capital are also plain. He says in the passages last quoted, that Capital is always a very real value fixed in a matter! Why, he himself has told us that there is Incorporeal Capital not fixed in any matter whatever, such as Copyright, &c. He then says that Immaterial products are not susceptible of accumulation! What! cannot a man be possessed of £100,000 of Funded property? and of the Copyrights of Books, and of a number of Bills of Exchange? He then says that a material product cannot be in two places at once. But who said it could-except Sir Boyle Roche, the famous Hibernian,-and even he limited this power to birds? Neither, however, can an immaterial product be in two places at once, that we are aware of; so that it makes not much difference as to its being in two places at once, whether the product is material or immaterial. He says that material merchandise lent cannot serve two persons at once. No one says it could; but that has nothing to do with the question. Because it is not the merchandise which is the Credit, but the Debt created in exchange for the merchandise, which is valuable property in itself, and may be used to buy other articles, and therefore is productive capital, or else it may be discounted by a banker, and the proceeds used in the same manner. Now when it is clearly understood that the Credit is the Debt, or Right, created which is recorded on paper, Say himself says it is Capital. He says "Every private person can sign an ordinary bill, and give it in payment of merchandise, provided that the seller consents to receive it as if it were money. This seller in his turn if he is the buyer of other merchandise, can give the same bill in payment. The second acquirer can pass it to a third with the same object. There is an obligation which circulates it serves him who wishes to sell; it serves him who wishes to buy it fills the office of a sum of money. "The value of a sign depends on the value of the thing signified: but in order that this value may be exactly as great as that of the thing of which it is the pledge, the payment of the bill must not only be certain, but demandable on the instant. "If bills of credit could replace completely metallic money, it is evident that a bank of circulation veritably augments the sum of national Wealth; because in this case the metallic wealth be 1 Cours, Pt. III., ch. 18. coming superfluous as an agent of circulation, and nevertheless preserving its own value, becomes disposable, and can serve other purposes. But how does this substitution take place? What are its limits? What classes of society make their profit of the interest of the new funds added to the Capital of the nation? According as a bank issues its notes, and the public consents to receive them on the same footing as metallic money, the number of monetary units increases "We must not, however, think that the value withdrawn from the sum of money, and added to the sum of capital-merchandize, equals the sum of notes issued. These only represent money, when they can always be paid on demand; and for that, the bank is obliged to keep in its coffers, and consequently to withdraw from circulation, a certain sum of money. If, suppose, it issues 100 millions of notes, it will withdraw, perhaps, 40 millions in specie, which it will put in reserve, to meet the payments which may be demanded of it. Therefore if it adds to the quantity of money in circulation 100 millions, and if it withdraws 40 millions from circulation, it is as if it added only 60. "We now wish to learn what class of society enjoys the use of this NEW CAPITAL." Say then goes on to explain how this New Capital is employed, and who reaps the profit of it. We need say no more upon this weary subject. The whole misconception is now cleared up; and we have shewn most clearly that Say expressly declares the Bank Notes, which are Credit, to be Capital. On the Self-contradiction of MR. J. S. MILL on the subject of Credit. 8. Turgot was the writer, as we have shown above, who started the erroneous notion that Credit is the transfer of something; and J. B. Say extended the error by saying that Credit could not be Capital, because the same thing cannot be in two places at once. These two sentences have been repeated by a multitude of unthinking writers in France and England from that day to this. The number of writers who have reiterated these absurdities is so great that we have no room to notice them, especially as we have shewn the misconceptions and self-contradictions of Turgot and Say who were the sources of the error. We can only notice Mr. J. S. Mill who has joined in the sneer, and see whether he is more consistent with himself than Say. Let us first examine Mr. Mill's definition of Wealth. He says "Everything forms therefore a part of Wealth which has a power of purchasing." Again he says of Credit"-" For credit though it is not productive power, is purchasing power." "The Credit which we are now called upon to consider, as a distinct purchasing power, independent of money." Now, if everything is Wealth which has a power of purchasing -and if Credit be purchasing power-why of course Credit is Wealth! That is a Syllogism from which there is no escape. Thus we have shewn that Credit is expressly included under Mr. Mill's definition of wealth: we have already shewn in a previous chapter3, Mr. Mill's inconsistencies in his definition of Wealth. Let us now turn to Mr. Mill's definition of Capital. He says "Capital, by persons wholly unused to reflect on the subject, is supposed to be synonymous with money. To expose this misapprehension, would be to repeat what has been said in the introductory chapter. Money is no more synonymous with capital than it is with wealth. Money cannot in itself perform any part of the office of capital, since it can afford no assistance to production. To do this it must be exchanged for other things; and anything which is susceptible of being exchanged for other things, is capable of contributing to production in the same degree." Now, deferring for the present enquiring what the meaning of production is, we see that Mr. Mill says that money conduces to production by being exchanged for other things, and he says that ANYTHING which may be exchanged like money may conduce to production in the same way. Now if Bank Notes, and Bills of Exchange can be exchanged for other things they may be productive Capital in the same way that money is; by Mr. Mill's own admission. Thus we see that Mr. Mill has admitted that Credit may be Capital. 