Acceptance (finance)

“ And further, I apprehend that their confidence of being helped out in the event of ill-fortune, will mainly depend on their opinion of their own individual credit, with, perhaps, some consideration, not of the quantity of the currency, but of the general state of the loan market. They are aware that, in case of a commercial crisis, they shall have difficulty in obtaining advances. ”

“ Not only two million francs, but indirectly I shall make three or four millions more. Besides, with the General's influence, I shall have an entrée to the Elysée, and be able to secure the Government contracts through the Minister of Finance. Of late several of my schemes have misfired, and my credit on the Bourse is nearly gone, but the moment I can secure this concession directly from the Government, I can obtain credit for as many millions as I require, and then my position is assured for ever. You do want to help your old father, don't you? ”

“ But he may make purchases with money which he only expects to have, or even only pretends to expect. He may obtain goods in return for his acceptances payable at a future time, or on his note of hand, or on a simple book-credit—that is, on a mere promise to pay. All these purchases have exactly the same effect on price as if they were made with ready money. The amount of purchasing power which a person can exercise is composed of all the money in his possession or due to him, and of all his credit. ”

“ Is private credit the friend and patron of industry? That most useful kind which relates to borrowing and lending, is reduced within the narrowest limits, and this still more from an opinion of insecurity than from a scarcity of money. ”

“ We have defined Credit as a right to demand something of somebody, and Debt as an obligation to render something to somebody; the denominations of Money are certainly needful in order to measure this right or obligation; and how can the denominations of money be established or maintained at all separate from the use of some money itself as a circulating medium? Moreover, great as is the undoubted power of Credit, vast as are these five advantages from its current use, still, each particular piece or form of Credit waits for something beyond itself ”

“ An acceptance is just as much a bank liability as a deposit subject to check, for if the seller and buyer, or the drawer and the drawee, don't pay the debt on the day named, the bank will have to pay it, just [Pg 97] as much as it will have to pay the checks against its deposits, although the people who borrowed the deposits have not paid their notes. ”

“ A man obtains his end equally when that end is to induce another to lend to his friend and when it is to bring about a loan to himself. It seems to us that it would be a natural use of ordinary English to say that he obtained the money for his friend. So when the statute speaks simply of obtaining money, the question for whom the money must be obtained depends upon the context and the policy of the act. ”

“ The means of paying those who have trusted him is acquired by his trusting others. Either he is selling goods on credit, or entering into contracts, or rendering services which give him the position of a creditor, and make it of the last importance to him that the value of money and the state of the public mind about money should not be materially different six months hence from what they are now. ”

“ And since the acceptance business is a comparatively small item, and a bank's liability under its acceptances is not a liability in quite the same sense as its deposits, and does not immediately affect the present question of the manufacture of currency, it may be omitted for the present. ”

“ I have yet seen no feasible method by which credit or debt can serve safely as money, nor any honest way in which fiat money can be put in circulation. It appears to me now that, while men seek credit, they will have to pay interest, and that only by restoring opportunity to those who are now denied it by our monopolies of land, of money, and of public franchises, and so relieving them of the necessity of borrowing, can we hope to mitigate the evils of our money and trade iniquities. ”

“ What is necessary to meet their acceptances they will borrow, pay for it what they may; they had better pay any price than permit those acceptances to be dishonoured. And in less extreme cases men of business have a fixed capital, which cannot lie idle except at a great loss ”

“ On the other hand, the capital owned by persons who prefer lending it at interest, or whose avocations prevent them from personally superintending its employment, may be short of the habitual demand for loans. It may be in great part absorbed by the investments afforded by the public debt and by mortgages, and the remainder may not be sufficient to supply the wants of commerce. ”

“ Debit and credit are no longer known; interest, rents, profits, and all the calculations based on them no more have any place in human affairs. In your day everybody, besides his account with the state, was involved in a network of accounts with all about him. Even the humblest wage-earner was on the books of half a dozen tradesmen, while a man of substance might be down in scores or hundreds, and this without speaking of men not engaged in commerce. ”

“ Or, lastly, there is another process by which, in England and other commercial countries, a large portion of the requisite supply of loans is obtained. Instead of its being afforded by persons not in business, the affording it may itself become a business. A portion of the capital employed in trade may be supplied by a class of professional money lenders. These money lenders, however, must have more than a mere interest; they must have the ordinary rate of profit on their capital, risk and all other circumstances being allowed for. ”

“ The credit, which is rendered as secure as possible in all its stages by the accumulating securities of the drawer, acceptor, and endorsers of a bill of exchange, brings capital into activity,—it carries it directly to those channels in which it may be profitably employed,—it conducts it to those channels by a systematic mode of payment for its use, which we call interest, or discount;—and it therefore carries forward accumulation to its highest point of productiveness. ”

“ This Proposition better pleas’d those wealthy Citizens, than if we had plaid the Hucksters with our Commodities, wherefore two of the most wealthy and greatest account amongst them bought all, paying us ready money without a penny Credit. After that every man had received his share or dividend proportionably, and according to a general Agreement; we divided our selves into parties as Interest or Inclination lead us. ”

“ After a nation has fixed what its money shall be, it then issues different forms of credit money all of which are directly or indirectly redeemable in the commodity to which a fixed and stable value has been given. ”

