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York. From New York, a consignment of $100,000 worth of flour is made to London, against which the skipper draws on his agent, at sixty or ninety days after sight, for $60,000, with the bills of lading. The merchant in New York has a consignment of calico, &c., to the amount of £20,000, from Manchester, against which the skipper draws at equal dates, to the extent of £14,000. In these two cases, it is generally expected that the goods will be partially or entirely converted into funds before the accepted bills become payable. But suppose the market at both ends to be seized with a temporary dulness; some pecuniary spasm, perhaps, has tightened for a few weeks the purse-strings of capital; a momentary panic or depression has come upon the money world; such things will and do frequently occur, and sales of produce cannot be forced except at ruinously low prices, involving, perhaps, a 20 or 30 per cent loss. In this dilemma, the London merchant is comparatively calm and confident; he views the approach of his drafts to maturity without alarm, because he knows that, by the time they are to be paid, his consignment of flour will be safely housed in some public warehouse, and the warrants will be in his safe. A day or two before his drafts become due, he walks down to his banker, or into Lombard street, amongst the money brokers, with his warrants in his hand, and a proper certificate of the quality, value, &c., of the flour. Along with the bundle is a policy of insurance against fire, from some good office, the Sun, the Globe, or the Royal Exchange, for £25,000. He walks with a confident step into the bureaus of the money autocrats, and states that he wants the sum of £14,000 against such a day, upon £20,000 worth of goods, of which he presents the warrants, certificates of value, and policy of insurance. The lender, at a glance, perceives the validity of the documents, and begins to talk of the price; if money is abundant, 2} or 3 per cent per annum will probably be asked ; if scarce, perhaps 4 or 44 may be screwed out of the borrower. That matter settled, the lender requests the warrants to be left, in order that his broker may examine the goods, which being satisfactory, the time is arranged, not to exceed so many months, and a power is given to the holder to sell, in case of defalcation in payment. The money is forthcoming, the bills are paid, and the goods are not sacrificed, but held for a better market. If the market improves the next day, and the merchant sells a thousand barrels of the flour, he sends to the lender a check for £800 or £1,000, and takes away warrants for one thousand barrels. Thus he releases the goods and extinguishes the loan as he can command sales. When the whole is paid off, the interest account is made up, and he finds it amounts, perhaps, to thirty or fifty pounds; a payment which has saved him and his principal, perhaps, £3,000 or £5,000. The New York merchant, on the other hand, receives his consignment into his own warehouse, and looks to the sale of the goods in order to meet the drafts he has accepted. The market turns flat, several parcels of goods arrive of the same kind, and buyers hang off. The vision of his coming drafts flits ominously before his eyes, and distorts the collectedness and calmness of his thoughts; anxiety perturbs his judgment, and interrupts that clear and concentrated flow of exertion and action, which are necessary to effective success; and he hurries on the sale of his consignment. The more he will sell, the more buyers wont purchase. He spoils the market and defeats his own objects; nevertheless, he must sell; but the sacrifice necessary to make deters and frightens him. He is pained to cause so
much loss to his principal, and so much discredit to himself; and hoping against hope, he holds on to the last, and then recklessly and compulsively sells, at, perhaps, 20, 30, or 40 per cent discount. He perhaps meets his drafts; but he has half ruined his principal, injured his own business, and spoiled the market for every body else. If there had been a public warehouse, and warrants issued for these goods, he could have had them in a portable form, ready to hand to any capitalist having spare funds, or ready to deposit with his banker for a temporary advance; a solid, real, substantial security, which may, perhaps, depreciate for a time, but cannot fail; a security superior to the best bill of exchange, as containing not promises to pay, contingent upon the ability of the promisers to do so, but actual, existent, bona fide property, which can neither melt away nor become insolvent. I say, if he had his imports in such form as this, he could, probably, have obtained the sum requisite to retire his drafts, have preserved his credit, protected his principal, kept the market stiff, and his own mind calm, collected, and easy, without which the energy and action of his business must ever be nerveless and disjointed. I know that hundreds who read these lines will re-echo their sentiments. The London merchant writes to his correspondent abroad, and informs him that he regrets the market has not enabled him to dispose of the consignment of flour at remunerating prices; that, in fact, if he had forced a sale, it must have been at several thousand pounds sacrifice on the parcel; he would, therefore, retire the drafts he had accepted, and hold on the flour for superior prices, for which he would barely charge his client 5 per cent per annum, for the money advanced. The correspondent abroad, is naturally pleased; he is impressed with the thoughtfulness and honesty of his agent in thus protecting his interest. He is impressed, too, with his wealth ; he must be a rich man, he argues, or he could not so readily spare $60,000 at 5 per cent, to hold on the flour. The New York merchant has a widely different tale to tell; and a widely different reception meets his advices. And yet they may both be men of equal capital, equal business talent, equally honest and energetic in their endeavors to do justice to their respective clients. But the one is favored by facilities which the other is not. There is an independence, too, about the Londoner who goes with his warrants in his hand, to the money market to obtain advances, widely dif. ferent