178 THE WORK OF THE STOCK EXCHANGE 
delivery of goods, long before it was employed in the deferred 
payment of money. It is consequently apparent that owing 
someone goods rather than money is not at all a new device of 
“high finance,” but an inevitable and immemorial practice 
arising from the fundamental nature of trade.? 
Purchasing a House on Credit.—Keeping it constantly in 
mind, then, that every sale is necessarily a two-sided transac- 
tion, involving goods as well as money, let us examine in more 
letail a typical purchase on credit. Mr. Jones, with a bank 
account of $8,000, a salary of $8,000, and an ability to save 
about $3,000 each year, is attracted by a $15,000 house. Obvi- 
ously, he has not money enough at present to buy it, nor does 
he wish to tie up all his savings in it, yet he has every reason 
to believe that, counting in part of his bank balance, he can 
comfortably pay the necessary amount in four years. He 
therefore decides to purchase the house on credit. He puts up 
$5,000 of the money he has in the bank, and gives his note for 
$10,000 to the seller. 
This note is a promise to make a deferred payment of 
money, and is secured by a mortgage upon the house. If Jones 
cannot keep up the interest on the note or make the deferred 
payment on its principal at maturity, the holder of the note can 
seize the house to recover the $10,000 involved. But subject 
to these conditions Jones has the house, and can live in it and 
enjoy it while he is saving the money needed to complete pay- 
ment for it. Or, if houses become more expensive and some- 
one offers Jones $18,000 for his house, he can sell it, and after 
paying off his note have a profit of $3,000 on the transaction. 
The credit element in Jones’s purchase of his house is involved 
on the money side of the transaction. Jones obtains the house 
when he “hasn’t enough money to pay for it” by employing 
credit to defer the payment of 66% of its price. 
Credit Sale of a Crop.—Let us now consider a case where 
credit is used to defer the delivery of goods instead of the pay- 
2 See Appendix VIIa.