the complete juridical Theory of Credit, except only on one point. And from the emphatic way in which certain elementary principles are laid down, it is quite evident that there were silly persons who chattered about Credit at Rome, just as there are at the present day. The principles elaborated by these jurists were incorporated in the Pandects of Justinian, and in the Basilica, and have been the mercantile law of Europe. They are contained in every Continental text of Jurisprudence. But upon this subject English legal textbooks are lamentably defective; and no scholastic Economist ever had any more notion of them than a child of six years old has of the triple expansion engines of the Campania. These principles have, by a statute which came into operation in 1875, been enacted as Law in England.

The doctrines of the Roman Jurists were, however, inadequate for the complete Theory of Credit, as they chiefly regarded the subject from the Creditor's side, and only very slightly from the Debtor's side.

But in every Obligation there are two sides-the Creditor's, or the Active or Positive side, and the Debtor's, or the Passive or Negative side. Now it is evident that the complete Theory of Credit must be developed simultaneously, both from the Creditor's and the Debtor's side. But the latter requires principles of mathematics which have only been fully understood by mathematicians themselves, and introduced into popular treatises, within the last sixty years.

Like

I have now laid bare the foundations of Economic Science. Botta and Layard at Nineveh; Schliemann at Troy, Argos, and Mycena; Petrie, and many other explorers in Egypt-I have swept away the rubbish and folly which has accumulated over the doctrines of the ancients for centuries, and laid bare the solid and impregnable foundations upon which the majestic structure of Economic Science is to be erected.

Continuation of the Doctrine of the Economists.
The Economists on Money.

One of the most important services the Economists rendered to Economics was to re-establish the true doctrine of the nature and use of Money.

The Mercantile System held that Money is the only species of Wealth; the evident absurdity of this doctrine was so great that it naturally led to reaction, and, as usual in such cases, opinion went

to the other extreme.
but only the Sign, or Representative, of Wealth.

It was held that Money is not Wealth at all,

This naturally led to the doctrine that as Money is only the means of obtaining other things, it is wholly indifferent what it is made of, and that it is only the command of the Sovereign which gives it Value. It was maintained that the Prince might diminish the quantity of metal in the coin, or even debase it, as much as he pleased, and still affix any value he pleased to it.

The Economists shewed that Money is neither all Wealth, nor is it not Wealth; but it is simply a species of merchandise, which is used for a particular purpose, to facilitate commerce. It is found more convenient in commerce, instead of exchanging products directly for one another, to exchange them for some intermediate merchandise, which is itself universally exchangeable. Such an operation is termed a Sale. Any merchandise whatever might have been chosen for this purpose, but there are many reasons why Gold and Silver are superior to all other species. The merchandise which is used for this purpose is termed Money. But this kind of exchange differs in no way from any other, and the Money given in exchange is the Equivalent of the merchandise. Thus, though every one agrees to take Money in exchange for products, it is not the Sign, or Representative, of the products, but their Equivalent. Money is, therefore, nothing but one species of merchandise, and any other merchandise might have been made money. Hence, though money has uses of its own, yet its Value, or exchangeable power, depends upon exactly the same laws as the value of any other merchandise. Money, therefore, is Wealth in itself, but only a very small part of the general Wealth.

The Economists only admitted an Exchange to be a transaction. in which each party obtained a satisfaction, or something which he desired for use: that is, when the desire of each party was consummated, or completed.

Such an Exchange is termed Barter. But in the intercourse of society such Exchanges are comparatively rare. Persons want usually to obtain things from others, while those others want nothing from them. To obviate the inconveniences which would take place if no one could get what he wanted unless he had something at the same time to offer the other party which he wanted, people hit upon the plan of adopting some particular kind of merchandise which should be universally exchangeable. The buyer, therefore, gave the seller of the product an equivalent quantity of this universally

exchangeable merchandise, so that he could get any satisfaction he pleased from someone else. The person, however, who has received the Money has not got a Satisfaction; his desire is not Consummated, or Completed. In order to obtain a satisfaction, he must exchange away the money for something else he does desire. Hence the Economists called a Sale a Demi

Exchange.

Le Trosne says: "There is this difference between an Exchange and a Sale, that in the Exchange everything is completed (consommé) for each of the parties; they have the thing which they desired to obtain, and have only to enjoy it. In the Sale, on the contrary, it is only the buyer who has gained his object, because it is only he who is in a condition to enjoy. But everything is not ended for the seller."

And again: "Exchange arrives directly at its object, which is completion (consommation): there are only two terms, and it is ended in a single contract. But a contract in which money intervenes is not completed (consommé), because the seller must become a buyer either by himself, or by the interposition of him to whom he shall transfer his money. There are, therefore, to arrive at the completion (consommation), which is the final object, at least four terms and three parties, one of whom intervenes twice."

