the merchant, and an additional sum for the value which he has conferred upon it. This sum is the compensation to the manufacturer. With it, he remunerates himself for his use of capital, labor and skill, and pays his workmen, for their labor, according to their skill and industry.

It now goes through the process of printing, and is then sold to the merchant at an additional advance. This advance is sufficient to replace the price paid by the calico printer to the manufacturer, and also to pay the calico printer for the use of his capital, and the labor of his workmen. It is by the merchant sold to the consumer. The consumer pays the merchant the price paid by him to the manufacturer, and an additional sum, sufficient to remunerate him, for the use of his capital, skill, and labor. So that, when the article comes to the consumer, it is charged with all these previous prices, which have, in these various processes, accumulated upon it. The consumer pays what has been paid to the agriculturist, the mariner, the cotton merchant in Mobile, and the cotton merchant in New York, the manufacturer, the calico printer, and the calico merchant. Each several amount has been charged upon it in its progress, and the consumer at last, pays enough to replace the whole. The case is the same with a watch, a knife, a plough, or any other article of merchandise.

I shall conclude this chapter with two general remarks; one on the proper use of credit; the other on the nature of insurances.

From what has been said upon the nature of credit, it is evident that a merchant may easily carry on a business greatly beyond his actual capital, and even with no capital at all. For instance, he may sell wholly the goods of another, by purchasing entirely on credit. Or he may borrow capital of an individual, or of a bank, and pay cash for his stock, and interest on his purchase money. In this case, he uses the property of the lender, instead of the

property of the merchant of whom he purchases. Or he may possess capital, say ten thousand dollars, of his own, and may effect credits to twice or thrice this amount. Or, lastly, he may employ in trade no more capital than that which he actually possesses.

Now it is manifest, that the profit must be, in these cases, very dissimilar. When a merchant owns all the capital he employs, he receives as profit, interest on his capital, and remuneration for his labor and skill. When he owns but a part, he receives interest for that part, and remuneration for his labor and skill in managing the whole. When he owns nothing, he receives nothing for interest on the capital, but only remuneration for his labor and skill in the management of the capital.

The risk of failure, and the liability of injuring others, are also dissimilar. He who owns all the capital he uses, can injure no one; because he cannot lose more than all, and, as he owns all, he is the sole sufferer. His payments may possibly be delayed, but he will, in the end, be able to pay every one his due.

When a merchant owns a part of the capital which he employs, he is not liable to injure his creditors, unless his loss be sufficient to absorb more than the portion which he himself possesses. But when a merchant trades wholly upon the capital of others, if his losses are more than sufficient to cover the advance due to his labor and skill, he must fail, and his creditors must suffer.

Hence, the moral and economical principles which should govern men in the transaction of business, under these circumstances, are somewhat dissimilar.

1. If a man choose to squander or to risk his own property, though there may be a moral question in respect to his duty to God, there is none in respect to his duty to man. If he pay all his debts, no one has any claim upon him. Yet, so far as his own interest is concerned, he may do well to remember,

that men will very naturally suppose, that after having wasted all that was his own, it will not be safe to trust him with what belongs to others.

2. If a man trade in part with the property of others, he is bound so to conduct his affairs, as to expose their property to no unnecessary risk that. can be foreseen. Hence, if their guaranty against loss, consist in that part of his stock which he owns, he is bound to guard against every risk, which could not be made good, by the sacrifice of his own property. This principle affects both the kind and the amount of business which he undertakes. It should be of such a kind, as is exposed to no greater risk than may be covered by his own property. It should be only to such an extent, that no ordinary fluctuation of business will endanger those who have confided in his skill and integrity. If he, knowingly, act otherwise, he is dishonest. Nor is this all. If he really expose others to no risk, yet if he so enlarge his business, that he is continually obliged to call upon his neighbors for assistance, and to throw himself on their mercy, to save him from loss of mercantile character, he trifles with his credit, and makes an unfair use of their kindness. A man who is always exposing himself to extreme risks, will generally expose himself once too often.

3. He who trades wholly upon the capital of another, should consider himself essentially in the character of an agent, and at liberty to expose the property of his principal to no risk; or which an unprejudiced person would not consider reasonable. He is to remember, that if he succeed, the owner of the property derives no benefit beyond the fair and ordinary profit; but if he fail, the owner suffers all the loss, and, therefore, he has no right to seek to benefit himself, at the risk of impoverishing another.

4. The same rule should govern the expenses of him who is engaged in business with the capital of another. He derives from his trade nothing more than the wages of his skill and labor. Within the

amount of these wages, his expenses should be restricted. If he expend more, he is living dishonestly on the property of another. If he expend the whole of these wages, he is accumulating no capital, but at the end of the year will be as poor as he was at the beginning. He can only become rich by reducing his expenses as far as possible below his income, and thus having, every year, something to invest as capital, which shall give stability to his credit, and increase to his annual revenue.

Of Insurance. When property of any kind is destructible, it is liable to be destroyed by accident. Thus houses, being combustible, are liable to be destroyed by fire. Ships are liable to be wrecked by storm and tempest. This liability is called risk. It is evident that it may, under given circumstances, be estimated. Thus, if we know the value of all the houses in a given city, and the amount of value in houses, which, on an average, for several years, has been destroyed by fire, we may estimate how great the risk of fire in that city is. The case is the

same with ships, or with any other property.

Now this risk being thus known, one person may bear it as well as another. If I have a ship at sea, I may either bear the risk of losing it myself, or I may pay another person for bearing the risk for me. This transfer of risk is found convenient, and either companies or individuals are easily found, who, for a small addition to the actual value of the risk, are willing to insure any property that may be offered.

From this view of the case, it is manifest, that insurance has no effect upon the fact of the loss. If a ship and cargo worth one hundred thousand dollars be sunk, precisely one hundred thousand dollars' worth of value is destroyed. The only effect of insurance is, to make the loss fall upon one person instead of upon another. The benefit of this transfer consists in this, that the loss is thus equalized. It is better for a community to divide a given

loss among a great number of persons, than to suffer it to fall exclusively upon one.

And hence, inasmuch as every one has the power of avoiding risk, by paying a small premium; every one whose property is small, and liable to be lost by a single accident, is negligent if he suffer it to remain a moment uninsured. Specially is this the case, when he holds the property of others; or when their only security for payment depends upon the stock in trade which he possesses.

And again. As insurance has no effect upon the fact of loss, the higher the premium of insurance the greater is the annual loss to a country; because it shows us how great an amount of property is annually destroyed. Hence a sound policy would always dictate the importance of taking every means to reduce the rate of insurance as low as possible. This can be done only by reducing the risk of the accidental destruction of property. On this account, the abundant supply of water is a matter of inestimable economical importance to a city. The difference in the amount annually paid for insurance by the two cities of New York and Philadelphia is enormous. Nor is this all. New York, in one single night, has lost by fire, property sufficient to pay the expense of abundantly supplying herself with water three times over. The same principles would teach us the importance of accurate surveys of the coast, the erection of light houses, and of wise and judicious laws for the government of pilots.