bills ever are, in modern commerce, may not even be in the possession of the person bound to pay it; it may perform an indefinite number of exchanges before it pays the bill. But the bill itself, a mere abstract Right to demand money, may also be put into circulation, and also effect an indefinite number of exchanges before it is discharged. Hence during the currency of the bill, there are two Economic Quantities in circulation.

Or there may be a Right to receive an uncertain profit, as the shares in a commercial company, or the profits to be made by selling books or machines.

But both these kinds of Rights are equally Property, and are called by different names according to the thing to which the Right relates. There is landed Property, house Property, real Property, personal Property, literary Property, funded Property, &c. And each of these kinds of Property is merchandise, or a commodity; and may be as freely valued and sold as the other.

Hence a Right to a future product is an Economic Quantity, and a Commodity exactly in the same sense as the Right to a present product: because in either case Economics has nothing to do with anything but the Right; and one kind of Right may be as freely sold and exchanged as the other. It is exactly the same in Law. An injury may be done to, and an action will lie for damage done, to a Right on the future as well as an injury done to a Right to the present. And when this is clearly understood, modern commerce becomes quite simple: because it is nothing but the exchange of these Rights.

There is, however, this difference between these two classes of property. When persons exchange Corporeal Property, the things to which the Rights relate can be actually exchanged by visible manual delivery: whereas in Incorporeal Property this cannot be done. So many lambs actually born can be visibly and manually exchanged for so much corn actually reaped; but so many lambs to be born some months hence cannot be visibly exchanged for so much corn to be grown at some future time. So the Right to receive so much money at a future time cannot be actually transferred by manual delivery from one person to another. Accordingly, at Rome, when the transfer of a Credit, or Debt, was agreed upon, it was necessary for the Creditor, the Debtor, and the Assignee to meet together, and, by the consent of the parties, the Right of action was transferred from the original

Creditor to the Assignee; and by this means the Creditor was discharged from his debt to the Assignee; and the debtor became bound to the new Creditor. This difficulty, however, is very easily surmounted. The Right may be recorded on paper or some other material; and this material may be transferred and exchanged for other rights; and thus this Right becomes strictly capable of being transferred by manual delivery: and thus Incorporeal Property becomes as visibly transferable as Corporeal Property.

7. Now when this Right is recorded on some material such as paper, the paper is termed an "Instrument," and it is proper to observe that in this case the word "Instrument" bears a strictly technical legal meaning, which is often overlooked.

The word Instrument has two meanings, which are often not distinguished. Sometimes it means a tool, or means, or implement, by which something is effected. Thus Smith speaks of money as "the great instrument of exchange," or "instrument of commerce." But also Bills and Notes are often spoken of as "Instruments of Debt," or 66 Instruments of Credit."

Now it must be carefully observed that in the expressions "instrument of exchange" and instruments of credit," the word instrument has two distinct meanings which have no connection with each other.

In "Instruments of Exchange" it signifies the means by which circulation or exchange is effected. In the term "Instrument of Credit" it means the record or document of the debt.

In Roman Law, the word Instrumentum means any evidence, whether oral or written, by which the Court or judge is instructed as to the merits of the case, or informed of a fact. In modern times, however, it is restricted to written evidence; and thus is exactly equivalent to the word document, which is any writing which teaches or informs the Court of a fact. It means simply a written record.

Thus Suetonius speaks of the Instrumenta Imperii, the written records of the Empire: and Quintilian of the Instrumenta litis, the papers or documents relating to a lawsuit: and Tertullian calls the Christian Scriptures1 the Novum Instrumentum, or the Novum Testamentum, the new record.

Ada. Prax., 15, 20: adv. Marc., IV., 1.

This meaning is common in English; thus, out of numerous instances, we may quote Hallam" is abundantly manifest by instruments of both the kings"-"by mutual instruments executed at Calais "-" by the language of some English instruments." Thus in these cases the word instrument means a document, or a record.

Hence an "Instrument of Credit" means any written evidence of a debt, such as a Bill or Note, or a Deposit in a banker's book. And in Courts of Law and legal treatises these documents, are invariably termed instruments. Though this is known to every lawyer, it is often overlooked by literary writers on Economics.

