money in this manner had been
long known in England; and during the course of the late war;
when the high profits of trade afforded a great temptation to
overtrading; is said to have carried on to a very great extent。
From England it was brought into Scotland; where; in proportion
to the very limited commerce; and to the very moderate capital of
the country; it was soon carried on to a much greater extent than
it ever had been in England。
The practice of drawing and redrawing is so well known to
all men of business that it may perhaps be thought unnecessary to
give an account of it。 But as this book may come into the hands
of many people who are not men of business; and as the effects of
this practice upon the banking trade are not perhaps generally
understood even by men of business themselves; I shall endeavour
to explain it as distinctly as I can。
The customs of merchants; which were established when the
barbarous laws of Europe did not enforce the performance of their
contracts; and which during the course of the two last centuries
have been adopted into the laws of all European nations; have
given such extraordinary privileges to bills of exchange that
money is more readily advanced upon them than upon any other
species of obligation; especially when they are made payable
within so short a period as two or three months after their date。
If; when the bill becomes due; the acceptor does not pay it as
soon as it is presented; he becomes from that moment a bankrupt。
The bill is protested; and returns upon the drawer; who; if he
does not immediately pay it; becomes likewise a bankrupt。 If;
before it came to the person who presents it to the acceptor for
payment; it had passed through the hands of several other
persons; who had successively advanced to one another the
contents of it either in money or goods; and who to express that
each of them had in his turn received those contents; had all of
them in their order endorsed; that is; written their names upon
the back of the bill; each endorser becomes in his turn liable to
the owner of the bill for those contents; and; if he fails to
pay; he becomes too from that moment a bankrupt。 Though the
drawer; acceptor; and endorsers of the bill should; all of them;
be persons of doubtful credit; yet still the shortness of the
date gives some security to the owner of the bill。 Though all of
them may be very likely to become bankrupts; it is a chance if
they all become so in so short a time。 The house is crazy; says a
weary traveller to himself; and will not stand very long; but it
is a chance if it falls to…night; and I will venture; therefore;
to sleep in it to…night。
The trader A in Edinburgh; we shall suppose; draws a bill
upon B in London; payable two months after date。 In reality B in
London owes nothing to A in Edinburgh; but he agrees to accept of
A's bill; upon condition that before the term of payment he shall
redraw upon A in Edinburgh for the same sum; together with the
interest and a commission; another bill; payable likewise two
months after date。 B accordingly; before the expiration of the
first two months; redraws this bill upon A in Edinburgh; who
again; before the expiration of the second two months; draws a
second bill upon B in London; payable likewise two months after
date; and before the expiration of the third two months; B in
London redraws upon A in Edinburgh another bill; payable also two
months after date。 This practice has sometimes gone on; not only
for several months; but for several years together; the bill
always returning upon A in Edinburgh; with the accumulated
interest and commission of all the former bills。 The interest was
five per cent in the year; and the commission was never less than
one half per cent on each draft。 This commission being repeated
more than six times in the year; whatever money A might raise by
this expedient must necessarily have; cost him something more
than eight per cent in the year; and sometimes a great deal more;
when either the price of the commission happened to rise; or when
he was obliged to pay compound interest upon the interest and
commission of former bills。 This practice was called raising
money by circulation。
In a country where the ordinary profits of stock in the
greater part of mercantile projects are supposed to run between
six and ten per cent; it must have been a very fortunate
speculation of which the returns could not only repay the
enormous expense at which the money was thus borrowed for
carrying it on; but afford; besides; a good surplus profit to the
projector。 Many vast and extensive projects; however; were
undertaken; and for several years carried on without any other
fund to support them besides what was raised at this enormous
expense。 The