Since money serves so well as a medium of exchange and as a measure of value, it is but natural that credit transactions should be expressed in the -same unit. An enterpriser, wishing, for example, to secure a new machine, borrows not a machine, but money with which he can purchase the machine. Nor does he expect a year hence to repay the loan with a machine. He borrows money and he repays money, both he and his creditor having every assurance that the entire transaction will be carried out in terms of the same unit.

Another reason why money is usually preferred as a medium of credit transaction is because of its stable value. As we shall see in a later chapter, all money, including gold, fluctuates in value, yet this fluctuation is likely to be relatively small for a reasonable period of time. Both debtor and creditor, then, enjoy a reasonable protection when money is the medium by which debts are to be discharged. Suppose A borrows ten bushels of wheat from B, agreeing to return to him at the expiration of one year the ten bushels plus interest. A bumper crop of wheat, accompanied by a large decrease in price, would obviously give A an undue advantage in repaying his loan. Conversely, a short crop of wheat would give B a corresponding advantage. No such fluctuation, we may say with assurance, will occur in the value of gold.