volume of buainess.' The business man may reach his end of increased earnings by either the one or the other expedient, and he commonly has recourse to both if he can. His means of increasing the j magnitude of the turnover is a resort to credit and a close husbanding of his assets. He is under a constant incentive to increase his liabilities and to discount his bills receivable. Indebtedness in this way comes to serve much the same purpose, as regards the rate of earnings, as does a time-saving improvement in the processes of industry.* The effect of the use of credit on the part of a business man so placed is much the same as if his capital had been turned over a greater number of times in the year. It is accordingly to his interest to ' extend his credit as far as his standing and the state of the market will admit.^
C[., e.g., Mareb&ll, Ptineiplea of feonomici (3d ed.), bk. Yl cb. VU, sees. 3 and 4.
» CI. LBUghliu, TVincipiM of Money, p. 86.
r will count for more in gross earnings at corrent
1 i( Instead of hla own capital alone the bustaees man ftlso en-
8 whatever funds he can borrow b; using his capital as collateral. r counted on capital (value of the Industrial equipment) pins credit, at current rates, will be greater tban that counted on tlie capital alone used without credit extension. The turnover ma; be expressed as the product of the mass of values employed multiplied b; the velocity. Hence, if credit be taken as an indeterminate frsc<