Theory of Credit [1, 2 ed.]

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THEORY OF CREDIT

Svulv

'AyaOoiv

There being two Credit

the greater

TOVTO

Se

6

Trpo?

If

HXovrov

OVTOIV

is

KOL

kinds of Wealth

u/^x oj/

opyai/ov.

The only

differences

in

this

respect between a freeman and a slave are, first, that the freeman sells himself, and only for a period, and to a certain extent ; the slave may be sold by others, and absolutely and, secondly, that the Personal Qualities of the slave are a portion of the wealth of his master those of the freeman, so far as they can be made the :

:

subject of exchange, are part of his

own Wealth.

They

perish

indeed by his death, and may be impaired or destroyed by disease or rendered valueless by any change in the custom of the country which shall destroy the demand for his services [thus Senior sees

that

value

depends on demand and not upon

lal>or~]

but

subject to these contingencies they are Wealth, and Wealth of the most valuable kind. The amount of revenue derived from their exercise in

in Great Britain

England far exceeds the rental of " 1

Political

Economy,

p.

10

all

the lands

7]

PEKSOXAL QUALITIES

AttK WF.ALTII

13-

So also Senior says " Even in our present state of civilisation, which high as it appears by comparison, is far short of what may be easily conceived or even of what may be confidently expected, the Intellectual and Moral Capital of Great Britain far exceeds all the Material Capital, not only in importance, but in productiveness. The families that receive mere wages

and probably do not form a fourth part of the community the comparatively larger amount of the wages, even of these, is principally owing to the Capital and Skill, with which their :

efforts are assisted

and directed by the more educated members

of

the society. Those who receive mere rent, even using that word in its largest sense, are still fewer and the amount of rent, like :

that of wages, principally depends on the knowledge by which the The bulk of the gifts of nature are directed and employed. national revenue

Profit

is

:

and

of that Profit, the portion

which

merely interest on Material Capital probably does not amount to one third. The rest is the result of Personal Capital, or in is

other words of Education " It is not in the accidents of the

soil,

in the climate, in the

existing accumulation of the instruments of production, but in the quantity and diffusion of this Immaterial Capital that the wealth of a country depends.

The

climate, the soil,

and the situation

of

Ireland have been described as superior, and certainly not much inferior to our own. Her poverty has been attributed to the want of Material Capital but were Ireland now to exchange her native for seven millions of our English north countrymen, population :

they would quickly create the Capital that is wanted. And were England north of the Trent, to be peopled exclusively by a million of families from the west of Ireland, Lancashire and

Yorkshire would

more rapidly resemble Connaught. Ireland because she is morally and intellectually poor. physically poor, And while she continues uneducated, while the ignorance and the still

is

and property insecmv, and prevent the accumulation, and prohibit the introduction of Capital, legislative measures, intended solely and directly to violence of her population render persons

relieve her poverty,

may

not indeed bo metlectuuil, fur they

may

aggravate the disease the symptons of which they are meant to palliate, but undoubtedly will be productive of no permanent

THEORY OF CREDIT

14

[CHAP.

I

been called power it is far more certainly Asia Minor, Syria, Egypt, and the northern coast of Africa were once among the richest, and are now among the most

Knowledge has

benefit.

Wealth.

miserable countries in the world, simply because they have fallen into the hands of a people without a sufficiency of the Immaterial " sources of Wealth to keep up the Material ones

" The

skill and energy and the perseverance of the artisans of a country are reckoned part of its Wealth no less than its tools and machinery," and why not the skill and energy

So Mill says 1

and perseverance " ,says

of other classes as well as of artisans

acquired capacities,

which

been called into existence by labor, within that designation

So

fall

"

Madame Campan

He

?

also

means, and have exactly as it seems to me,

exist only as a

inscribed over the Hall of Study in her

establishment at St. Germain " Talents are the ornaments of the rich "

and the Wealth

of the

poor

So Cardinal influence:

and

if

"

Newman says If Gold is Wealth, power, Coal is Wealth, power, influence: so is Knowledge." 2

We have, then, already found two distinct kinds of things which can be bought and sold or whose value can be measured in money : (1) Material things which can be seen and handled, such as money, corn, cattle, lands, houses, &c., which can be transferred by manual delivery (2) Things like Labor and Knowledge, which can neither be seen nor handled but which can be bought and sold and though these two kinds of things have nothing in common besides the capability of being bought and sold they are each for that reason, comprehended under the term Wealth :

:

:

:

:

Demosthenes shows 8.

Power

that Personal Credit is

But Personal Qualities may be used method besides that of Labor

Wealth as

Purchasing

in another

^Principles of Political Economy, Bk. L, ch. iii. ^Historical Sketches, Free Trade in Knowledge, p. 50.

7,

PERSONAL CREDIT

8]

IS

WEALTH

15

" merchant enjoys good " Credit as it is termed, lie may into the market and buy goods, not with Money, but by giving his Promise to pay money at a future time that is, he creates a Right of action against himself. The goods become his property It is a Sale or exactly as if he had paid for them in Money. an Exchange. The Right of action is the price he pays for the goods it is termed a Credit in French a Cre"ance because it is If a

:

not a Right to any specific action to

demand

a

sum

of

sum

money, but only a Right of the merchant at a future

of

money from

time

Hence a merchant's Credit is Purchasing Power, exactly as The merchant's Purchasing Power is his Money and

Money,

his Credit.

They

definition.

When

are both therefore equally Wealth, by Mill's a merchant purchases goods with his Credit,

instead of with money, his Credit

is

valued in money

:

because

the seller of the goods accepts his Credit as equal in value to Money his Credit is valued in money exactly as his Labor may :

Hence by

be.

Aristotle's

definition of Wealth,

which is now is Wealth

universally accepted, the merchant's Personal Credit 1

So Demosthenes says " Suotv ayaOolv OVTOLV TrXovrov re /z.etov ecrrt

TO r^s

Tn'crrecos vTrap-^pv

"There leing two kinds of Wealth the greater is Credit, and ive have

Credit

So also again 2 " et Se TOVTO yxeyiCTT?/ /rpos

"

ayvoets

^p^/mnoyxoV

on

Iltcrns

TTCLV a.v

aTravTas Tritrreuecr^at,

KOLL irpo