light as a machine or instrument of trade, which facilitates and abridges labour, and which, though it costs a certain expense, repays that expense with a profit."1

Instead, then, of being entirely overlooked, as is most frequently the case, the dexterity, skill, and intelligence of the mass of its inhabitants should be most particularly attended to in estimating the capital and productive capacities of a country. Much stress is uniformly and justly laid on the efficacy of the machines which man has constructed to assist in his undertakings; but he is himself the most important of all machines, and every addition made to his skill and dexterity is an acquisition of the utmost consequence. The discrepancies that actually obtain in the physical organization of the various races of men, are seldom very considerable; and yet, how vast is the difference, in other points of view, between an Indian of Mexico, and an Englishman or a Frenchman! The former, ignorant and uninstructed, is poor and miserable, though placed in a country blessed with a soil of exhaustless fertility and a genial climate; the latter, intelligent and educated, is wealthy, prosperous, and happy, though placed under comparatively unfavourable circumstances. Lord Bacon's aphorism, that knowledge is power, is true in a physical as well as in a moral sense. It gives its possessors an ascendency over their less instructed neighbours, and makes immeasurable additions to their productive capacities. An ignorant and uneducated people, though possessed of all the materials and powers necessary for the production of wealth, are uniformly sunk in poverty and barbarism: and until their mental powers begin to expand, and they have learned to exercise the empire of mind over matter, the avenues to improvement are shut against them, and they have neither the power nor the wish to emerge from their degraded condition.

"Wealth of Nations," p. 122.

It has been said, and perhaps truly, that it was the rapid growth of the cotton manufacture that bore us triumphantly through the contest with revolutionary France, and gave us wealth and power sufficient to overcome the combined force of almost all Europe, though wielded by a chief of consummate talent. But what is the cotton manufacture? Is it not wholly the result of the discoveries and inventions of Hargreaves, Arkwright, Crompton, Cartwright, and a few others? It was their sagacity that discovered and explored this mighty channel for the profitable employment of millions upon millions of capital, and of thousands upon thousands of workmen; so that the vast advantages derived from it, are to be ascribed to them as to their original authors and inventors.

To those who are impressed with a conviction of the truth of the principles thus briefly stated, who are duly sensible of the importance of science to the advancement of nations, nothing can be more gratifying than the progress made of late years in diffusing instruction among the great mass of the community. The discoveries of Bell and Lancaster, and the schools founded on their principles, have powerfully contributed to spread a knowledge of the elementary branches of instruction; while the Mechanics' Institutions formed in the metropolis, and other great towns, afford the labouring part of the population an opportunity of perfecting themselves in their respective arts, by making them acquainted with the principles on which they depend, and from the better application of which every new improvement must be derived. It is impossible to form any accurate estimate of the influence of this general instruction over the future fortunes of the empire; but it can hardly fail to be alike great and beneficial. More discoveries will be made, according to the degree in which more individuals are placed

1 For an account of the rise, progress, and present state of the cotton manufacture, see Commercial Dictionary, art. Cotton, and the authorities there referred to.

in a situation to make them. And it is neither impossible, nor at all improbable, that the lustre which now attaches to the names of Arkwright and Watt may be dimmed, though it can never be wholly effaced, by the more numerous, and, it may be, more important discoveries, that will, at no distant period, be made by those who would have passed from the cradle to the tomb in the same obscure and beaten track that had been trodden by their unambitious ancestors, had not the education now so generally diffused, served to elicit and ripen the seeds of genius implanted in them for the common advantage of mankind.

CHAPTER III.

Definition and Growth of Credit-Contributes to facilitate Production by distributing Capital in the most advantageous manner-Circulation of Bills, &c.

HAVING seen, in the last chapter, the effects resulting from the accumulation and employment of Capital, our attention is next called to the subject of Credit. This is most commonly represented as a very effective agent in the production of wealth; and though its influence has been, in this respect, a good deal exaggerated, it is, notwithstanding, of very considerable importance.

Credit is the term used to express the trust or confidence placed by one individual in another when he assigns him property in loan, or without stipulating for its immediate payment. The party who lends is said to give credit, and the party who borrows to obtain credit.

very

In the earlier stages of society credit is in a great measure unknown. This arises partly from the circumstance of little capital being then accumulated, and partly from government not having the means, or not being sufficiently careful to enforce that punctual attention to engagements so indispensable to the existence of confidence or credit. But as advances, capital is gradually accumulated, and the

Society

observance of contracts is enforced by the public authority. Credit then begins to grow up. On the one hand, individuals who have either more capital than they can conveniently employ, or who are desirous of withdrawing from business, are disposed to lend, or to transfer a part or the whole of their capital to others, on condition of their

obtaining

a certain stipulated premium or interest for its use, and what they consider sufficient security for its repayment; and on the other hand, there are always

individuals to be met with disposed to borrow, partly and principally in order to extend their businesses beyond the limits to which they can be carried by means of their own capital, or to purchase commodities on speculation, and partly to defray debts already contracted. These different classes of individuals mutually accommodate each other. Those desirous of being relieved from the fatigues of business, find it very convenient to lend their capital to others; while those who are anxious to enlarge their businesses, obtain the means of prosecuting them to a greater extent.

It is in the effects resulting from this transference of capital from those who are willing to lend to those who are desirous to borrow, that we must seek for the advantages derivable from credit. All the operations supposed to be carried on by its agency, how extensive and complicated soever they may appear, originate in a change in the actual holders or employers of stock. Nothing, indeed, is more common than to hear it stated, that commodities are produced, and the most expensive operations carried on, by means of credit or confidence; but this is an obvious mistake. Wealth cannot be produced, nor can any sort of industrious undertaking be entered upon or completed, without the aid of labour and capital; and all that credit does, or can do, is, by facilitating the transfer of capital from one individual to another, to bring it into the hands of those who, it is most probable, will employ it to the greatest advantage. A few remarks will render this apparent.

It is plain, that to whatever extent the power of the borrower of a quantity of produce, or of a sum of money, to extend his business, may be increased, that of the lender must be equally diminished. The same portion of capital cannot be employed by two individuals at the same time. If A transfer his capital to B, he necessarily, by so doing, deprives himself of a power or capacity of production which B acquires. It is most probable, indeed, that this capital