A fifth cause of our suspensions of credit is the lack of variety in our manufactures, and the consequent over-production of particular commodities. A very large share of the manufacturing capital, both in this country and in England, is in large masses, and employed by large companies, that have been long established, and are engaged in the production of a limited variety of commodities. The consequences are over-production of those particular commodities, slow sales, low prices, long credits to purchasers, and also credits extra hazardous. All these are bad elements in the money market. The only remedy for them is to introduce a greater variety in our manufactures. And a more diffused credit is the only means of introducing this greater variety. Old companies, composed of many individuals, employing large capitals, their machinery all adapted to their peculiar kinds of manufactures, and having established commercial connexions, cannot easily divert their industry into new channels. In fact, it is nearly impossible. As a general rule, therefore, it is only young men, commencing business, and employing only small capitals at first, who can make experiments easily, and without much risk, and thus introduce new varieties of manufacture. Old men, with large capitals, and established business, rarely think of such things. But every young man, on first setting out in manufacturing business, naturally desires to engage in the production of some commodity, that will not expose him to the competition of older establishments. And if he succeed in so doing, it is a most favorable circumstance both for himself, and for those who would otherwise be his competitors. Both are relieved from a competition, that would have been injurious, and perhaps dangerous, to them.
In this way variety in manufactures is greatly increased. And the greater this variety, the less over-production will there be of any particular commodity, the quicker will be the sales of all commodities, the higher the prices of all, the more cash payments, the shorter the credits, and the safer the credits, and consequently the less liability to any suspension of credit.
This greater variety in manufactures is as desirable for the community at large, as for the manufacturers themselves. A man’s enjoyable wealth is measured by the number of different things be possesses, rather than by the quantity of any one thing. Thus a man may have a thousand times as much wheat as he can eat, and yet, if he have no other wealth, he will be a poor man. But if he can exchange his surplus wheat for a thousand other things, which he desires, his enjoyable wealth will be multiplied a thousand fold. He will then be rich.
For the same reason a nation is rich, or poor, according to the greater or less number of different commodities, which its people possess. Hence the industry of a nation should be devoted, not wholly to the production of any one commodity, nor even to the production of any small number of commodities, but to the production of as great a variety as its soil, climate, its opportunities for foreign commerce, &c., &c., will justify; the end, to be kept constantly in view, being that the nation may have the greatest variety of commodities, which its people can either produce directly by their own industry, or procure by an exchange of their own productions for those of other nations.
If the industry of a people be but devoted to the production of a sufficient variety of commodities, we need have little doubt, either that there will be a sufficient quantity of each, or that the commodities produced will be of the highest quality. These matters will take care of themselves; since where there is no over-production of any commodity, the active demand for it, and the high price it will bear, will not only stimulate the industry of those engaged in its production, but will incite them to the acquisition of all the science, skill, machinery, &c., which will enable them to produce the commodity in the greatest abundance and of the highest excellence.
Hence, wherever we see the greatest diversity of industry, there we see the highest skill and science, and the most perfect machinery, employed in each and every department; and consequently the greatest aggregate production.
Wherever there is little diversity in industry, there is little energy, skill, science, or machinery; and the aggregate amount, neither of labor performed, nor of wealth produced, bears any reasonable comparison with that where industry is diversified.
But so great, and so constantly increasing, is this combined power of science, skill, and machinery, in the production of wealth, that unless new commodities were being constantly invented, production would outrun demand, and industry would stagnate. But as nature has set no limit to human ingenuity, in the invention of new commodities, no limit can be set to the increase of wealth, if only the necessary facilities shall exist for producing these new commodities as fast as they shall be invented.
Diversity in industry, or variety of production, has the same comparative importance, relatively to foreign commerce, that it has relatively to domestic wealth. Thus new and rare commodities are of most value in foreign commerce. That is, they bring the highest prices in proportion to the labor it costs to produce them. When any commodity becomes common and abundant, it bears a low price abroad, as well as at home, in proportion to the labor it costs to produce it. Other things being equal, therefore, the nation that is most ingenious and enterprising in the invention and manufacture of new commodities, and has the credit and currency necessary for producing them in abundance, and exporting them while they are fresh and new, will have immense advantages, in foreign commerce, over a people less ingenious and enterprising in this respect, or having less facilities of credit and currency for taking advantage of markets before the commodities shall have become stale.
But it is to be borne in mind that this great diversity in industry and production can be secured only by the pre-existence of such facilities of credit and currency, as will enable individuals to engage in the production of any and every new commodity, as fast as they shall be invented; no matter how trivial the commodities may be, if only they be such as the community desire. But this universal credit, this indispensable pre-requisite to the greatest diversity in industry, can exist only under some system of currency, other than that we now have. The capacities of the present system are very limited, and are already monopolized. But the author’s system would furnish both credit and currency in any needed abundance.
Those, who oppose the freest credit, and most abundant currency, through fear of competition in their own industry, make a great mistake. Such credit and currency, by diversifying industry and production, tend not only to relieve all branches from competition and over-production, but also to create new and better markets for every commodity than before existed. The greater the diversity of industry, the fewer will be the producers, the more numerous the consumers, and the higher the prices, of each particular commodity. Every man, who commences the manufacture of a new commodity, relieves the producers of some other commodity of a competitor, and as a general rule, becomes a better customer for all other commodities than he otherwise would have been.
But this is not all. If credit were stable, and were extended (as under the author’s currency system it would be), still further than it is now in our most prosperous years, mechanical industry would be proportionally increased, and our annual production proportionally increased, over those even of what are now our most prosperous years.
There is abundant room for a great increase of mechanical industry, with a view to both foreign commerce and domestic consumption. Among at least one half our population, occupying much more than one half our national territory, the mechanic arts are as yet practised but to a very limited extent. An adequate extension of credit would carry with it a corresponding increase of mechanical industry throughout the country. We have agricultural and mineral resources to sustain an indefinite increase of mechanical industry. Nothing but credit—that credit which will give to every man the means of applying his labor and ingenuity to the best possible advantage—is needed to give us the benefit of the immeasurable wealth which this increase in mechanical industry is capable of producing. For the want of this credit, a very large proportion of our people are engaged in merely manual labor, unaided by machinery. Such manual labor is, of necessity, heavy, dull, clumsy, stupid, unskilful, unscientific, and comparatively unproductive. And the consequence is, that if we are not,