The explanation of this is that though every child has capacity (apart, of course, from the congenital idiot and the mentally "defective"), there are many kinds of capacity which a formal examination fails to discover, and which the education that is dominated by the prize system fails to develop.

The child whose particular kind of capacity does not count, either in the ordinary school lesson or on the examination day, is not aware that he is capable; and as he is always low on the class-list, and is therefore regarded by his teachers as dull and stupid, he not unnaturally acquiesces in the current and apparently authoritative estimate, of his powers, and, losing heart about himself, ends by becoming the failure which he has been taught to believe himself to be.

In brief, while the prize system breeds ungrounded and therefore dangerous self-esteem in the child whom it labels as bright, it breeds ungrounded but not the less fatal self-distrust in the child whom it labels as dull.
We have seen that there comes a time in the life of every man when the fear of punishment ceases to act as a stimulus to educational exertion.

It is the same with the hope of reward.

Examinations, and the prizes which reward success in examinations, are for the young.
What will happen to the prize-winner when there are no more prizes for him to compete for?
Will he continue to pursue knowledge for its own sake?
Alas! he has never pursued it for its own sake.