Grace and Mercy

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Mercy and grace, though they may touch one another at certain points, are not the same thing, and therefore could not be used interchangeably as if they were words of equal value.
Grace simply means free gift, or free favor, and it does not necessarily raise any question as to the character of the individual to whom the gift is given or the favor shown. It excludes every idea of remuneration and of legal claim on the part of the recipient (Rom. 11:66And if by grace, then is it no more of works: otherwise grace is no more grace. But if it be of works, then is it no more grace: otherwise work is no more work. (Romans 11:6)).
When, however, we speak of mercy shown to any, we imply actual demerit in the person to whom mercy is extended. Both the one who shows mercy and the one who receives it are conscious that another kind of treatment altogether might have been justly measured out.
Now, in our soul’s blessing, both of these golden words have place. We are said to be justified freely by God’s grace, for it is certain that we never worked for it, nor can we in any wise remunerate God for so astonishing an act of favor. By grace also we are saved. Salvation is a free gift; it is too great, too grand, too priceless, too far beyond all human reach ever to visit us any other way. It is equally true that “according to His mercy He saved us,” for we who are saved were once dead in trespasses and sins, the willing servants of sin and Satan, and were by nature children of wrath (Eph. 2). Mercy alone could meet our case, and, blessed be God, He is rich in it. From Christian Truth, Vol. 7, p. 96