DOI Page / Citation link:
https://doi.org/10.11588/diglit.22140#0088
72 INDUSTRIAL AND COMMERCIAL HISTORY.
He was simply displacing it, mobilizing it, giving it a new effi-
ciency. He might, indeed, have lost by the transaction, and
forfeited his estate. The security which he offered is ex hypo-
thesis unimpaired, but the wealth which he secured by the pledge
is lost.
Some people allege that credit creates new wealth. It does so
no more than bank-notes make more money. What it does is to
utilize, to mobilize wealth, and make it more efficient. I remem-
ber to have heard that, when an enthusiastic advocate of the
functions of credit was dwelling on its creative powers in the
House of Commons, the late Sir Robert Peel congratulated him
on his eloquence and his mastery over one theory of the currency,
but added, not perhaps without some tinge of personal sarcasm,
that he would sooner have the orator's money than his credit.
And Peel had done the country an infinite service by insisting on
the restoration of genuine credit, on the resumption of cash pay-
ments, in opposition to those who wish to develope the currency.
When by proper exercise and diet, to use an illustration, you
bring human strength to its fullest efficiency in an individual
body, you do not make two bodies. And so, when by judicious
substitutes, in the form of commercial obligations, the fullest effi-
ciency is given to the monetary resources of a country, you do not
make another mass of money. If you did, the more instruments
of credit you made, the more you pile up indebtedness, the more
property do you create. You might as well allege, as a very
active and enthusiastic, not to say positive, writer appears to assert,
that if you had a thousand pounds, and owed a thousand pounds,
you were worth two thousand pounds. To my mind you are
worth just nothing under such circumstances.
There is an obvious question which it is not easy or accurate to
answer with a yes or no, which is, does credit affect prices ? Now
no doubt price is due to demand. Articles rise in price, because
the demand appears to fall short of the supply, and fall in price,
because the supply seems immediately or prospectively to exceed
the demand. How the possession of credit may enable one person
who determines on producing an article an opportunity of com-
peting against another, who will go without it if the other gets it.
But here the credit does not raise the price which the purchaser
He was simply displacing it, mobilizing it, giving it a new effi-
ciency. He might, indeed, have lost by the transaction, and
forfeited his estate. The security which he offered is ex hypo-
thesis unimpaired, but the wealth which he secured by the pledge
is lost.
Some people allege that credit creates new wealth. It does so
no more than bank-notes make more money. What it does is to
utilize, to mobilize wealth, and make it more efficient. I remem-
ber to have heard that, when an enthusiastic advocate of the
functions of credit was dwelling on its creative powers in the
House of Commons, the late Sir Robert Peel congratulated him
on his eloquence and his mastery over one theory of the currency,
but added, not perhaps without some tinge of personal sarcasm,
that he would sooner have the orator's money than his credit.
And Peel had done the country an infinite service by insisting on
the restoration of genuine credit, on the resumption of cash pay-
ments, in opposition to those who wish to develope the currency.
When by proper exercise and diet, to use an illustration, you
bring human strength to its fullest efficiency in an individual
body, you do not make two bodies. And so, when by judicious
substitutes, in the form of commercial obligations, the fullest effi-
ciency is given to the monetary resources of a country, you do not
make another mass of money. If you did, the more instruments
of credit you made, the more you pile up indebtedness, the more
property do you create. You might as well allege, as a very
active and enthusiastic, not to say positive, writer appears to assert,
that if you had a thousand pounds, and owed a thousand pounds,
you were worth two thousand pounds. To my mind you are
worth just nothing under such circumstances.
There is an obvious question which it is not easy or accurate to
answer with a yes or no, which is, does credit affect prices ? Now
no doubt price is due to demand. Articles rise in price, because
the demand appears to fall short of the supply, and fall in price,
because the supply seems immediately or prospectively to exceed
the demand. How the possession of credit may enable one person
who determines on producing an article an opportunity of com-
peting against another, who will go without it if the other gets it.
But here the credit does not raise the price which the purchaser