48 W. G. Langworthy Taylor 



sarily occupied. That the credit or set-off system, which is the 

 further development of the money system, allows of exchanges 

 quicker, if possible, than the barter economy itself does not mat- 

 ter to the present discussion. 



In the second place, the use of money permits a much more 

 distinct stimulus to be imparted from one business or industry 

 to another. This agrees with the circumstance just mentioned 

 that money allows of the sale of undivided lots, and thus guaran- 

 tees the success of manufacture on a large scale. Values being 

 generalized 1 and stored up by money are passed on to the benefit 

 of other industries, either through the well-known method of 

 purchase of supplies, raw materials, and labor, or through 'the 

 generally distinguished method of investment or capitalization, 

 which is really and essentially the purchasing, not of materials 

 for industry A, in which the money itself was earned, but of 

 other raw materials, supplies, and labor, suitable for industry B, 

 in which the money was not earned. The stimulus to general 

 business is equal in both cases. They are distinguishable, from 

 the point of view of business A, only by the difference between 

 a purchase of goods of the second degree and that of goods of 

 the third degree, following Herrmann's classification. Both cases 

 are cases of true industrial stimulus. 



In the case of the purchase of secondary goods — materials, 

 labor, etc. — the stimulus is apt to be a more or less continuous 

 one, the interruptions are slight, or merely a minute wave, as in 

 a so-called "continuous" electric current. The essentially psycho- 

 electric analogy is significant, since the money-system allows so 

 much freer scope to the schemes, plans, and imagination of man, 

 systematic though they must be if they would succeed. Through 

 and by the money system man's mind essentially thinks and acts 

 in industry. But in tertiary purchase, or capitalization, the stim- 

 ulus is that of an interrupted current or even the shock of a 

 Leyden jar. The purchases are made en masse, and at distinct 

 intervals. The stimulus is pronounced, theatrical. We now see 

 how differently the theory of the kinetic process looks upon pur- 



1 The late Professor Sidney Sherwood's valuable article, The Nature and 

 Mechanism of Credit, Quar. Jour, of Economics, January, 1894. 



48 



