merely to restore the proportion between production and consumption. It has the same effect as if there had been no saving; as if every one had consumed his whole income, his whole share in the national produce; and viewed in this light, it affords no benefit, and deserves neither consideration nor favour.

But when those savings are employed in undertakings, speculations, and improvements, they increase the sum of labour, ameliorate the condition of the labouring class, and favour population. They are, it is true, restored to consumption, as in the former case; but their consumption leaves an equivalent behind in an augmented population and increased produce of labour. They are of course the true source, or rather the most powerful lever of prosperity and wealth; and private credit, which is the agent, the promoter of such beneficial results, deserves all the attention and benevolence of governments.

This twofold employment of the savings put into circulation by private credit, ought to warn banks of circulation not to meddle with the operations of private credit. Whether the funds thrown into circulation by private credit go into the hands of spendthrifts or speculators, the banks are immediately forced to convert them into metallic money; because they are destined to consumption both, as has been observed, can o

There are however some banks especially devoted to private credit. Such are the banks of Scotland, such was the land-bank (banque Hypothécaire) of Paris, and such are all lombards (monts de piété, lumber offices.) But these establishments have no affinity whatever with banks of circulation. They can only be considered as associations of capitalists, who circulate private savings, and whose operations are limited to the lending of their own and borrowed capitals. When they issue notes their stock in specie must always be nearly in equal proportion to the amount of notes issued. They afford no other advantage than that of concentrating private credit, and giving it a greater influence, stability, and activity. These advantages are, no doubt, valuable, but not to be compared with those resulting from commercial credit.

Though the utility of private credit is so obvious, it yet has not made the same progress as commercial credit; and the reason lies in particular circumstances, which it is necessary to detail.

Most religions have taught, some even have ordered, that private loans should be made gratuitously. They wished that whatever one individual possesses too much, should be generously lent to him who wants it, without any equivalent, without any retribution, I on the only condition of returning the commothat is lent. Undoubtedly this doctrine is worentiments of humanity and charity, which vour to awaken in the heart of man:

fessed, it ill agrees with human erest of nations, and the pros

merely to restore the proportion between production and consumption. It has the same effect as if there had been no saving; as if every one had consumed his whole income, his whole share in the national produce; and viewed in this light, it affords no benefit, and deserves neither consideration nor favour.

But when those savings are employed in undertakings, speculations, and improvements, they increase the sum of labour, ameliorate the condition of the labouring class, and favour population. They are, it is true, restored to consumption, as in the former case; but their consumption leaves an equivalent behind in an augmented population and increased produce of labour. They are of course the true source, or rather the most powerful lever of prosperity and wealth; and private credit, which is the agent, the promoter of such beneficial results, deserves all the attention and benevolence of governments.

This twofold employment of the savings put into circulation by private credit, ought to warn banks of circulation not to meddle with the operations of private credit. Whether the funds thrown into circulation by private credit go into the hands of spendthrifts or speculators, the banks are immediately forced to convert them into metallic money; because they are destined to consumption or to labour, and both, as has been observed, can only be paid in coin. As banks of circulation are chiefly established to save the use of coin, they evidently go astray from their destination when they suffer themselves to be voluntarily or fictitiously entrapped into the operations of private credit,

There are however some banks especially devoted to private credit. Such are the banks of Scotland, such was the land-bank (banque Hypothécaire) of Paris, and such are all lombards (monts de piété, lumber offices.) But these establishments have no affinity whatever with banks of circulation. They can only be considered as associations of capitalists, who circulate private savings, and whose operations are limited to the lending of their own and borrowed capitals. When they issue notes their stock in specie must always be nearly in equal proportion to the amount of notes issued. They afford no other advantage than that of concentrating private credit, and giving it a greater influence, stability, and activity. These advantages are, no doubt, valuable, but not to be compared with those resulting from commercial credit.

Though the utility of private credit is so obvious, it yet has not made the same progress as commercial credit; and the reason lies in particular circumstances, which it is necessary to detail.

Most religions have taught, some even have ordered, that private loans should be made gratuitously. They wished that whatever one individual possesses too much, should be generously lent to him who wants it, without any equivalent, without any retribution, and on the only condition of returning the commodity that is lent. Undoubtedly this doctrine is worthy of the sentiments of humanity and charity, which all religions endeavour to awaken in the heart of man: but it must be confessed, it ill agrees with human passions, with the interest of nations, and the pros

1

perity of empires. Hence it has no other effect than to deprive mankind of the invaluable advantages of private credit, and to render useless for all what some have too much. This consequence, which the progress of knowledge renders every day more obvious, has been but feebly remedied by the laws. They have not authorized any equivalent or price of loans which religion prohibited; they have only limited that equivalent or price, as if the contract of lending differed in its nature from other civil contracts; as if an individual could be induced to strip himself of what he has saved, without an equivalent that pleases or suits him; as if the price of equivalents was not always proportioned to the mass of surplusses or savings. But let us leave to time the care of giving to these considerations the persuasive power which is denied to reason. Let us await from the general interest, which is every day better felt and better known, a solid triumph over the errors or pusillanimity which still obstruct the progress of private credit, and oppose a fatal resistance to its success.

The denial or limitation of equivalents is not the only obstacle which private credit encounters; it meets with one more serious and less easily overcome in the difficulty of re-payment, in the unpopularity which assails the creditor when he is obliged to enforce payment by a legal process, in the benevolence of the laws, and in the bias of courts of justice in favour of the borrower.

The preference granted to the debtor over the creditor is assuredly astonishing, and its motive cannot easily be guessed; I think however I have discovered it, and I hope I shall be pardoned for developing it at