“ The lenders receive a certificate of indebtedness, and have the right to buy each year a quantity of my books at half the retail price. Thus, if you lend ten dollars, you can get $5 worth of books for $2.50. These books must be ordered in one shipment, so as to save handling costs; under the Loan Plan you may place one such half-price order every year. The saving takes the place of interest on your money; it amounts to 25% interest—a pretty good rate, but not so high as millions of poor farmers are having to pay to national banks all over the country—see my “Letters to Judd”! ”

“ If no great contraction of general credit occurs, they will feel no doubt of obtaining any advances which they absolutely require, provided the state of their own affairs at the time affords in the estimation of lenders a sufficient prospect that those advances will be repaid. ”

“ By empowering such an authority to buy the companies out in full, with money borrowed at 3 or 31⁄2 per cent., we should come into possession of their works at an annual charge for interest, less, by nearly two-fifths, than our present annual payment to the companies ”

“ If I give a bond to myself, it does not add to my wealth, or create a new interest. If a nation should create any portion of debt, and sustain it in a state of equal distribution anions all its members, no separate interest would thence arise. Creditor and debtor are characters essential to the existence of a paper property or interest; if these characters are united, the quality of value flees from paper. Imagine a nation consisting; of one million, each having paper stock of one million, each per one holding one share, and equally taxed to redeem this stock. ”

“ Again: he, who sells upon credit, asks a price, for what he sells, equivalent to the principal and interest of his money, for the time he is to be kept out of it. Therefore, he who buys upon credit, pays interest for what he buys; and, he who pays ready money, might let that money out to use. So, that he who possesses any thing he has bought, pays interest for the use of it. ”

“ II. The object of credit is money lent; the basis of loan is the payment of interest. If money be wanting, credit will die; consequently, there must be a method found for augmenting and diminishing the quantity of money in proportion to the demand for it. ”

“ For, if one man gets a dollar that he has not earned, some other man has earned a dollar that he has not got. That is as certain as that two and two make four.
If all men could use their own credit in the form of money, there could be no such thing as interest. Yet, to put this idea into practice, there must be organization and consolidation of credit. Commercial credit, to be good, must be known to be good. ”

“ In principle it is impossible not to maintain the affirmative. It is true that the payment of the interest, when the creditors are members of the same community, is no national loss, but a mere transfer. ”

“ The objections usually urged against credit-money are considered and found untenable, the claim that interest naturally accrues to capital is disputed at each successive stand-point, and in the concluding remarks an explanation is given of the present excess of supply over the demand of commodities and service, confirming the conclusion that the correction of this abnormal state is contingent upon the financial measure suggested. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ I answer, The abatement of Interest to the People, is the abatement of Interest to the King, when he hath occasion to take up money: For what is borrowed of the City of London, or other Bodies Politique, nothing can be demanded but the legal Interest; and if the King have occasion to take up money of private persons, being his Majesty, according to good right, is above the common course of Law, the King must and always hath given more than the legal Rate. ”

“ In a state of commerce in which much credit is habitually given, general prices at any moment depend much more upon the state of credit than upon the quantity of money. For credit, though it is not productive power, is purchasing power; and a person who, having credit, avails himself of it in the purchase of goods, creates just as much demand for the goods, and tends quite as much to raise their price, as if he made an equal amount of purchases with ready money. ”

“ If the yielding of a plank by the borrower to the lender is a natural, equitable, lawful remuneration, the just price of a real service, we may conclude that, as a general rule, it is in the nature of capital to produce interest. ”

“ I beg leave, my Lords, to ask, what want is there of any additional circulation, when the circulation is at present greater than it ever was? Is it necessary to have a more extended circulation, to afford the means of procuring loans of money to those who have no capital and no credit? I contend that this is a state of things that ought not to exist in any country. Persons who really possess credit, can raise money at the present moment with every facility that is reasonable or proper. ”

“ It clearly appears, therefore, that this quest for simplification in the means of credit, which each nation ardently pursues in the interest of its own industrial and commercial development, demands the greatest circumspection. ”

“ One is the right to demand and receive at maturity the principal amount of the bond representing capital investment. The other is the right to demand and receive interim payments of interest on the investment in the amounts and on the dates specified by the coupons. ”

“ Even with this precaution, too, the money which is borrowed, and which it is meant should not be repaid till after a period of several years, ought not to be borrowed of a bank, but ought to be borrowed upon bond or mortgage, of such private people as propose to live upon the interest of their money, without taking the trouble themselves to employ the capital, and who are, upon that account, willing to lend that capital to such people of good credit as are likely to keep it for several years. ”

“ When credit comes into play as a means of purchasing, distinct from money in hand, we shall hereafter find that the connexion between prices and the amount of the circulating medium is much less direct and intimate, and that such connexion as does exist, no longer admits of so simple a mode of expression. ”

“ Here the loan is made on the basis of an anticipated income. Here again the anticipated income is made possible only by the loan; one of the values that enters into the exchange exists only because the exchange is possible. None the less, the credit rests on value. It is a right to an anticipated income. The man who has made the loan has his security in the value which he has lent, plus the present worth of the extra income which the new idea is expected to create. ”