to the one who is taking a batch of bills for discount. These last are closely scrutinized; the credit and means of the acceptors or endorser are weighed and re-weighed; the credit and means of the borrower himself carefully considered, re-considered, ferreted out and inquired into, until he gets almost talked and inquired into discredit. An independent man hates this. With warrants of goods of a stated value, he goes with a different feeling. He asks the advance upon the credit of the goods, upon the value of the property, and not upon his own credit, though, of course, that is pledged also. Yet that is not the point to scrutinize or inquire into ; it is the value of the goods themselves, be it more or less—their intrinsic market value, which forms the subject of inquiry and examination; and which, of course, is done without questioning any person's means or respectability. In London, I know many houses of immense business, whose transactions extend to the ends of the earth, literally speaking, and amount to hundreds of thousands sterling during the year, whose active capital is almost ridiculously small. In fact, it does not pay them to employ large capital; it is more remunerative for them to take at market price, and for short pe. riods, just such sums as they require, rather than keep large floating capitals. Wholesale dealers, too, can mostly hold their entire stocks in bond, and conduct large businesses without warehouses, stores, &c.; no paraphernalia, except a small office and a few forwarding clerks, denote their immense transactions. They can always buy at convenient seasons very largely, without increasing their working capital, as they can always depend upon obtaining any money they require, upon these warrants. This, again, tends to preserve the equilibrium of the markets, and prevents an article getting extremely low, because the dealers instantly commence buying up and laying by for future use ; a thing they would neither have capital nor room to do if they had to remove the goods to their own warehouses, and pay for them in the usual mode. In New York, I am cognizant of many instances in which merchants and wholesale dealers have their wārehouses full of produce and goods, and are, notwithstanding, frequently quite at a loss for portable security to offer when they require the temporary use of money. They have abundance of bulky value on their own premises, which they cannot transfer to the iron safe of the capitalist, and they feel that to attempt to borrow money on their own personal security, is always a hard and ungracious task; it is, in fact, humiliating; it subjects them to doubts and inquiries which are injurious and unpleasant; it causes their private life, their business speculations, and their personal and family expenditure to be looked into and watched by others; in short, they are put under surveillance, and the babbling of lying mischief, or the tongue of malignant slander, may, in a few sneaking, skulking words, blast their credit, and bring their creditors down upon them, when they are unprepared, and not expecting them. A system of business which shall enable a trader to keep his stock as a kind of corps de reserve, ready to support his credit at any moment, instead of being a dead weight round his neck, must certainly be an invaluable improvement in business tactics. By these facilities, and those which ramify from, and are contingent upon them, in innumerable shapes, it will be evident that the merchant in London has a decided advantage. The facilities for the payment and receipt of large sums of money in so safe a manner, the facility for the warehousing and transfer of goods in the public warehouse, and the facility of converting dead stock into the best of security for loans and advances of money, enables a merchant to depute, in a great measure, the detail of his business to others. Thus his mind is left free to digest and reflect upon the leading movements and speculations of his business; he can calmly consider the effects of a sale or purchase ; of an import or export ; he watches the markets attentively, and considers them in regard to foreign markets, and both in regard to the interests of his business. Thus he keeps the grand course clear before him, and sees beforehand the results of his movements. His mind is kept comparatively free from pecuniary trouble. He keeps his means under his thumb. His stock, properties, ventures, are made so that he can convert them into securities for obtaining necessary means at any time; and thus he marshals his forces, keeping all his operations active, setting in motion distant and complex springs
of industry; his subordinates trained to still, rapid action in their various
departments; everything around him busily employed, while he himself appears in ample leisure. He is never in a hurry; there is no turmoil or bustle, and you might imagine that he had little or nothing to do. It would
be quite a mistake, however; he is extremely wide awake, active enough to make money, and, what is better, to keep what he makes.
The New York merchant, on the other hand, has more personal labor; there is more of the actual sweat of the brow, and less of the presiding influence of mind. The detail of business is not left to subordinates, but occupies, most unprofitably, the attention of the principal. There is bustle and discomfort in the offices, fidgetiveness and anxiety on the countenances, and a hurried, grasping action in the business movements of the New York mercantile community. There is an absence of that quiet leisure and substantial assurance, amounting to a sense of certainty, which marks the London merchant. But the defect is one, partly of circumstances which only time and the accumulation of wealth will remedy; partly of that prejudice and habit which impels a New York merchant to do everything himself, instead of ordering a perfect system of detail, and resigning its care to subordinates ; but mostly from the want of more perfect systems of monetary transfer and warehousing accommodations, which might, without much difficulty, be invented and adopted.
I intended to have instanced many other points of contrast, but this paper has reached a greater length than I anticipated, and further observations must be reserved for a future chapter.
* G. G.
