By making foreign loans, the community, as such, receive the same extensive benefits, which one individual does in borrowing of another. This country was always in the practice of making such loans. The merchants in Europe trusted those in America. The American merchants trusted the country store-keepers, and they the people at large. This advance of credit may be stated at not less than twenty millions of dollars. And the want of that credit now is one principal reason of those usurious contracts mentioned above. These have been checked by the institution of the bank, but the funds of that corporation not permitting those extensive advances, which the views of different people require, the price given for particular accommodations of money continues to be enormous; and that again shows, that to make domestic loans would be difficult, if not impracticable. The merchants not having now that extensive credit in Europe, which they formerly had, the obtaining such credit by government becomes in some sort necessary.
But there remains an objection with many against foreign loans, which (though it arises from a superficial view of the subject) has no little influence. This is, that the interest will form a balance of trade against us, and drain the country of specie; which is only saying in other words, that it would be more convenient to receive money as a present, than as a loan; for the advantages derived by the loan exist, notwithstanding the payment of interest. To show this more clearly, a case may be stated, which in this city is very familiar. An Island in the Delaware overflowed at high water has for a given sum, suppose a thousand pounds, been banked in, drained, and made to produce, by the hay sold from it at Philadelphia, a considerable sum annually; for instance, two hundred pounds. If the owner of such an Island had borrowed in Philadelphia the thousand pounds to improve it, and given six per cent interest, he would have gained a net revenue of one hundred and forty pounds. This certainly would not be a balance of trade against his Island, nor the draining it of specie. He would gain considerably, and the city of Philadelphia also would gain, by bringing to market an increased quantity of a necessary article.