ABSTRACT
The functions of credit have been a subject of as much misunderstanding and as much confusion of ideas, as any single topic in Political Economy. Credit has a great, but not, as many people seem to suppose, a magical power; it cannot make something out of nothing. The forms of credit which create purchasing power are those in which no money passes at the time, and very often none passes at all, the transaction being included with a mass of other transactions in an account, and nothing paid but a balance. It has become one of the chief functions of bills of exchange to serve as a means by which a debt due from one person can thus be made available for obtaining credit from another. Credit given by dealers to unproductive consumers is never an addition, but always a detriment, to the sources of public wealth.
