We have already spoken of two different modes of effecting exchanges; viz., (1) barter, and (2) a universal equivalent, money or currency. We now notice a third mode of doing this; viz., by evidences of debt.

These are mainly of three kinds: —

I. Book accounts. A sells B one hundred barrels flour, and charges him five hundred dollars in account, to be paid, by verbal agreement, in four months.

This is a very extensive mode of effecting exchanges.

Very large transactions are made in this manner. Retail trade, especially, is almost wholly carried on in this way.

These accounts are often, particularly in country trade, paid in commodities. The farmer makes his purchases of the merchant, from time to time, and sells him his produce when ready for market. Both are entered in account, and the final balance- is ascertained and adjusted by money or other equivalent.

(a) Book accounts are, in some respects, an undesirable form of transfer, because they are ex parte, and may be disputed. The purchaser may deny that he bought such a quantity, or at such a price. An account, if disputed, is always a matter to be proved; and, although the oath of the seller is generally deemed conclusive evidence, there is always opportunity for litigation.

(5) Another objection to book accounts is, that they are not negotiable. C cannot readily purchase B's account against A; but, if B had A's note, that could be easily negotiated, or transferred. Accounts cannot, of course, be made available at banks, like notes, or left as security for money borrowed. The capital is locked up for the time being.

II.  The next mode of credit is that of notes. These are made payable for a given sum, and at a given date. They are generally payable to the order of the payee, and, when negotiated, are indorsed by the latter. This transfers the ownership to a third person; but the indorser is held to pay the note, if the promisor fails to do so.

III.  A third form is by bills of exchange, or orders from A to B to pay C a given sum at a fixed time. These differ from notes, in that they involve three parties, — the drawer, the acceptor, and the payee. They have a form usually somewhat like the following: —

$1000.                                                    New York, Jan. 1, 1866.

Four months from date, pay to the order of J. Brentwood & Co. one thousand dollars, value received, and place to account.

(Signed)                             Henderson, Williams, & Co.

To Messrs. Bennet Brothers & Co., Boston.

Here are three parties, — the drawer, the acceptor, and the indorser or payee.

This is first called a draft. When presented to the person on whom it is drawn, and by him accepted (which is done by writing the word "accepted" on the face, and signing the name), it is an acceptance. "When indorsed by the person in whose favor it is drawn, it becomes a complete bill of exchange.

This species of transaction will arise mainly between persons residing in different places, and in this manner: A, in Boston, orders of B, in New Orleans, one thousand bales of cotton, which B sends, with a bill of the same, and then draws on A for the amount.

The commerce of the world is carried on principally by this agency. The transportation of money is thus dispensed with, except to settle the final balance of trade.