On the Evolution of Language / First Annual Report of the Bureau of Ethnology to the Secretary of the Smithsonian Institution, 1879-80, Government Printing Office, Washington, 1881, pages 1-16

Possible ideas and thoughts are vast in number. A distinct word for every distinct idea and thought would require a vast vocabulary. The problem in language is to express many ideas and thoughts with comparatively few words.
Again, in the evolution of any language, progress is from a condition where few ideas are expressed by a few words to a higher, where many ideas are expressed by the use of many words; but the number of all possible ideas or thoughts expressed is increased greatly out of proportion with the increase of the number of words.
And still again, in all of those languages which have been most thoroughly studied, and by inference in all languages, it appears that the few original words used in any language remain as the elements for the greater number finally used. In the evolution of a language the introduction of absolutely new material is a comparatively rare phenomenon. The old material is combined and modified in many ways to form the new.
How has the small stock of words found as the basis of a language been thus combined and modified?
The way in which the old materials have been used gives rise to what will here be denominated THE GRAMMATIC PROCESSES.
Two or more words may be united to form a new one, or to perform the office of a new one, and four methods or stages of combination may be noted.
a. By juxtaposition , where the two words are placed together and yet remain as distinct words. This method is illustrated in Chinese, where the words in the combination when taken alone seldom give a clew to their meaning when placed together.
b. By compounding , where two words are made into one, in which case the original elements of the new word remain in an unmodified condition, as in house-top , rain-bow , tell-tale .
c. By agglutination , in which case one or more of the elements entering into combination to form the new word is somewhat changed—the elements are fused together. Yet this modification is not so great as to essentially obscure the primitive words, as in truthful , where we easily recognize the original words truth and full ; and holiday , in which holy and day are recognized.