Public credit is only one form of general credit, and it is comparatively easy to point out wherein the former differs from the latter.

1 See Bastable, p. 567.

But credit in itself is by no means easy to define. Scarcely any two of the able writers who have treated the subject are agreed as to its most important features. It has, moreover, as a term in common use, suffered so many subtle changes in meaning in the course of its history as to leave its modern significance full of dangerous variations. The ordinary business man uses the word daily to convey half a dozen or more different ideas without recognising the differences. Scientific writers have waged long and bitter controversies concerning its proper definition.1 Without going deeply into the controversy, we may say that there are practically three opposing views as to the real nature of credit. First, there are those writers, who, like Nebenius and Rau, start from the etymological meaning of the term and maintain that the confidence, or trust, reposed by the creditor in the ability of the debtor to fulfil an agreement in the future is the chief element in credit.2 Second, there is a class of writers who, like Knies, regard this element of confidence, a mere psychical condition, as too intangible, too immaterial, to be of any value for a scientific definition.

1 A good idea of the extent of the controversy and of the conflicting views can be gained from Knies, Der Kredit, Berlin, 1876.

2 Nebenius, Der öffentliche Credit, Carlsruhe und Baden, 2d ed., 1829 ; Rau, Finanzwissenschaft, 3d ed., Heidelberg, 1851 ; II. Abt, p. 248.

They proceed entirely from observation of those transactions which are said to involve the use of credit, and find in all such transactions one feature which is never present in transactions not designated as credit transactions. That feature is that the completion of the transaction is regarded as being postponed to a future time. This element of time, this postponement, must then, they argue, be the essence of credit. Credit is, in their eyes, merely a means of transferring ownership temporarily, a means of paying for present goods with a greater quantity of future ones. Third, there is still another school, who, like McLeod, regard credit as analogous to money, money being regarded as representing claims on the wealth of the whole community, while a credit is a similar claim on the wealth of some particular individual. McLeod even goes so far as to identify the claim, the order, the promise to pay, or the right to demand with "the credit." " A credit," says McLeod, " in Law, Commerce, and Economics, is the Right which one Person, the Creditor, has to compel another Person, the Debtor, to Pay or Do something."1 Professor Sherwood has developed this in a more scientific manner.

1 Theory of Credit, L, 315. In a very scholarly article published in the Quarterly Journal of Economics, January, 1894, Professor Sherwood discusses the nature and mechanism of credit in a way to throw a great deal of new light upon the subject. I do not believe that his analysis can be improved upon. He distinguishes particularly the credit basis of money, as generic or