credit, to aiich a point as would not be attractive to a business man who must confine himself to the employment of capital without credit extension. On an average, it may be said, the aggregate^ earnings o£ the aggregate capital with credit extension are but slightly greater than the aggregate earnings of the same capital without credit extension would be in the absence of a competitive use of credit extension. But under modern conditions business cannot profitably be done by any one of the competitors without the customary resort to credit. Without the customary resort to credit a " reasonable " return could not be obtained on the investment.
To the extent to which the competitive recourse to credit is of the character here indicated — to the extent to which it is a competitive bidding for funds between competent managers — it may be said that, taken in the aggregate, the funds bo added to business capital represent no material capital or " production goods." They are business capital only ; they swell the volume of business, as counted in terms of price, etc., but they do not directly swell the volume of industry, since they do not add to the aggregate material apparatus of industry, or alter the character of the processes employed, or enhance the degree of eflficiency with which industry is managed.
The " buoyancy " which a speculative inflation
of values gives to industrial business may indirectly increaae the material output of industry by enhancing the intensity with which the industrial process is canied on under the added stimulus ; but apart from this psychological effect the expansion of business capital through credit