When such a plan is once established, confidence will find a basis in the property of every individual who profits by it. When it is not established, credit will appear like a meteor: intelligent and crafty men will avail themselves of it, and thereby dazzle the eyes of the public, with gilded schemes of opulence and prosperity: mankind will fly to industry, confidence will be established; but as there will be no method of determining the bounds of that confidence, the promoters of the scheme will profit of the delusion: confidence will vanish; and the whole will appear to have been a mystery, a dream. Is not this a representation of many projects set on foot since the beginning of this century? What were the South Sea’s and Missisippi’s, but an abuse of confidence? Had ever the _cause_ of confidence been examined into, would ever such extravagant ideas have arrived at the height they did? Credit therefore must have a _real_, not an _imaginary_ object to support it; and although I allow that in all operations of _mercantile_ credit, there must be something left to chance and accident; yet that chance must bear a due proportion to the extraordinary profits reasonably to be expected from the undertaking. From this it appears, what an useful speculation it is to inquire properly into the nature of credit; to deduce with accuracy the principles upon which it is founded; to banish mystery from plain reason; to shew how even the most surprizing effect of credit, whether tending to the advantage, or to the hurt of society, may easily be accounted for; and, which is the most useful of all, to point out how such effects may be foreseen, so as either to be improved or prevented. In going through so extensive a subject, as a deduction of the principles of credit, method is very necessary; and when a detail is long, subdivisions are very convenient. I have, upon this account, divided this book into four parts. The first shall be set apart for deducing the principles which regulate the rate of interest; because this is the basis of the whole. The second, for the principles of banking; under which I shall have an opportunity to unfold the whole doctrine of domestic circulation. The third, for those of exchange; which is equally well calculated for carrying on foreign circulation; and as to what regards debts, and the borrowing of money, with all the consequences which they draw along with them, these important objects will furnish ample matter for The fourth and last part, which shall treat of the principles of public credit. These premised, I proceed to the definition of credit. CHAP. I. _What Credit is, and on what founded._ Credit is the _reasonable expectation entertained by him who fulfills his side of any contract, that the other contracting party will reciprocally make good his engagements_.