1 Preliminary Remarks. already, by implication, And this doctrine we shall Book iii., ch. 2, § 3. ▲ Bk. i., ch. 4. find he still more explicitly states when he speaks of credit itself, B. iii., c. xi., is headed, "Of Credit, as a substitute for money." Now, we observe that if one thing is to be a substitute for another, it must be of the same general nature. Not so high, or excellent in degree, perhaps, but still it must be of the same kind. Things of totally different natures cannot be substituted for each other. Thus, for instance, if a man cannot get xxx ale, he may have to put up with swipes, as a substitute. But a pair of shoes could never be a substitute for a glass of ale. If, therefore, credit is to be a substitute for money, it must be of the same general nature as money. Now money, as every one knows, is separate and independent exchangeable property, and consequently, Credit must be so also. Money, if used in a certain way, is capital; Credit must also be capable of being used as capital as well. If money, therefore, is capable of being productive capital, Credit must be so likewise. In B. iii., c. 11, § 5, he says, that a form "in which Credit is employed as a substitute for currency is that of promissory notes," and also- "The convenience of this mode of (as it were) coining Credit." In § 6, he says, another mode "of making Credit answer the purposes of money, by which, when carried far enough, money may be very completely superseded, consists in making payments by cheques." Here we see that he expressly calls the Promissory Note and the Cheque, the Credit. In the next chapter, xii., we shall see that he expressly allows that these Instruments of Credit are independent exchangeable property, and valuable things. He says, § 1:-"An order or note of hand, or bill payable at sight, for an ounce of gold, while the credit is unimpaired, is worth neither more nor less than the gold itself;" and-" But we have now found that there are other things, such as bank notes, bills of exchange, and cheques, which circulate as money, and perform ALL the functions of it." Now here is an explicit declaration that Credit performs ALL the functions of money, and, therefore, as one of the functions of money is to be productive Capital, it follows that Credit may also be productive Capital. In § 2 of the same chapter, he says, that a man "may make purchases with money which he only expects to have, or even only pretends to expect. He may obtain goods in return for his acceptance payable at a future time, or on his note of hand, or on a simply book credit, that is, on a mere promise pay. All these purchases have exactly the same effect on price, as if they were made with ready money. The amount of purchasing power which a person can exercise, is composed of all the money in his possession, and due to him, AND OF ALL HIS CREDIT." "He creates a demand for the article to the full amount of his money AND CREDIT taken together, and raises the price proportionably to both." In § 3, he says, "The inclination of the 41 mercantile public to increase their demand for commodities by making use of all or much of their credit as a purchasing power." In § 4:-"The banker's credit with the public at large, coined into notes, as bullion is coined into pieces of money to make it portable and divisible, is so much purchasing power SUPERADDED, in the hands of every successive holder, to that which he may derive from his own credit. Credit, in short, has exactly the same purchasing power with money; and, as money tells upon prices not simply in proportion to its amount, but to its amount multiplied by the number of times it changes hands, so also does Credit; and Credit, transferable from hand to hand, is in that proportion more potent than Credit which only performs one purchase.' * In § 5, he says:-"Since, then, Credit in the form of bank notes is a more potent instrument for raising prices than book CreditsIf we consider the proportion which the utmost increase of bank notes in a period of speculation bears, I do not say to the whole mass of credit in the country, but to the bills of exchange alone, the average amount of bills in existence at any one time is supposed considerably to exceed a hundred millions sterling. The Bank Note circulation of Great Britain and Ireland is less than thirty-five millions, and the increase in speculative periods, at most, two or three." And, as a note to this passage, Mr. Mill gives a table of the bills supposed to be created in several years, the last of which is 1839, when the bills supposed to be created amounted to £528,493,842. In c. xiii., he says:-" After experience had shewn that pieces of paper of no intrinsic value, by merely bearing upon them the written profession of being equivalent to a certain number of francs, dollars, or pounds, could be made to circulate as such, and to produce all the benefit to the issuers which could have been produced by the coins which they purported to represent-" |