There is a classification of credit less popular than that just given which presents a special problem deserving of notice. By some writers credit is classified on a time basis thus:

1. Long-term or investment credit.

2. Intermediate or productive credit.

3. Short-term or commercial credit.

The distinction sought to be established here is a good deal more subtle than that which is suggested in the earlier descriptive classification. The underlying thought in it is that the term or period for which credit is granted deeply influences the character of the use to which the goods are put. Thus if A asks for a ten-year loan, it is because he wishes to build a house, exploit a mine, or provide a permanent supply of working capital. If, on the other hand, B borrows for thirty days, he can have no intention of building, mining, or developing a property. He probably borrows in order to buy ready goods for a quick turnover or to meet obligations which are falling due, expecting to settle with his creditor out of current funds to be paid him within the month's period for which his credit runs. Accordingly, say the advocates of this view, the time element is the real or true determinant of the character of credit. Long-term is essentially different from short-term because of the different character of the purposes served by it.

The points raised with regard to the different ends served by long and short term credits may be freely accepted without altering the analysis already given with respect to the two main points always to be considered in measuring or granting credit. There is, however, a matter involved in this classification which must receive at least passing notice. This is the fundamental question already briefly considered, whether credit is essentially a question of time at all.