58 Wisconsin Academy of Sciences, Arts, and Letters. 



and the indefinite use of the term has confused the discussion of 

 many economical problems, and led to erroneous opinions. In 

 its correct use, the radical meaning of trust — that mental exer- 

 cise which includes an intellectual judgment and a feeling of reli- 

 ance, must always be kept prominent. Credit is always a sub- 

 jective thing with the man who trusts rather than an objective 

 quality of the man trusted. We speak loosely of a man's credit, 

 meaning something in his character or condition which is a power 

 to command credit. The real measure of his credit is, however, 

 the estimate in which he is held by others. Swindlers understand 

 this very well, and their efiforts are never to perfect in themselves 

 trustworthy qualities, but by whatever deceptive ai'ts, to mislead 

 the judgment and to win confidence in their favor. Judgment 

 and feeling are very closely identified in the exercise of credit. 

 The normal exercise requires that the judgment should regulate 

 the feeling, but too often this order is reversed ; the feeling runs 

 away with the judgment. Hence over-confidence unduly ex- 

 panding credit, at one time, followed by the reaction of panic, 

 when unreasoning distrust paralyzes all business activity. 



As a technical term in the science of Political Economy, 

 '• Credit is Trust in the promise of an equivalent to be rendered 

 at a future time for values immediately transferred." It supposes 

 One of the highest acts of human free-will, a contract between 

 two parties, in which a present advantage conferred is balanced by 

 an obligation to be fulfilled in the future. The possibility of 

 thus entering into a contract and its binding force proceed from 

 two capacities of the human mind, viz., foresight and freedom. 

 For a present consideration, anticipating future resources, a man 

 freely binds himself by an expressed intention respecting a future 

 act, surrendering his right to change that intention. It is evident 

 then that the soundness of credit, the strength of trust, in a par- 

 ticular case or in regard to transactions generally must be deter- 

 mined by the care with which such obligations are assumed and 

 the sacredness with which they are regarded. 



The true basis of credit is real wealth, existing or prospective, 

 which is or is expected to be at the command of the party trusted. 

 Credit is never self-supporting. It does not go alone. It can 