In fact, although Money is an Equivalent merchandise to the product it is exchanged for, its real use and purpose is to be a Right or Title to obtain anything else which its possessor desires. Hence its true nature is that of a Bill of Exchange on the general community.

Thus Baudeau says: "This coined Money in circulation is nothing, as I have said elsewhere, but Effective Titles on the general mass of useful and agreeable enjoyments which cause the well-being and propagation of the human race.

"It is a kind of Bill of Exchange, or Order, payable at the will of the bearer.

"Instead of taking his share in kind of all matters of subsistence,

produce annually growing, the Sovereign demands it in fective Title, the Order, the Bill of Exchange." onomists saw clearly that Money is only the highest a truth which we have shown a long line of Jurists have seen (Money).

n, being only an Order, or Bill of Exchange, on all of the country, and its only use being to facilitate the of products, a substitute may be found for it. The

Economists showed that instead of the quantity of Money in a country being the measure of its wealth, it is generally the contrary. In rich countries the valuable paper of rich merchants supplies the place of money, and is itself an object of commerce just like money. It is only in poor and barbarous countries, where no one has confidence in his neighbour, that a large stock of money is required. The use of more money than is absolutely required is a great loss to a country, because it can only be purchased with an equivalent. amount of products, and their value is thus withdrawn from being employed in productive operations. Any country which has plenty of products can at any time purchase any amount of money it may require. The Economists, therefore, strongly urged the entire abolition of all restrictions on the free export of money, and also the entire abolition of usury laws.

The Economists termed a Sale a Demi-Exchange. The Exchange was completed when the seller of the product, who had obtained money for it himself, procured some object for it which he desired. Thus, a wine-merchant may have sold wine to his clients, and got paid for it in money. But he can make no direct use of the money: he can neither eat it, nor drink it, nor clothe himself with it. It is only when he has got the food, clothes, books, etc., which he wants, that the Exchange is completed.

For this reason Money is called the Medium of Exchange. But the Economists also called a Sale Circulation, and the number of sales was the amount of the Circulation.

Hence, Money was also called the Medium of Circulation, or the Circulating Medium.

The Economists on the Balance of Trade.

During the prevalence of the Mercantile System, Money was held to be the only wealth, from which doctrine the consequence naturally followed that in every exchange one side must gain and the other side must lose. This doctrine was the cause of many commercial wars.

The Economists held that in an Exchange neither side gains or loses. This was an advance on the preceding doctrine of the Balance of Trade, and they proclaimed the falsity of that doctrine as then held. They held that there is always an Exchange of equal value for equal value. From this doctrine, which they maintained with unflinching pertinacity, they drew the most extraordinary consequences, as we shall have to show immediately.

The Economists on Productive Labour, and on Sterile or

Unproductive Labour.

We have now to notice a remarkable and distinctive doctrine of the Economists.

They defined Productive Labour to be Labour which left a Profit after defraying its Cost.

They maintained that agriculture and Labour, that is, Labour employed in obtaining all sorts of raw produce from the earth, is the only species of Productive Labour; or the only one which leaves a surplus Profit after defraying its Cost.

The surplus of the raw produce of the earth, after it has defrayed all the Cost of its Production, the Economists termed the Produit Net; and they alleged that it is the sole augmentation of National Wealth, and that all Taxation should come out of it.

They maintained that all other Labour expended on the raw produce of the earth, either in fashioning it, or in manufacturing it, or in transporting it from place to place, or in selling and re-selling it, is Sterile and Unproductive, and adds nothing to the Wealth of the Nation. And they maintained that neither the Labour of artisans, nor the operations of Commerce in any way enrich the country.

They alleged that the Labour of artisans is Sterile, or Unproductive, because, though their Labour adds to the value of the product, yet during the process of the manufacture the labourer consumes his subsistence, and the value added to the product only represents the value of the subsistence destroyed during the Labour. Hence in this case, though there is an augmentation of Value, there is no augmentation of Wealth.

Again, they maintained that Commerce cannot enrich a country, because it is always an exchange of equal value for equal value. Over and over again the Economists alleged that Commerce being only an exchange of equal values, neither side can gain or lose. They held that the only use of Commerce is to vary and multiply the means of enjoyment, but that it does not add to national Wealth, or, if it does, it is only by giving a value to the products of the earth which might otherwise fail in finding a market. They contended also that as all exchanges are mere equal value for equal value, the same principles apply to sales, and that the gains which traders make are no increase of Wealth to the nation.

The Economists maintained these doctrines through long and