of industrial equipment by the use of fimds so obtained ; the value of the material items employed in industry advances ; the aggregate of values employed in a given undertaking increases, with or without a physical increase of the industrial material engaged ; but since an advance of credit rests on the collateral as expressed in terms of value, an enhanced value of the property affords a basis for a further extension of credit, and so on.'
Now, the base line of business transactions is the money value (market or exchange value, price) of the items involved, not their material efficiency. The value of the money unit is by conventional usage held to be invariable, and the lenders perforce proceed on this assumption, so long as they proceed at all.' Consequently, any increase of
' Cf. Tvielfth Ceniui of the United Slaiei, vol. VII. p. c, * Few, perbaps, nould in set terms maintain an argument Ihu the value of money does not vary, but still fewer would, in a credit trenaacUon, proceed on a suppoaition at variance with that position. Aa
the aggregate money values involved in the current induetrial business enterprises will afford a basis for an extension of loans, indistinguishable from any other block of capitalized values, even if the increase of capitalized values is due to credit advances previously made on the full cash value of the property hypothecated. The extension of loans on collateral, such as stock and similar values involved in industrial business, has therefore in the nature of things a cumulative character^ This cumulative extension of credit through the enhancement of prices goes on, if otherwise undiaturbed, so long as no adverse price phenomenon obtrudes itself with suflScient force to convict this cumulative enhancement of capitalized values of imbecility. The extension of credit proceeds on the putative stability of the money value of the capitalized