It is to credit alone that we are indebted for that intermediate agent which plays so important a part in the transaction of business, whether it be in causing supply and demand to meet, or in applying to the industry of exchange the principle of the division of labor which is so favorable to production.

Without credit this intermediary is impossible in most instances. It gives birth to both industry and trade. It multiplies the producing and consuming power of society; by facilitating exchange it accelerates and increases it.

In reality the largest share of the business of the world is done on a credit basis. In many instances the instruments of payment which we call cash are in reality only promises to pay.

During the Middle Ages credit transactions of great importance and on long time were effected without leaving the slightest trace in writing; and even to this day the Russian producers and merchants who frequent the great annual fair at Nijni Novgorod, contract credit obligations for twelve month's time, without giving the least evidence of the debt, and that for a very good reason : very frequently they can neither read nor write.

When we give credit we give value and wait for the value we are to receive in return; but we often cannot afford to do this, so we get some other person to wait for us by giving him an instrument of credit which we take when we deliver our goods. This person to whom we give the instrument of credit may not be able to wait either, so he takes the paper to the bank and discounts it. It is the business of the bank to wait, not the business of the merchant. The latter should keep his full capital active every day and every dollar he is waiting for is inactive and is earning nothing.

On the other hand the bank increases its capital by waiting,for the simple reason that it charges for waiting just as a lawyer charges for giving his time to his client.

But does this increased circulation increase capital? The machine runs faster and turns out more work, but doesn't increase its size or its intrinsic value; it is the work that counts, not the machine.