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 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<
Pero sobre los fondos obtenidos a crédito el deudor ha de pagar intereses que, al ser deducidos de las ganancias brutas del negocio, dejan, como beneficio neto debido a su uso del crédito, únicamente la cantidad en la que el incremento de las ganancias brutas excede al cargo por intereses. Esto establece un límite algo elástico para el uso ventajoso del crédito de préstamo en los negocios. En tiempos ordinarios, sin embargo, y bajo una gestión competente, la tasa corriente de las ganancias comerciales excede la tasa de interés en una cantidad apreciable; y en tiempos de prosperidad ordinaria, por lo tanto, comúnmente es ventajoso emplear el crédito de la manera indicada. Aún más en tiempos boyantes, cuando las oportunidades de ganancias son numerosas y prometen aumentar. Para invertir la proposición, de modo que se muestre el curso de los motivos comerciales en el caso: siempre que el gerente de negocios competente vea una diferencia apreciable entre el costo de una extensión de crédito dada y el aumento bruto de las ganancias que se obtendrán mediante su uso, procurará extender su crédito. Pero bajo el r%ime
TlM Algebraic Btatement serves to bring out the equivoleiice betwMQ an acceleration of tbe rate of turnover and an increase of the volome of business capital. Cf. Jevona, Thtory of Political Economy, pp.
^ 240-268.
J 1 / I Sombarl U mlfltaken in saying (KapilatUmus, vol. IL ob. VX p. T4)
J^ r- th&t the use of credit lengtbena the time of turnover of capital,
I* f'' j El crédito acorta el tiempo en relación con la magnitud de la rotación ;
1 1 .«. un capital inicial dado con la ayuda del crédito genera un objetivo
^ paonnlary magultode la a given llmei — — — >-.