(December 12, 2009)
Correspondent Eric H. shares some of the prescient analysis of Orestes A. Brownson,
The past is an endless well of insight into the present, and voices from the past
have the unsettling ability to sound quaint and keenly contemporary at the same time.
Correspondent Eric H., who contributed a key cognitive trap to
Survival+, has introduced me to the thinking of a fin de siecle
polymath/philosopher, Orestes A. Brownson. Eric prepared an excerpt of Brownson's
wide-ranging analysis--one which strikes me as being very similar to
Survival+ in combining an economic, social and ethical analysis
of our devolving "end of work" era of rising instability and inequality.
Here are a few paragraphs of the complete excerpt, which I have placed in
Literary, scientific, and political views of Orestes A. Brownson (1893)
The Credit System
The fact is, the mercantile system, introduced by England, or the credit system,
that is, the system of making debt pass for capital, is itself failing, in consequence
of its own expansion. The principle of the system, as we understand it, is to do business
on credit and to rely on the profits of the business done to pay the interest on the
borrowed capital and to discharge in time the loan itself. This would, perhaps, be well
enough if the capital borrowed were real capital, for the volume of business would then
not exceed the ability of the country to sustain and no general depression of business
could occur. But it is credit, not capital, that is borrowed. The banks do not lend
money, they simply lend their credit, and consequently depend on their debtors for the
means to sustain their own credit or to redeem their bills; and these depend on the
amount and profits of the business they do on their borrowed credit. If they fail the
bank fails, or suspends, as it is politely called. The greater the facility of borrowing
credit, the greater the extension of business.
The multiplication of banks of discount facilitates the borrowing of credit, tempts an
undue proportion of the young men of the country into business, and those already engaged
to extend their business operations, till business is expanded far beyond the wants of
the community or the ability of the industry and productions of the soil to support;
and a collapse and business depression, as well as widespread financial ruin, inevitably
follow. No wisdom, foresight, or prudence, no business tact or capacity, can save a
house that has borrowed or given credit from failing, for it will be carried down by
the collapse of credit or the demand for payment of the debt hitherto used as capital;
and the means to pay it will not be forthcoming when business has been overdone.
The various remedies suggested, whether by the president or by prominent merchants, traders,
and bankers, are puerile, and not even palliatives. There is no remedy for a gangrenous
limb or safety for the patient but in amputation, and not always even in that. The essence
of the present system is in using debt as capital. Under it no debts are ever really paid;
there is only a transfer of the debt, and all debts are mortgages on the future. A debt
discharged in bank-notes becomes a debt against the bank; in greenbacks, it becomes a
debt against the government, but in neither case is there any liquidation of the
If the government credit fail – and a revolution or gross mismanagement may cause it to fail
– somebody must lose; if the bank fail – and fail it must if it overdoes its business,
if its debtors fail, if it lock up its means in unavailable or worthless assets, if there
is a considerable shrinkage in their market value, or it its officers are speculators,
stock-gamblers, swindlers, or defaulters – its creditors necessarily lose.
The bank depends on its debtors for its ability to pay its own debts, and the government
would bankrupt the whole people were it to attempt to liquidate at once its entire
indebtedness. It is more than it is now able to do to meet its ordinary expenses
and pay the interest on the public debt.
CHS note: doesn't this precisely describe the current financial meltdown?
Click here to read the full excerpt.
Permanent link: The Work of Orestes A. Brownson (1893)
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