Many persons, however, feel a difficulty in admitting such things as Bank Notes and Bills of Exchange to be Wealth, seeing that they are nothing but so many pieces of paper. It is to be observed, however, that it is not exactly the paper document which is wealth that is only the evidence, or the record, of the Right: it is the Right which is wealth: and it subsists, and can be exchanged, quite independently of any paper: and even if the paper be destroyed, the Right is not destroyed: it may be written on a fresh piece of paper. So many persons are somewhat startled at calling so many figures in a banker's book, wealth. But these figures are merely the evidence of the Rights which exist in the persons of the customers of the banker: and they may be put into circulation by means of a cheque. These Deposits, therefore, or Credits in bankers' books, are in real effect, so many bank notes, and if one be admitted to be wealth, the other must be so too. They are each of them nothing but transferable Rights.

8. We have now to investigate the different forms of Incorporeal Property.

This commodity, then, Incorporeal Property, has exactly the same varieties as Corporeal Property. Some of it is immoveable, some moveable: or as it might by analogy be called real and personal moreover some Incorporeal Property is as truly the produce of labour as any Corporeal Property: other large masses of Incorporeal Property are not the result of labour, just as there is Corporeal Property which is not the result of labour: and also vast masses of Incorporeal Property are the subject of exports and

1 Middle Ages, ch. 1, part 2.

imports, and affect the exchanges exactly in the same way as any other merchandise; but as these masses of Property do not pass through the Custom House, but through the Post Office, it is quite impossible to have any record of the quantities which are exported or imported: and consequently the subject of the exchanges is a hopeless puzzle to any persons who look only to the official returns of merchandise published by the Board of Trade: for they cannot contain any record of the various mercantile securities, and bonds, or obligations of the Government, or public companies, which are transmitted from country to country, and which affect the exchanges exactly in the same way as so much merchandise.

9. But Incorporeal Property itself is of two kinds, each of them comprehending many varieties, and enormous masses of property

I. Where the Right of one person to demand a future payment is also connected with the Duty of some one else to make that payment. The Right and the Duty constitute an Obligation or Nexum. This species of Property may be called Rights of Obligation. It is also called an Annuity; which is the Right to demand a series of payments from some person.

It must be carefully observed that an Annuity is not the series of payments actually made, but only the Right to demand them; and is Property quite separate from the sums actually paid. And this series may consist of any number from one to infinity, or any intermediate number.

This species of Incorporeal Property includes Credit, which is the lowest form of an annuity, being usually the Right to a single future payment; Rents of houses, farms, Copyrights, Patents, Mines, &c., which are usually a limited series of payments; up to Property in Land, the Funds, Tithes, &c., which are the Rights to receive a series of payments for ever.

II. Where the Right only exists to receive some uncertain profit; but no certain person is bound to make that payment; and there is only the expectation that some one will. This is called the emptio spei, or the emptio rei sperata, in Roman Law: this species of Property may be called Rights of Expectation.

To this class of Incorporeal Property belong Shares in Commercial Companies, Copyrights, Patents, the Goodwill of a

business, the Practice of a professional man, Tolls, Ferries, Fisheries, &c.

In modern times Incorporeal Property includes by far the largest amount of existing Property.

On RIGHTS of OBLIGATION.

10. The doctrine of Annuities is a curious commentary upon the arguments of Aristotle, Dante and the Mediæval theologians to shew that interest for money is unnatural and abominable. The theory of annuities entirely depends upon the principle that money naturally produces interest: and that interest also produces interest, an idea that drove Plutarch wild.

An Annuity, as said above, is the Right to a series of payments from whatever source arising: and the doctrine of Annuities rests entirely on the principle that each of these future payments has a PRESENT VALUE, and that the Right to all or any number of them may be bought and sold like any article of commerce.

The Present Value of an Annuity is, therefore, the sum of the series of the Present Values of all the future payments. Now let us take the case of a perpetual annuity, or the right to receive a series of payments at definite intervals for ever. If money bore no interest, it is clear that the value of such future payment would be exactly equal to the payment itself. Consequently the Present Value of such an Annuity would be the same as the aggregate of the sums to be paid for ever. That is, to purchase such an annuity it would be necessary to pay down an infinite sum of money. A consequence which is manifestly absurd. Hence such a mode of calculating the value of an annuity is evidently

erroneous.

Again, suppose that simple interest is charged: then each future payment is diminished by a small definite sum of uniform amount. And it is evident that to buy an annuity on such a principle would involve exactly the same absurdity as in the former case. That is, to secure a finite annual payment, we should have to pay down an infinite sum. And this shews that this mode of calculation is also erroneous.

But if we suppose that compound interest is charged, we shall find that each term of the series will progressively and rapidly diminish. A larger quantity will have to be subtracted from each term in succession, according as the payment is more distant. We