Page:Tales in Political Economy by Millicent Garrett Fawcett.djvu/84

 one farthing of coin. Money's worth has already been exchanged between them, and each owes and is owed an exactly similar amount; if then they agree to cancel each other's debts the exchange is effected virtually by barter, and the only service which money gives to the transaction is that which it affords as a "measure of value." As a medium of exchange it is not used at all.

The method just described of dispensing with the use of money by means of written promises to pay which are exchanged for and cancel each other, grew with the growing wealth and prosperity of Isle Pleasant; and thus an effectual check was put upon the tendency of prices to fall as a consequence of the increased number of exchanges which were caused by the progress of industry and manufactures. The more active trade was, the greater was the number of bills of exchange (or promises to pay) that were used to make purchases. Thus a virtual addition was made to the currency at the very time when it was most needed; and these additions to the currency ceased to exist as