CREDIT, in political economy, is one of many terms used in that science, of which it is said that we yet possess no scientific definition. This is the less to be regretted, as the practical meaning of the word is thoroughly known, so as to enable every one to understand what is meant, when economists speak of the extent to which C. is safe or proper, unsafe or improper, in this or that class of cases. We have come, perhaps, thus far towards an exact scientific notion of the nature of C., that while it serves the purpose of capital, it can only do so while there is capital ready to come and take its place if necessary. Credits which are not in this position—though they may happen to serve their turn, as a ship may sail sonic distance unwrecked without a steersman—do not accomplish the purpose of capital. The real power of C., properly resting on capi tal, is that it enables that capital to be devoted to more than one purpose. A bank is a great emporium of C.; that is to say, it consists of a certain amount of capital, which can be operated on by a whole community—not all at one time, but by individuals as occasion requires. Thus, a comparatively small stock of money can be made to do duty for carrying on numerous transactions. But it is indispensable for insuring a safe sys tem of C. that money must be instantly available when wanted; and this principle applies not alone to banking, hut to every species of transaction in which postponed payment is concerned. Unfortunately, this principle is too often set aside, and C. is grossly abused. The facts brought out in great bankruptcies generally teach the moral, that men who have every element of human well-being in their power, ruin themselves both in purse and fortune, by trying to make £30,000 do the work of £100,000. In many bankruptcies, too, there is a curious illustration of the power of C. as a represent
ative of capital, in enabling men to keep up for a considerable time the appearance of being wealthy traders, though they never had a farthing they could honestly call their own. In the few instances where such projects succeed, there is the kind of applause which is given to the successful winner in any game of chance; and it is naturally felt that if the successful are applauded, it is hard to condemn the unsuccessful; so that there is perhaps a dangerous leniency in public opinion towards speculators on credit.
In a modified shape, C. is a thing which, to all apppearance, can never be abolished. There is scarcely a human being in a civilized country, who does not transact a piece of credit business almost every day of his life. The workman hired by the week, and paid at its end, gives his employer C. from Monday morning to Saturday evening. The same workman, when getting a coat made for himself, even although he engaged to pay ready money on delivery, gets C. from the tailor during the making. It is necessary to con sider these things, because a course of C. is often so hurtful to people of the working classes, by fastening ruinous obligations on them, that some people have proposed to abolish all C. where they are concerned, by rendering them free from all legal procedure for the recovery of debts. The answer to this is, that although it is practicable to relieve any class from obligations, and their legal enforcement, it is impossible in a trading country to suppress debt and credit. It is practicable, however, so far to modify the legal remedies against debtors of the poorer class, that there may not be, as there too often is, a temptation to traders to transact a special business, in holding out temptations to working-people to purchase on credit.