And the injustice of it all is, that many if not most of the firms involved in these disasters were, but for their sudden inability to meet their engagements, sound industrial and commercial concerns. They have fallen not from any fault of their own, but because they were linked to a system of credits over which, when they are contracted on the faith of future speculative production, there is and can be no organized mechanism of control. Summing up then we may say; - First, that paper credits when they keep time and step in due subordination and relation to the aggregate of commodities that are being continuously produced and consumed in their passage round the wheel, accelerate the speed of that wheel, and so assist the increase of wealth of the community; and thus the laws of their action are in harmony with all the other laws of wealth, inasmuch as they are related not to production alone nor yet to consumption alone, but to a continuous process of production and consumption. Secondly, the effect of these paper credits in increasing the wealth of a nation is not due to any positive economic powers they possess - for they cannot themselves be converted into food or drink, houses or clothing: - but is due rather to the negative power they have, in virtue of their flexibility and fluidity, of opening up a more free and unimpeded passage for the circulation of these commodities than could be accomplished by the less easily manipulable mechanism of gold and silver alone.

Thirdly, that when these paper credits, whether from a deficient production or from a deficient consumption, have been issued in excess of their due proportion to the commodities actually in circulation on the wheel, they clog its movement instead of accelerating it, slowing it gradually when no actual crisis occurs, but bringing it for the time being to a sudden stop in times of great financial crashes. And fourthly, that in a nation standing alone by itself (or in the world as a whole), these paper credits are for scientific purposes (and for the same reasons for which we excluded gold and silver currency), not to be counted as part of a nation's wealth; inasmuch as being the ideal representatives of its fixed capital, invention, and industrial skill, they are already implicitly contained in that wealth; otherwise the same thing would be counted twice over.

But there is a still further point requiring some comment. I have said that these paper credits must keep time, measure, and proportion with the aggregate of commodities in continuous process of production and consumption. But production and consumption are but the two sides or aspects of one and the same thing; the commodities produced on the one side being the same as those consumed on the other. Is there then no one thing which will sum up both, and so simplify our conception of precisely what it is that the aggregate of paper credits must be adapted to? To this we can answer that the continuous actual 'turnover' of the retailers of a nation would furnish such a criterion, inasmuch as this turnover is the meeting point where production and consumption coalesce into a definite unity; - not a single turnover, be it observed, but such a continuous average turnover from year to year as that, for example, on which the Chancellor of the Exchequer relies when framing his budget.

But as the paper credits which give rise to financial crises are not usually contracted on retailers' goods, but rather on the large productive enterprises from which these goods are expected to issue, and from which in the case of sound and legitimate concerns they do issue; and farther, as these credits cannot be based both on the fixed capital and on the consumable goods, inasmuch as the former implicitly includes the latter; it would practically be more convenient to base them on the fixed capital of the country in actual running; (the fact of the running being itself the proof and guarantee that the goods turned out are really being consumed); for if they were not consumed, the wheel, as we have seen, would slow and the fixed capital would either run on short time, or a portion of it be thrown out of working altogether, according to the extent of the deficiency in consumption. And so the conclusion we are brought to is this, that while the paper credits of individuals may be based on anything or everything in their possession, whether it be consumable goods or fixed capital; the credits of a nation standing alone by itself, or of the world as a single economic entity or whole, can be issued with safety only on the aggregate of its working fixed capital.

But as no nation exists alone by itself, but stands side by side in trade relations with other nations, we are introduced to a fresh set of complications; and as they are complications which affect the solution of each and every problem of the Applied Science of Political Economy, they must be resolved before that Applied Science can make any pretension to completeness. But before ending this chapter, I may remark in passing that the reason I have confined my investigations so far to the laws regulating the increase or decrease of wealth of a single nation standing alone by itself, is because these laws being the laws of a single economic entity or whole, - whatever its size may be, - can be transferred without alteration to the world as a whole. If therefore the Science of Political Economy were what the Orthodox Political Economists profess their science to be, namely a eosmopolitical one, as true for the world as an economic whole as for any and every nation in it, we should need to go no further, for we should already have enunciated the main first principles of the reconstructed Science with which we are anxious to replace the orthodox Science. But for the satisfaction of those who contend that an Applied Science of Political Economy, if it is to be practical, should take a national standpoint, and should be true of a particular nation standing in trade relations with other nations, - a quite proper contention inasmuch as no single nation can control the economic policy of another, - it is necessary that we should enquire as to what modifications, if any, are to be made in the laws regulating the increase of wealth of a nation by itself, or of the world as a whole, if they are to hold good of a nation standing in trade relations with other nations; - and to these we shall presently direct the reader's attention.