The new trader has obviously an immense advantage in the struggle of trade.

If a merchant have 50,000 L.all his own, to gain 10 per cent on it he must make 5,000 L.
a year, and must charge for his goods accordingly; but if another has only 10,000 L., and borrows 40,000 L.by discounts (no extreme instance in our modern trade), he has the same capital of 50,000 L.
to use, and can sell much cheaper.

If the rate at which he borrows be 5 per cent., he will have to pay 2,000 L.a year; and if, like the old trader, he make 5,000 L.a year, he will still, after paying his interest, obtain 3,000 L.a year, or 30 per cent, on his own 10,000 L.As most merchants are content with much less than 30 per cent, he will be able, if he wishes, to forego some of that profit, lower the price of the commodity, and drive the old-fashioned trader--the man who trades on his own capital--out of the market.

In modern English business, owing to the certainty of obtaining loans on discount of bills or otherwise at a moderate rate of interest, there is a steady bounty on trading with borrowed capital, and a constant discouragement to confine yourself solely or mainly to your own capital.
This increasingly democratic structure of English commerce is very unpopular in many quarters, and its effects are no doubt exceedingly mixed.

On the one hand, it prevents the long duration of great families of merchant princes, such as those of Venice and Genoa, who inherited nice cultivation as well as great wealth, and who, to some extent, combined the tastes of an aristocracy with the insight and verve of men of business.