The burden of the method of barter is reduced where some commodity is quite generally in demand in a society. The possessor of surplus commodities is willing to accept this article of general demand, knowing that it can be used later in exchange for particular goods he may then need or desire. Goods which he cannot get by direct exchange may thus be procured indirectly.
A commodity may be in general demand by reason of its power to satisfy directly man's desires and needs; objects of food, clothing, decoration, and the like do this. But when once adopted, always by an unconscious process, as a medium of exchange, the commodity is received and wanted primarily for its exchangeability, and a prime use or function of it is to facilitate exchanges. The commodity becomes the foundation upon which a new economy rests, the economy of division of labor, of separation of employments. Producers eventually produce articles to exchange, not for specific goods but for general purchasing power; they specialize their production and sell to a general market. The exchange values of their products in terms of the commonly acceptable mediums are spoken of as "price"; to receive the medium for goods is to "sell," to give the medium for goods is to "buy." The medium is money and may be any commodity having general acceptability.
But a second function is apparent: the values of salable commodities are measured and stated in terms of this medium. The comparison of values becomes possible when values are expressed in a common standard. Money becomes the common denominator of value and, besides making exchanges easier, makes them definite.
For wants to be wholly coincident in time is quite impossible; A may not want B 's product at the particular time that B wishes to dispose of it. But the exchange value may be determined at any time and a contract drawn by which A promises to pay B so much of the money medium at a future date, and in exchange for this promise receives, at once or when he wishes, B's product. Money, in other words, becomes the standard of deferred payments, performing thereby its third fundamental function. The seller is willing to agree to accept the money, because he is confident that social custom will not change meanwhile and that the medium will still be generally acceptable in exchange for things that he may desire.