CHAPTER VIII. 



CREDIT. 



We are obliged to make a supposition by no means flattering 

 to the individual presented to the reader. Let us suppose, there- 

 fore, that some miserable mortal, who is utterly devoid of any per- 

 sonal good quality to recommend him, makes his advent on the 

 stage of action, and demands credit. Are there circumstances 

 under which he can obtain it? Most certainly. Though he pos- 

 sesses neither energy, morality nor business capacity, yet if he 

 owns a farm worth $3,000, which he is willing to mortgage as secur- 

 ity for $1,500 that he desires to borrow, he will be considered as 

 eminently deserving of credit. He is neither industrious, punctual, 

 capable, nor virtuous; but he owns a farm clear of debt worth 

 $2,000 and verily he shall raise the $1,500! 



Personal credit is one thing; real credit is another and a very 

 different thing. In one case, it is the man who receives credit; in 

 the other, it is the property, the thing. Personal credit is in the 

 nature of partnership; real credit is in the nature of a sale, with a 

 reserved right of repurchase under conditions. By personal credit, 

 two men or more are brought into voluntary mutual relations; by real 

 credit, a certain amount of fixed property is transformed, under 

 certain conditions and for a certain time, into circulating medium; 

 that is, a certain amount of engaged capital is temporarily trans- 

 formed into disengaged capital. 



THE USURY LAWS. 



We have already spoken of the absurdity of the usury laws. 

 But let that pass; we will speak of it again. 



A young man goes to a capitalist, saying: "If you will lend rae 

 $100, I will go into a certain business, and make $1,500 in the course 

 of the present year; and my profits will thus enable me to pay you 

 back the money you lend me, and another $100 for the use of it. In- 

 deed it is nothing more than fair that I should pay you as much as 

 I offer; for, after all, there is a great risk in the business, and you 

 do me a greater favor than I do you." The capitalist answers: "I 

 cannot lend you money on such terms; for the transaction would 

 be illegal; nevertheless, I am willing to help you all I can, if I can 

 devise a way. What do you say to my buying such rooms and 

 machinery as you require, and letting them to you on the terms you 

 propose? For, though I cannot charge more than 6 per cent on 

 money loaned, I can let buildings, whose total value is only $100, at 

 a rate of $1(X) per annum, and violate no law. Or, again, as I shall 

 be obliged to furnish you with the raw material consiimed in your 



