The discussion of money has so far dealt only with the metallic forms. Transactions in which immediate payment of standard metallic money is made are primarily barter transactions - as when one hat is exchanged for one ounce of gold; they are transactions, however, which differ from the original barter transactions, inasmuch as the receiver of the gold does not take it for his present industrial or personal use but as a representative of those things for which he is confident he can exchange it.

This purposed exchange may be direct or indirect. One man, Brown, accepts gold because he is confident that another, Jones, will take it from him for shoes which Brown wishes and which Jones has. This confidence is born of custom and rests upon the inertia of custom to change, and is seldom if ever consciously acted upon. Brown, however, may accept silver or paper which he knows Jones will not accept for the shoes, but which he knows Smith will accept in exchange for gold. That is, Brown knows that by indirection he can get the shoes from Jones. This confidence that Smith stands ready to exchange gold for silver or paper rests upon custom, upon Smith's promise, or upon law or public opinion compelling Smith to make such exchanges. Smith's function is to convert or redeem silver or paper with gold.

Thus the very foundation of the money concept is faith in another. This faith is "credit." "He believes." Brown believes that Jones will accept and Smith will redeem. It is a confidence which extends over a period of time, that is, Brown accepts now, believing that Jones or Smith will accept later. The coin or paper is the tangible evidence of that faith and the measure of its amount. A gold eagle or a $20 bill accepted by Brown is evidence that he trusts custom, promise, or law to that amount.