s prices in the industry from
which it is withdrawn to the same extent as the cotton industry was
stimulated by the credit. Whether the money to pay the debt is taken
from the cotton industry or from some other industry, the general
level of prices has not been raised. The purchase in the first
instance may have temporarily stimulated the price of cotton, but if
the payment of the debt is made from money drawn from that industry,
it will depress the price of cotton to where it was before the credit
purchase was made; and if the payment is made from money drawn from
some other industry, it will depress prices in that industry to the
same extent that the price of cotton was stimulated. In either event
the general level of prices remains the same. It is like robbing Peter
to pay Paul. It may make Paul richer, but how about Peter? There is no
more wealth in existence than before the robbery was committed.

Again, it is claimed that credit stimulates prices by causing
commodities which are sold on credit to be sold for higher prices than
commodities of the same value are sold for when sold for cash. It is
true that sales on credit are, as a rule, at a higher price than sales
for cash in hand. Why is this so? For two reasons:

1st. Business done on credit is always attended with considerable
risk. Even when the utmost caution is exercised, bad debts will be
made, and a greater margin on sales is necessary.

2nd. When time is given a certain amount must be added to the price of
the goods to compensate the seller for the use of his capital between
the date of sale and the maturity of the account.

The additional price, thus received, is of no advantage to the
producer or to the seller of the commodity. The addition to the price
is consumed by losses from bad debts and in interest on capital. In
fact, the additional prices charged, when properly analyzed, are not
for the goods, but for the risk on the credit and for interest on
capital. The net selling price of the commodity is not increased.
Experience has proven that men who sell for the lesser price for cash
in hand are more apt to succeed than those who charge the higher rate
on the credit system.

Credit is always burdened with interest. If interest is not directly
charged, the goods are sold at an advance on the cash price equal to
the interest, which amounts to the same thing. Interest acts on
commerce like friction on machinery. As friction absorbs a portion of
the