If therefore all the consumable goods that are produced, circulated, and consumed on the wheel of wealth are but transformed 'fixed capital' and powers of Nature, it follows that the gold and silver circulating medium of a nation and the great mass of paper credit obligations issued against them, and which are ideal symbols, counters, and representatives of the wealth of a nation, must be based either on the continuous stream of consumable wealth, or on the total of the 'fixed capital' of the nation, but not on both. They cannot be adjusted to the consumable goods, for these are temporary and evanescent and as difficult to catch as fish in water, and when caught are as difficult to hold, for they will go bad on your hands. The currency and credits of a nation, then, as distinct from those of an individual, can only be based on its 'fixed capital' in all its varying forms. To base them on fixed capital and consumable goods together, would be to base them on the same thing counted twice over; as much so, indeed, as if an individual trader, say a baker, were to ask for credit first on the flour he had bought, and then on the bread into which he had transformed it; or a butcher, on the cattle, and then on the meat and hides into which they had been cut up.

He might get it on one or the other, but not on both. It is true that each of a series of producers, all handling in turn the same product, but in different stages of its development - farmer, manufacturer, wholesale dealer, transporter, and retailer - can draw credit advances against it, but the nation as a whole can only-issue a credit against that part of it which has a relative permanence, namely the fixed capital involved in its production at its several stages, as otherwise the same thing would be counted as a national asset as often as it changed hands. The reason that each of the series of producers can obtain credit on the same thing slightly modified and added to by fresh fixed capital at each stage, is because each credit as it is issued extinguishes the one that went before (if all the producers in the chain are solvent), until we come at last to the retailer; so that in fact there is only one credit against the commodity after all; as the candle which has lit up the rooms of a house one after another and has its light extinguished in each room as it passes to the next, counts only as one candle.

When at last the consumer buys the commodity from the retailer and pays for it, that credit too is extinguished; and so far no obstruction having occurred at any point in the wheel of wealth, there is nothing to slow its pace. But should the commodity lie on the retailer's hands unsold, or be sold but not paid for and so remain a bad debt, this obstruction to the retailer's business is propagated backwards along the whole series of producers engaged on the commodity, and restricting the sales, is at once transmitted at each stage to the fixed capital and powers of Nature employed at that stage, slowing the machines, preventing the full employment of labour, and so, by getting as a free gift less of the powers of Nature embodied in them, slows to that extent the whole wheel of wealth of the nation, and lessens the credits that can be raised on it as a working machine whose wealth-producing capacity is proportioned to the speed of its revolutions per unit of time. The 'fixed capital' of a nation, then, is the only permanent tangible reality on which that nation if standing alone by itself in the world, could lay its hands as an asset against which gold and silver and credit notes, its ideal representatives, could be advanced with security.

It is the permanent reality from which issues the moving mass of consumable goods continually reproduced on the wheel of wealth - goods which are no sooner produced than they are carried around to the point where they are consumed and devoured, and so, as national assets, are continually cancelled and extinguished in the process. In other words, the credit notes, bank notes, etc., must rest on a basis of gold and silver, but the gold and silver themselves must rest ultimately, and keep time, measure, and proportion with the fixed capital of the nation as embodied in its soils and mines, its machines, its railways and ships, its warehouses and dwelling houses, bridges and what not - always including of course the working population. If not, the excess of credits will shrivel into waste paper, the machinery of production for the time being will stop, the powers of Nature can no longer lend their gratuitous aid, and if the collapse of credit is total, the wheel of wealth will come to a stop.