ing
manufactories, sinking mines, or trading in goods, if they only had
enough money to enable them to buy the requisite materials, tools,
buildings, land, &c. A man must have some property of his own before he
can expect to get credit; but with some property to fall back upon in
case of need, and with a good character for honesty and ability, a
trader can by credit obtain other people's capital to deal with.

#84. Loans on Mortgage.# Credit is given in many different ways;
sometimes a man is assisted by a permanent loan from a relative or
friend who has confidence in him. Enormous sums of money are lent, as it
is called, upon #mortgage#. A man, for instance, who has built a cotton
mill with his own money, pledges the mill as security for a loan, that
is, he gives his creditor a right to sell the mill unless the debt is
paid when required. #The mill is called a mortgage or dead pledge#,
because it becomes dead to the former owner, if he breaks the conditions
of the loan. There are many institutions, such as insurance companies,
building societies, &c., which have a great deal of capital to lend on
mortgage, and many rich people invest their money in the same way. Thus
a very large part of the houses, land, factories, shops, &c., are not
really owned by the people who seem to own them, but by #mortgagees#,
who have lent money on them.

Generally speaking, the interest paid for such loans is 4-1/2 or 5 per
cent. per annum, when the security is quite good, that is, when the
property mortgaged is sure to sell for more than is lent upon it. A
considerable margin is always left to cover mistakes or alterations as
regards the value of the property; thus, if a house be said to be worth
L1000, it will usually be security only for a debt of L700 or L800. When
the security is not so good, because the ownership or the value of the
property mortgaged is doubtful, the rate of interest charged will be
higher, and may be six, seven, or more per cent. The surplus covers the
risk, that is, compensates the lender, for the chance of losing what he
lends. Mortgage loans are generally made upon fixed capital like houses,
mills, ships, &c., which last a long time; but sometimes stocks of
goods, such as cotton, wine, corn, &c., are mortgaged as security for
temporary loans.

#85. Banking.# A large part of the credit given, in a civilised country,
is given by bankers, who may be said #to deal in credit#, or which comes
to the same thing, #in