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PART II THE INSTITUTIONS OF EXCHANGE

In order that this transformation may be accomplished, the early form of natural exchange must pass into the fully developed form of exchange by the use of money. In natural exchange both parties to the transaction give and acquire natural performances, meaning economic material commodities or the use of such, as well as personal services. In other words, each of the two parties surrenders and acquires natural values, material or personal. Where the exchange is effected by the use of money, the transaction is bifurcated. Men are satisfied in the first act of the enterprise to surrender the natural value of which they desire to dispose, in exchange for a counterperformance which they receive vicariously in money, the permanent possession of which they do not expect to retain. The next, or second step is to lay out the money in the purchase of the natural value which was the object whose ultimate acquisition and use in the household or in the economy of acquisitive trade was desired. In the first step, one receives in the form of money the advantage in value, which he wishes to secure; in the second only, does one realize it. In this process the parties change position, as they exchange; every vendor, becomes vendee; every vendee becomes vendor. Uninterruptedly thus, exchanging parties, link after link, join to form a never-ending chain; every pair of them is connected with the preceding and succeeding pair by one of the contracting parties.