took the common prices of retail trade (in which as I have said are included risk and labour, highly paid when the business is small, still highly paid when the business is large; for no man will reduce his rate of remuneration below that which is necessary to secure custom), and sold at these rates. The difference between the price at which they could have sold, when all expenses were paid, and the price at which they did sell, was conventional, and in a manner arbitrary. Some difference was necessary, in order to secure custom, or, more correctly, to induce it. In fact, of course, the so-called profit had been paid already when the customer bought his goods, and need not, in order to carry out the principle on which these stores are founded, have been added to the cost and divided at the end of the year. But it is very hard for people to forget traditions and experiences, and the Rochdale co-operators did wisely in deferring to habits of trade, to customary expressions.

The system, however, which they adopted, when the ambiguity referred to is cleared away, will illustrate to us what is one of the sources of connexion' or 'good-will.' It is very hard work for a man to build up a character for commercial integrity. Perhaps no labour of his life is so severe as this, none which needs more constant watchfulness. There is a story told of a certain Colonel Charteris, who was a notorious cheat and swindler. once said that he would give £5000 if he could get a good character; and when he was asked why he valued it so highly, answered, that he could immediately borrow £10,000 upon it. But we see from the case given above that, if it be possible to bring about what I may call a sort of mechanical morality, a saving may be effected, and

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society be all the better off, in just the same way as it is when physical forces are employed in place of manual labour. There is no reason why we should not economise moral forces, when they are susceptible of a market-price, as well as those which are muscular or intellectual.

Another cause of connexion or good-will is the indolence of customers. They wish to have the fact of a man's business brought to them, and not this only, but the favour of their purchases canvassed. Hence the prodigious outlay on advertisements, and the gross tradefalsehoods which are prevalent, as to the merits of particular goods, the skill of particular traders, the impossibility of securing such advantages elsewhere, as those which the advertiser offers. These devices are developed most fully in this country, and have probably had something to do with those frauds which have discredited several branches of our trade, in the imitation of trade-marks, and of other special signs by which producers in credit seek to prevent others from appropriating dishonestly a part of their reputation. The same desire to attract customers, and the weakness which leads customers to rely on such attractions as merely guide the eye, give a fictitious value to certain streets, and cause extravagant expenditure on shop-fronts and other decorations. These causes of expense-for of course they must needs be paid by the customer, who simply bears the charge for gilding the trap in which he is to be caught are obviated under the co-operative system described above; for those dealers have no need to advertise their wares, or spend their capital on an attractive outside, or incur heavy rents in a fashionable or crowded locality, in order to get custom. The machinery of their

combination secures them those advantages, which the ordinary trader, whose sole object is the benefit of the seller, can hardly obtain, except with heavy outlay and trouble; though when he does obtain them, he finds that they ordinarily possess accumulated value.

Having then explained the anomalous position occupied by 'connexion' and 'good-will,' and having therefore shown that all business-returns, after capital is replaced and loss insured against, are divisible into wages and profit, i. e. profit proper or interest; it will be convenient to say a little about the position which interest on money assumes in all acts and processes which bear an economical value.

My reader will remember that money is a measure of value, and is accepted in lieu of goods and services, because it is easily disposed of, and is, under ordinary circumstances, more susceptible of exchange than any other commodity. But he will also remember that people take money in order to get rid of it; for as long as they keep it, it brings them no further advantage than a dormant power of exchange. And as men take money only for what it will fetch and buy, so when they lend money, they do not really lend pieces of gold and silver, but that which pieces of gold and silver will purchase, i. e. labour or goods. The lender surrenders his right to buy goods or hire labour, or use goods which he has bought or might buy, in order that another person may effect the purchase. But as persons exchange with a view to some ulterior advantage, the surrender of this right of purchase or exchange must be compensated by an offer of some of the advantages attending that transaction, which is completed by the interposition of money. You cannot induce

a man to surrender these rights without offering him some equivalent. This equivalent is profit proper, or interest; and hence Mr. Senior defined interest to be 'the wages of abstinence.' The owner of the money abandons his beneficial use of the money to another. He may give it if he will, or lend it without interest. These, however, are exceptional acts, the great majority of lenders performing this function of relinquishing their own use to others on condition of gaining some benefit by doing so.

For a long time, however, partly in consequence of some inveterate misconceptions as to the nature of money, partly from traditions derived from certain religious feelings, the levy of interest on advances was discouraged, reprobated, and even forbidden. Thus, for example, so sagacious an analyst as Aristotle objected to the payment of interest, on the ground that it was the productive addition to an unproductive object. This view seems to have been traditional, for it is found, under another figure, i. e. of the rivers and the sea, in the 'Clouds' of Aristophanes. It is quoted in Bastiat's works as a popular delusion among certain socialists of modern times. We find, however, how gross the fallacy is, when we recognise what is really the economical position of money, and see that to repudiate interest on advances is in effect to prohibit a rate of profit, a regulation manifestly absurd if carried out, because it would effectually stop all exchange by stopping the motive to exchange, and so be destructive of society.

The levy of interest was forbidden to the Jews. Various reasons have been assigned for this prohibition. The two most obvious are, first the desire on the part of the Jewish lawgiver to prevent the accumulation of great fortunes by

individuals; secondly, the motive of inculcating mutual good-will and benevolence among a race peculiarly keen in striving to obtain pecuniary advantages. From the Jewish code, in which the avoidance of usury forms a peculiar and repeated command, it was imported into the morals of Christian societies. The office of a lender on interest was viewed with suspicion, and even treated with infamy. It was forbidden to Christians, and was practised at first almost entirely by Jews, though it was in course of time taken up by the Lombard merchants, who were either indifferent to ecclesiastical censures, or were too important in the economy of society at that time to be repressed.

At the Reformation, the claiming and giving of interest was legalised, though under the supervision of government, and at fixed rates; a distinction being taken between interest, which was admitted to be fair, and usury, which was treated as rapacious, excessive, unlawful. It is only in the present age that all restrictions have been abandoned, and the rate of interest left to the discretion of lenders and borrowers, as they may agree; the courts of equity interfering, as in other cases, to prevent fraud and overreaching. It should be added, that the usury laws were attacked in the most conclusive manner by Bentham, who contributed in this, as in other subjects, to great social and legal reforms.

The first condition under which loans are made on interest, is that the interest be not only paid, but the principal sum be restored at the termination of the period during which the loan is to continue. Unless security of such a kind be given, loans will not be made at all unless the security be satisfactory or complete,