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Hamilton's followers were, for the most part, from the Northern and Middle States, city dwellers, money-lenders rather than borrowers, business men, and manufacturers, who saw no wrong in having the Government promote the general welfare by legislation. The sudden revival of business which followed the adoption of Hamilton's plan to redeem all the debts seemed to them both natural and legitimate.
If there were no robbers, and no assaulters, and no borrowers, then the morality of the Sermon on the Mount would be most harmless. High praise, truly, for a legislator that his laws would not be injurious when they were no longer needed. Christ should have remembered that the "law is made for sinners," and that such a law as he gives here is a direct encouragement to sin.
We have seen that finance becomes international when capital goes abroad, by being lent by investors in one country to borrowers in another, or by being invested in enterprises formed to carry on some kind of business abroad. We have next to consider why capital goes abroad and whether it is a good or a bad thing, for it to do so.
Those who are well off can travel in parties if they wish, taking their personal friends and connections with them. Jews, with the exception of the richest, have, after all, very little intercourse with Christians. In some countries their acquaintance with them is confined to a few spongers, borrowers, and dependents; of a better class of Christian they know nothing.
Excessive rates for call money in New York attract money from the interior banks into the speculative field; this depletes the fund that would otherwise be available for commercial uses, and commercial borrowers are forced to pay abnormal rates; so that each fall a tax, in the shape of increased interest charges, is placed on the whole commerce of the country.
Borrowers quickly presented themselves, but no one got money except on the most tangible kind of security, and at a ruinous interest. Careful as he tried to be, Wolford was not always successful in his operations. One or two failures on the part of his borrowers, made him acquainted at a magistrate's office, where he acquired another new idea upon which he improved.
But he was not rich, although generally reputed so: for Ardevora's population was not one out of which any man could make his fortune, and of poor folk who borrow or obtain goods on credit quite a large number do not seriously mean to pay a fact often overlooked, and always by the borrowers themselves.
Manufacturing is a matter of formula, but salesmanship is genius. Moreover, to get the money to equip great factories is genius, and up to the Nineties the Carnegie Mills were immense borrowers of capital. Our socialistic friends sometimes criticize Andrew Carnegie for making the vast amount of money that he has.
In short, in Madrid he was only one among many, and in spite of his diamonds he was once taken for a rustic who did not know how to comport himself and at another time for an Indiano. His scruples were scoffed at, and he was shamelessly flouted by some borrowers whom he offended.
They end up charging borrowers the wrong interest rates or, more common, financing risky projects. Badly managed banks pay higher premiums to secure federal deposit insurance. But this disincentive is woefully inadequate and disproportionate to the enormous benefits reaped by virtue of having a safety net.
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