709. Banks, Fictitious Capital. -- The banks themselves were doing business on capitals, three-fourths of which were fictitious; and to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labors of the plow, chose rather to call himself a merchant, to set up a house of $5,000 a year expense, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fradulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital, probably of one hundred millions of dollars, is now to be lost, and to fall on somebody ; it must take on those who have property to meet it, and probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless and ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knowledge of political economy than we possess. I believe it might be done, but I dispair of its being done. The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present, all is confusion, uncertainty, and panic. -- To Richard Rush, Ford ed. x, 133. (M., June 1819.)