motive power, so interest absorbs a part of the value of all
commodities sold on credit. Interest, the necessary accompaniment of
credit, produces no wealth; but, on the contrary, absorbs wealth and
tends to concentrate it in the hands of the few; and, necessarily, in
the same ratio it takes from the masses the power to purchase the
things they desire and would otherwise consume. Its ultimate result
must be to lower prices. Credit burdened with interest, as it always
is, may temporarily increase the demand for a certain commodity and
consequently temporarily raise its price; but it must do this at the
expense of other commodities. Like a stimulant administered to a human
being, it may produce spasmodic results of extraordinary power; but
when the stimulant has spent its force it leaves the individual weaker
and in a worse condition than he was before the stimulant was
administered.

Henry Thornton, an English economist, attempts to prove that a bill of
exchange is money, and that, being money, it acts on prices. He says:

Let us imagine a farmer in the country to discharge a debt of L10
to his neighboring grocer by giving him a bill for that sum,
drawn on his corn-factor in London, for grain sold in the
metropolis; and the grocer to transmit the bill, he having
previously indorsed it, to a neighboring sugar-baker in discharge
of a like debt; and the sugar-baker to send it, when again
indorsed, to a West India merchant in an outport; and the West
India merchant to deliver it to his country banker, who also
indorses it and sends it into further circulation. The bill in
this case will have effected five payments, exactly as if it were
a L10 note payable to the bearer on demand. A multitude of bills
pass this way between traders in the country, in the manner which
has been described; _and they evidently form in the strictest
sense a part of the circulating medium of the kingdom_.

Mill in his "Political Economy" quotes this illustration with
approval. Is the conclusion arrived at correct?

Suppose that instead of a bill of exchange for L10, a horse worth L10
had been made use of, and the farmer had delivered the horse to the
grocer in satisfaction of his debt, and the grocer had turned it over
to the sugar-baker, and the sugar-baker to the West India merchant,
etc. The horse would have paid the five debts in precisely the same
manner that the bill of