If we glance even casually at the modern organiza-tion of business, two features or elements in it present themselves as of striking suggestiveness:

1. Few persons are producing articles which they themselves want to consume or use.

2. Few persons sell or exchange their services or products directly for other services or products which they wish to consume or use.

It is true that there are exceptions to these general rules. The farmer may raise vegetables for his own table as an incident to staple-crop farming. The worker in a shop may be allowed to take goods, which he wants, from the stock and be debited with them against the salary due him for services. Many other illustrations of direct production or direct exchange might be cited, but only a little reflection is needed to show that they are immensely in the minority as compared with the general body of business. Men work, but not, as a rule, for themselves; they trade, but as a rule for things they do not want.

The facts just set forth lead to two conclusions or inferences which follow from the outstanding facts cited:

1. Business to-day is dependent upon the exchange of goods and services. Nearly every transaction involves or calls for a process of sale and purchase.

2. This exchange must be carried on in terms of some commodity or value which serves as an intermediary or as a step from one to the other.

The intermediary which serves this purpose is what we ordinarily call money; the process of sale and purchase referred to involves, as an auxiliary, the operation known as banking.

Reasons why the exchange of goods has been developed into an indirect or roundabout process are usually set forth by economists somewhat as follows:

1. Abilities differ widely between individuals.

2. Therefore, the largest production is secured by having each producer devote himself to that article in which he can obtain greatest results.

3. The process of production is facilitated by having articles specialized and produced upon as large a scale as possible.

4. Hence the concentration of machinery and plants upon individual items which in many cases have no useful purpose except as parts in a whole that is to be assembled from many sources.

5. The considerations already suggested may be summed up in the proposition that division of labor is essential to and the basis of modern industry.

Division of labor depends upon and implies exchange, which in turn is only one part of the broader field of economics, and the ancillary processes or mechanisms already referred to.

The evident importance of exchange in economic life has led economists to assign it a place as one of the four fundamental divisions of their science, which are frequently enumerated as production, exchange, distribution, and consumption. Within each of these general grand divisions there has been developed a group of specialized processes. Under the heading "exchange" there are thus included studies relating to the mechanism of money, prices, banking, as well as others. Banking is thus a special phase of the general economic process known as exchange.