The most important service of credit is to facilitate the transfer of capital and thus to promote the production of wealth. Credit is not in itself either capital or wealth. It is a means to both. Wealth consists of economic things and capital consists of economic goods used in the production of wealth.

Credit has been characterized as the wheels of commerce. It is more than this. It is the foundation of business. It is, as Daniel Webster said, "the vital air of the system of modern commerce. It has done more - a thousand times more-to enrich nations than all the mines of all the world. It has excited labor, stimulated manufactures, pushed commerce over every sea, and brought every nation, every kingdom and every small tribe among the races of men to be known to all the rest. It has raised armies, equipped navies and triumphed over the gross power of mere numbers. It has established national superiority on the foundation of intelligence, wealth and well directed industry.

"Credit is to money what money is to articles of merchandise. As hard money represents property, so credit represents hard money, and is capable of supplying the place of money so completely that there are writers of distinction who insist that no hard money is necessary for the interests of commerce.

"I am not of that opinion. I do not think that any Government can maintain an exclusive paper system without running to excess, and thereby causing a depreciation. I hold the immediate convertibility of bank notes into specie to be an indispensable security for their retaining their value, but consistently with this security and indeed founded upon it, credit becomes the great agent of exchange. It increases consumption by anticipating products and supplies present wants out of future needs. As it circulates commodities without the actual use of gold and silver, it not only saves much by doing away with the constant transportation of precious metals from place to place, but also accomplishes exchanges with a degree of dispatch and punctuality not otherwise to be obtained. All bills of exchange, all notes running upon time, as well as the paper circulation of the banks follow to the system of commercial credit. They are parts to one great whole. We should protect this system with increasing watchfulness, taking care on the one hand to give it full and fair play, and on the other to guard it against dangerous excess."

It has been estimated by authorities that ninety per cent. of the nation's business is conducted on credit. To estimate its importance to the commercial world, let us assume that no such thing as credit exists. We should then be compelled to use some other medium of exchange to transact the same volume of business as is carried on at present. Every purchase would require an immediate payment in the next best substitute, which for the moment, let us say is gold. This would require in the conduct of modern business many times more of the precious metal than the available supply. The value of credit can therefore be readily estimated.