22. Credit, or Debt, then being an Exchangeable Right, or an Economic Quantity, a Commodity or Merchandise, which may be bought and sold, cannot of course, in that form, be the subject of manual delivery. The Greeks hit upon the plan of recording this Right upon a material, and when this was done, the Right itself was capable of manual delivery, like any other Chattel.

When the Right is recorded on paper, this paper is in English Law termed an Instrument, and it must be observed that in this case the word Instrument bears a technical meaning which is often overlooked.

The word Instrument has two meanings which are often not distinguished. Sometimes it means a tool, or means, or implement by which something is effected. Thus, Smith speaks of money as "the great instrument of exchange" or "instrument of commerce." But also Bills and Notes are often spoken of as "Instruments," or as "Instruments of Credit," or "Instruments of Debt."

Now it must be carefully observed that in the expressions, "Instruments of Credit" and "Instruments of exchange," the word Instrument has two distinct meanings which are often overlooked.

In "Instruments of Exchange" it signifies the means by which circulation or exchange is effected. In "Instruments of Credit" it means a Record, or Document, of the Debt.

In Roman Law the word Instrumentum means any evidence, whether oral, or written, by which the Court or a Judge is instructed as to the merits of the case, or informed of a fact. In English Law however it is restricted to written evidence, and thus it is exactly equivalent to the word Document, which is any writing which teaches or informs the Court of a fact. It means simply a written record.

This meaning is very common in English: thus out of innumerable examples we may quote from Hallam - "is abundantly manifest by the instruments of both the kings" - "by mutual instruments executed at Calais." Thus in these cases the word instrument means a Document, or Record.

Hence an Instrument of Credit or Debt, means any written evidence of a Debt: and in Courts of Law and legal treatises these documents are invariably termed instruments.

Instruments of Credit are of four forms.

1. Orders to pay money.

2. Promises to pay money.

3. Credits in banks, termed Deposits.

4. A mere acknowledgment of a Debt usually called an I. O. U.

Many persons feel a difficulty in admitting such things as Bank Notes and Bills of Exchange to be Wealth, seeing that they are but so many pieces of paper. But it must be observed that it is not exactly the Paper Document which is Wealth - that is only the evidence or the Record of the Eight: it is the Eight itself which is the Economic Quantity or Wealth: it subsists and may be exchanged quite independently of any paper, and even if the paper is destroyed, the Eight is not destroyed: it may be written on a fresh piece of paper. So many persons are somewhat startled at calling so many figures in a banker's ledger Wealth. But these figures are merely the evidence of the Bights which exist in the persons of the customers of the banker, and they may be put into circulation at any moment by means of Cheques. These Deposits, therefore, or Credits in bankers' books, are in real effect so many Bank Notes, and if one be admitted to be Wealth the other must be so too. They are each of them nothing but Transferable Eights of action.

These written Documents of Debt are often termed Instruments of Credit, and also Negotiable Paper : but the former term is far preferable because, since Bills of Lading and Dock Warrants have been made negotiable - like Bills of Exchange - they are included in the title of Negotiable Paper. We have pointed out the fundamental distinction between these two classes of paper documents, which is of the greatest consequence in Economics: and it can only lead to confusion to class under one denomination documents of such distinct natures: for as we have shewn

Bills of Lading and Dock Warrants are not of the nature of Credit at all.

Instruments of Credit are in two forms. When a Creditor has a Right of action against a Debtor it may be recorded in two ways. 1. It may be in the form of an Order from the Creditor to the Debtor to pay him, or any one else he may name. 2. It may be a Promise emanating from the Debtor to pay his Creditor or any one else he may name.