Art, II,-COMMERCE OF THE GREAT WESTERN LAKES,
THE Hon. Robert M'Clelland, member of Congress, and chairman of the Committee on Commerce in the House of Representatives, recently addressed a letter to James L. Barton, Esq., of Buffalo, for information in relation to the present state of the commerce of the Western Lakes. The importance of the subject to a very large portion of our country, rapidly increasing in wealth and population, and a patriotic desire to advance the prosperity of the Great West, induced Mr Barton to procure from official and other reliable sources, many important facts in regard to the rise, progress, and condition of the commerce of these “inland seas,” which, together with a statement of the difficulties and embarrassments under which it has been carried on from its early beginning unto the present time, he has embodied in his reply to the chairman of the committee. A copy of this letter has been furnished to the editor of this Magazine, the substance of which we propose to lay before our readers in the following pages, generally adopting the statements, and even the phraseology, of
Mr. Barton commences his letter to Mr. M'Clelland with several extracts from a letter which he addressed to Captain W. G. Williams, of the Topographical Engineer Department, in December, 1841, in reply to some inquiries of that gentleman on the same subject. As the extracts from this letter contain many interesting facts concerning the business antecedent, and up to 1841, we have thought best to present them before we proceed to follow Mr. Barton in his statements in regard to its present condition:
“Prior to the year 1832, the whole commerce west of Detroit was confined, almost exclusively, to the carrying up provisions and goods for the Indian trade, and bringing back, in return, the furs ...]" other matters collected by that trade for an eastern market, and the freighting up of provisions and supplies for the troops at the different posts established around the Upper Lakes. All of which food a. limited business for a few schooners.
“The breaking out of the Black Hawk war, in 1832, first brought out a knowledge of the richness of the soil, and salubrity of the climate, of northern Illinois and Indiana, and the Territory of Wisconsin, and exhibited the commanding position of Chicago, (hitherto an isolated place) for commercial business. This war being closed that same season, and peace being re-established in all those parts, a strong emigration set in that direction the next year, and the rich prairies of that country began to fill with a vigorous, hardy, and enterprising population; and from that time only, the short period of eight years, may it in truth be said that there has been any commerce west of Detroit.
“ As early as the year 1819, the steamboat Walk-in-the-Water, (built and first went on to Lake Erie in the month of August, 1818,) the only steamboat on these lakes, made a trip as far as Mackinac, to carry up the American Fur Company's goods, and annually repeated the same voyage, until she was shipwrecked on the beach near Buffalo, in the month of November, 1821. Her place was then supplied by the steamboat Superior, (now the ship Superior,) which came out in 1822 ; this boat also made similar voyages to Mackinac, which was then the Ultima Thule of western navigation.
" In 1826 or 1827, the majestic waters of Lake Michigan were first ploughed by steam-a boat having that year made an excursion with a pleasure party to Green Bay. These pleasure excursions were annually made, by two or three boats, until the year 1832. This year, the necessities of the government requiring the transportation of troops and supplies for the Indian war then existing, steamboats were chartered by the government, and made their first appearance at Chicago, then an open roadstead, in which they were exposed to the full sweep of northerly storms, the whole length of Lake Michigan; and even at this day, the slight improvements made at that place, in a partially constructed harbor, afford them but a limited protection.
“ It is well known that the steamboats navigating these waters have very frequently consolidated their interests and made returns of all the earnings to one office, where their accounts have been annually settled.
" In 1833, the first association was formed by the steamboat owners, and, as I was then engaged in commercial business, I was appointed secretary to the company; and, as such, kept all the books and received the returns from each boat. For my own satisfaction I kept an account of the number of passengers who passed over the lakes. This year there were employed 11 steamboats, which cost the sum of $360,000 ; they carried to and from Buffalo, and other ports on the lakes, that summer, 61,485 passengers. Of these, 42,956 were taken from Buffalo, bound west; the remaining 18,529 were all landed at Buffalo, excepting some few distributed at the different ports along the lake. There were made, that season, three trips to the Upper Lakes, two to Chicago, and one to Green Bay; the amount of receipts for which was $1,355 93; but how much of this sum was actually earned from business west of Detroit, I cannot say, as I did not, as I now wish I had done, make this distinction. By way of contrasting the time employed in making trips to Chicago in those days and the present, I will state that one of the boats left Buffalo on the 23 June, at 9 P. M., and returned on the 18th day of July, at 10 P. M. The other left Buffalo the 20th July, at 4 P. M., and returned Augnst the 11th
"* In 1834, the boats kept up the association, which was composed of 18 boats, costing $600,000, some new ones having come out that season. The same mode of keeping and settling accounts was adopted, with this exception ; I kept no account of the number of passengers. This year two trips were made to Green Bay, and three to Chicago, and the amount of business done was $6,272 65; the greatest part of this sum was for business west of Detroit, as the trips to Chicago were made by a boat running from that place to Chicago.
" In 1835, the association amongst the boats was kept up, but, as my own private business required my whole attention, I declined being the secretary. As I saw but little of the books, and they are now all settled, nothing definite can be said of the amount of business done that year; but, as the spirit of land speculation had commenced west, the number of passengers crossing the lake was much