ABSTRACT
Credit substitutes directly for money; in performing the same function both supply the same demand, and an increase of credit affects the purchasing power of a dollar no less than an increase in the supply of money itself. Credit liberates wealth when it substitutes for primary money. A very poor community must have the necessities of life; the pressure for goods causes idle money in the drawer to be regarded as an unnecessary luxury. Credit is to be distinguished from a credit instrument, the latter being a promise to pay money which is written or printed or in tangible form. Credit ties firm to firm and business to business throughout the industrial life of the people. A credit instrument has general acceptability when all persons in a country accept it without question in payment for goods and services. A bank may be likened to a reservoir from which capital flows in the form of credit.
