As stated already the use of credit is to facilitate exchange of services. Credit normally reinforces demand at its point of origin (the buyer and his assets are known to the local banker) and enables this valid demand to reach out toward supply. At the other end, similar credit is also reinforcing supply (the seller and his goods are known to the local banker) and enables this to reach out toward demand. In this partially formed tenuous system for conducting human energy all the vital differences of potential exist to ensure flow and counter-flow; but the circuit is not yet closed, for bankers have to be cautious.[1]
The remaining gap, which represents uncertainty and distrust, must still be bridged. This is done internally by money, a second mortgage upon gold; and externally it is done by a first mortgage upon gold, or by gold itself. It is popularly supposed to be gold in every case, but much more often it is a promise to pay gold if required. The whole network of conductors therefore centers in various gold repositories which are often controlled by international bullion-dealers or unsympathetic governments, and from these repositories the available stock is either allocated or projected outward in every direction in almost invisible threads. The disasters which arise from this delicate system of conductors of human energy are due to the fact that it bridges extended areas of doubt. Crowned and uncrowned powers, or their very discreet semiofficial agents, have first call upon most of the total gold; and the terminal banks which reinforce the buyer and the seller have a second preferred call upon the same stock; so that what we have is a very gossamer of gold upon which our whole credit conductor of human energy hangs suspended. The incredible thing to contemplate is that this vital communication system, within the borders of democracy, is privately owned, and linked to the external communication system which is held in alien ownership. A threatened strike, the fall of a political party in Europe, the death of a great financier, a family feud among the financial Olympians or a hint of war—and the deli-
- ↑ In normal commercial transactions, on a quiet market, advances of 75 per cent to 90 per cent of the value of the goods are often made.
