the cash reserves of the banks, or the general solvency of the creditor or debtor, — all these "advances" go to mcrease the "capital " of which business men have the disposal ; but for the material purposes of industry, taken in the aggregate, they are purely fictitious items.' Cash loans (such as savings-bank deposits* and the like) belong in tlie same category. All these advances afford the borrower a differential advantage in bidding against other business men for the control and use of industrial processes and materials, they afEord him a differential advantage in the distribution of the material means of industry; but they constitute no aggregate addition to the material means of industry at large. Funds of whatever character are a pecuniary fact, not an industrial one; they serve the distribution of the control of industry only, not its materially productive work.
Loan credit in excess of what may serve to transfer the management of industrial materials from the owner to a more competent user — that is to say, in so far as it is not, in effect, of the nature of a lease of industrial plant — serves, on the whole, not to increase the quantity of the
This tniinn ia frequently OTerlooked in theoretiol hence, m the present argument requires Ibi recognition, it Is stated in tblA explicit wa;.
- The cash louii mkle by depoilton to atTingt-bukt in the of deposits.
THE USE OF LOAN CREDIT 105
material means of industry nor, directly, to en- • bancs the effectiveness of their use; but, taken in the aggregate, it serves only to widen the discrepancy between business capital and industrial equipment. So long as times are brisk this discrepancy ordinarily goes on widening through a progressive extension of credit. Funds obtained on credit are applied to extend the buainesB; competing business men bid up the material items