Money serves as a medium of exchange. It is the intermediary third commodity which makes exchange possible where direct barter would be impossible. This is the first and most important function of money. In the second place, money serves as a measure of value. As we have already seen, the processes of exchange are very much simplified because of the fact that all commodities may have their values estimated in terms of the value of some one commodity, and need not have their values estimated in terms of the value of any other commodity. In the third place, money may serve as a standard of deferred payment. Thus, A borrows a quantity of some commodity from B with the understanding that he will repay it at the end of a year. If the value of the commodity should increase during the year, and if he should return the exact quantity of the good which he had borrowed, he would overpay the debt. On the other hand, if the value of the commodity should decrease during the year, and if he pays back the exact quantity which he borrowed, he will have underpaid the debt. In order that he may return exactly the amount of value which he has received it is desirable that the value of the commodity borrowed should be reckoned in terms of the value of some commodity which is not likely to fluctuate much in value. A good money serves this purpose. Fourthly, money serves as a storehouse of value. A man may desire to change his other property into the form of money in order to keep it until he may make a desirable investment. He can store his wealth in the form of money at less expense and with greater security than he could store it in many other forms. A fifth function of money is to serve as a basis for credit transactions. This function will be discussed in the next chapter.