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34 THE M.1MESTS OF BANKING.
*
becomes Capital, by the second of methods. Money
in used
as Capital by exchanging it for some goods or labour, the produce
of which may be sold or exchanged again for a greater sum than
they cost. And it is also clear that any Economic Quantity
whatever which is used as a substitute for Monoy to purchase
goods for the purpose of Profit is Capitol as woll iw Mnnoy, by th
very force of the definition which Senior say that all Kconomists
are agreed upon.
Money becomes Productive Capital by being employed to
purchase things to be sold again
at a Profit, And if a man can
purchase things by means of his Credit, that is if ho can fmrchaMo
them by giving his Promise to pay at a future timi*, and by o
doing can sell the goods at a higher price* and HO ban u Profit
after- paying and discharging his Debt, m it quite* clear that litsi
Credit has been Capital to him in exactly the mmo way
thai
Money would have been.
Let us take a very simple example to illuntrnto thin.
SuppoBo
a tailor wants to make clothes for a cuatomer. He payn ny i()/.
in money to the cloth merchant, and after making up the c!oth f
he sells the clothes perhaps for ISL Then ho 'has nmd his
Money as Capital. He has 10L at the beginning of the operation,
and 15Z. at the end of it :
or he has made a profit of ft/,
Suppose the tailor has no money to boy the cloth with, then
if he cannot buy it on Credit^ he cannot make the clothe**, and he
cannot have any Profit
Suppose, 'however, that the cloth merchant twlieving
in hii
honesty and capacity to pay, sells him tho cloth in t'Xt'hiiiigti for
his Promise to pay money three months alter tho time. As tho
payment is deferred, and as of course there is Homo rink of l*.w f
he will by way of insurance, charge the tailor a nomewhat higher
price in Credit, than in Money, Suppose he Bells hi* cloth in
exchange for the tailor's promise to pay 11L three month** alter
the time. This is as much a Sale as if the Price bail been pi-titl
in Money. The Property in the cloth 3ms gone to the tailor,
/ and what the cloth merchant has received in exchange for it i%
the Right or Property, to demand lit three months" attar dato.
And this Property is called a Credit or a Debt
The tailor having purchased the cloth by creating a Dibl