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The Scotch banks, no doubt, paid all of them very dearly for their own imprudence and inattention: but the Bank of England paid very dearly, not only for its own imprudence, but for the much greater imprudence of almost all the Scotch banks. The over-trading of some bold projectors in both parts of the united kingdom, was the original cause of this excessive circulation of paper money.
There are two things which may be properly called over-trading, in a young beginner; and by both which tradesmen are often overthrown. Trading beyond their stock. Giving too large credit. A tradesman ought to consider and measure well the extent of his own strengh; his stock of money, and credit, is properly his beginning; for credit is a stock as well as money.
But to return to the dark side, namely, over-trading; the second danger is the giving too much credit. He that takes credit may give credit, but he must be exceedingly watchful; for it is the most dangerous state of life that a tradesman can live in, for he is in as much jeopardy as a seaman upon a lee-shore.
The farmers must be run down and ruined in order to repair the effects of excessive credit and over-trading among the manufacturers; the corn-grower must smart for the sins of the cotton-spinner.
When the profits of trade happen to be greater than ordinary over-trading becomes a general error, both among great and small dealers. They do not always send more money abroad than usual, but they buy upon credit, both at home and abroad, an unusual quantity of goods, which they send to some distant market, in hopes that the returns will come in before the demand for payment.
Over-trading is among tradesmen as over-lifting is among strong men: such people, vain of the strengh, and their pride prompting them to put it to the utmost trial, at last lift at something too heavy for them, over-strain their sinews, break some of nature's bands, and are cripples ever after. I take over-trading to be to a shopkeeper as ambition is to a prince.
They had over-traded 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 over-trading. Those traders and other undertakers, having got so much assistance from banks and bankers, wished to get still more.
The difficulty of getting payment from our different sugar colonies has been greater or less in proportion, not so much to the extent of the balances respectively due from them, as to the quantity of uncultivated land which they contained; that is, to the greater or smaller temptation which the planters have been under of over-trading, or of undertaking the settlement and plantation of greater quantities of waste land than suited the extent of their capitals.
He told the Vraibleusians that the present universal and overwhelming distress was all and entirely and merely to be ascribed to 'a slight over-trading, and that all that was required to set everything right again was 'a little time. He showed that this over-trading and every other injudicious act that had ever been committed were entirely to be ascribed to the nation being imbued with erroneous and imperfect ideas of the nature of Demand and Supply.
But there are divers ways of over-trading, besides this of taking and giving too much credit; and one of these is the running out into projects and heavy undertakings, either out of the common road which the tradesman is already engaged in, or grasping at too many undertakings at once, and having, as it is vulgarly expressed, too many irons in the fire at a time; in both which cases the tradesman is often wounded, and that deeply, sometimes too deep to recover.
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