7. We have now to trace the consequences of this distinction between the Mutuum and the Depositum, because they each give rise to a class of Paper Documents of a totally distinct nature. And it has been the confusion between these two distinct classes of Paper which has been at the root of most of the false theories of Credit and Currency which have produced such terrible catastrophes in the world.

There are two species of Paper Documents which are in general use in commerce, and which have some superficial resemblances - that is they both convey Rights to certain things and are similarly transferable, and are, therefore, considered by many to be of the same nature; but which are yet fundamentally distinct in their nature: and in this radical distinction is contained the basis of the Theory of Credit.

These species of Paper Documents are -

I. Bank Notes, Bills of Exchange, and other forms of Credit.

II. Bills of Lading, Dock Warrants, and all other Titles to specific goods.

In order to understand clearly the fundamental distinction between these classes of Paper Documents, we will explain how each of them arises.

It has already been shewn that in all Loans of the nature of the Mutuum, and in Sales of goods on Credit, the Property in the money or the goods is transferred to the borrower or the buyer, and in exchange for it the lender or the seller receives the Property or Right to demand a sum of money: which Right may be recorded on paper: and may be bought and sold like any other goods or merchandise.

Now when a person pays in money to his account at his banker's it is a Mutuum: the Property in the money passes absolutely to the Banker. He is not the Trustee or the Bailee, of the money: but it becomes his Property. He is the Owner of it, and is entitled to use it in any way he pleases, for his own purposes. In exchange for this money, he creates a Credit in his customer's favour, promising to deliver an equal amount of money on demand. The transaction is an exchange or sale. The Banker buys the money from his customer, and sells him in exchange for it, the Right to demand an equal quantity of money at any time he pleases, and it has Value, because the owner of it can exchange it for money, or anything else. The Banker is not the Trustee of the money, but he is simply the Debtor to his customer: and if unfortunately he should happen to fail, his customers or creditors are only entitled to have his property divided among them, and they must take their chance of having their Debts paid in full.

It is exactly the same in all cases of Mercantile Credit. The merchant or trader who buys goods on Credit, is not the Trustee or Bailee of the goods, but their Proprietor. The seller of the goods cedes the Property in them absolutely, and receives in exchange only the abstract Right to demand payment at a future time. Like the Banker, the buyer is simply the Debtor to the seller. In both cases there is a New Property created, which may be recorded on Paper, either in the form of a Bank Note, or a Bill of Exchange, which may be bought and sold quite independently of any specific money. Hence all forms of Paper Credit are absolutely separated from any specific money, and that is the very reason why they are called Credit, because the holder of them has nothing but a Right to demand money from some person.

But the case is quite different with the other class of Paper Documents. When a man ships goods on board a vessel, he receives from the captain a Paper Document, acknowledging the receipt of the goods, and promising to deliver them to whomsoever shall be the owner of the Paper Document called the Bill of Lading.

The shipper of the goods sends the Bill of Lading to the consignee, who, directly he receives it, may negotiate it, i.e. transfer it by indorsement to whomsoever he pleases, in all respects like a Bill of Exchange, and it may pass through any number of hands, and whoever is the owner of it at any time may go and demand the goods from the captain.

Similarly when goods are deposited in a Dock Warehouse, the Dock Master gives a Paper Document, or receipt for them of a similar nature to the Bill of Lading, which is called a Dock Warrant. This is transferable in all respects like a Bill of Lading, or a Bill of Exchange, and whoever is the owner of the

Dock Warrant, is the owner of the goods described in it, and is entitled to demand and receive them from the Dock Master.

Now it is especially to be observed that in these two cases, although the goods are delivered into the temporary custody of the captain, or dock master, they have no Property in them. The Property in the goods remains with the shipper, or depositor, and is transferred by him along with the Bill of Lading or Dock Warrant. The goods are what is called in Roman Law, a mere Depositum. The captain or the dock master is the mere Bailee or Trustee of the goods, and not the Owner, as in the case of the Mutuum. He has no right to convert them to his own use, and if he did so, it would be a robbery, and he would be liable to be punished as a thief. Thus in these cases the goods are merely delivered into the temporary custody of the captain, or dock master, for a certain defined purpose, and no New Property is created. The Bill of Lading and the Dock Warrant form One Property with the goods, and cannot be separated from them. The goods travel with the Paper Document. Thus it may be said in this case that the Paper Documents represent goods. In this case there is no exchange and these documents have no Value, i.e. they are not exchangeable separately. They are not exchangeable for goods generally, but are Titles to certain specific goods, and no others. No one ever spoke of the Value of a Bill of Lading or a Dock Warrant. Such Documents are not Credit, because the owner of them does not simply believe that he can obtain goods in exchange for them, but he knows that he has become the owner of certain specific goods. Such a transaction is not an Exchange, but what is called in Law a Bailment.