They say: "Suppose a person with $5,000 in money enters the cotton market, and with his money purchases $5,000 worth of cotton. His demand for cotton and his purchase of $5,000 worth will tend to advance or stimulate the price of cotton." "Now," they say, "suppose he has a credit of $5,000 and with this credit he purchases an additional $5,000 worth of cotton. The second purchase, made on credit," they contend, "will tend to still further advance the price of cotton in the same manner and to the same extent that the cash purchase did." Is this true? Let us suppose that he purchased the second bunch of cotton on ninety days' time. At the end of the ninety days he must pay for this cotton. If he draws the $5,000 with which he pays this debt from money invested in the cotton trade, the withdrawal of that sum from money invested in that industry will tend to depress the price of cotton to the extent that it was stimulated by the credit. If he withdraws it from the grain trade or from some other industry, the withdrawal of that sum of money will tend to depress prices in the industry from which it is withdrawn to the same extent as the cotton industry was stimulated by the credit.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.