  In trying to picture the difficulty of collecting taxes on our national income without the aid of a medium of exchange, we imagined a difficulty that could not have arisen; for without a medium of exchange, we could not have brought about a division of labor or accumulated capital facilities sufficient to produce our present annual increment of taxable wealth. Indeed, scarcely any of the major economic problems of to-day could have reached their present proportions under a barter economy. Even John Stuart Mill, who said that there could not be intrinsically a more insignificant thing in the economy of society than money, except in the character of a contrivance for sparing time and labor, made note of the fact that without a circulating medium we should suffer the inability to effect any far-reaching division of labor. Incidentally, it may be noted as a fact -- though this fact alone does not prove our point -- that there is no instance in history of any considerable industrial development without some form of money.
The vastness of the difficulties of production under a barter economy may be seen from concrete examples. If any one will try to follow out, in imagination, all the laborious transfers of goods from place to place that would have been necessary to procure, through direct exchange, sufficient materials and services to build the Union Pacific Railroad, he will visualize the physical impossibility of carrying through large enterprises without a medium of exchange. A poor medium is bad enough. At times the depreciated Russian money became so inconvenient that a traveler who took enough money with him for a long journey was forced to use much of it to pay excess-baggage charges. If there had been no medium of exchange, the purchasing agent for the builders of the Union Pacific Railroad would have been obliged to take with him a train load of goods wherever he went. Or imagine, as another example, the problems that would have been involved, in addition to all that were encountered, in an attempt to organize and operate, without a financial basis, the 228 companies located in 127 cities and towns in 18 States, which were combined to form the United States Steel Corporation. This enterprise, to be sure, required the use of various agencies in addition to money.
The point is that large-scale business operations, based as they necessarily are on an extensive division of labor, would be impossible without a monetary system.
This world-wide interdependence of the agencies of production and exchange that is based on division of labor, says H. J. Davenport, might have developed without currency. "It is obvious," he writes, "that in a society lacking any established medium of exchange, division of labor and specialization of employment might exist very much as in the present society"; and, again, he says, "by trading and retrading, the possessor of any commodity for exchange would finally get possession of that particular thing he wanted." But is this obvious?
Is it not obvious, on the contrary, that a society, in which a man who wants to buy anything has to use his time and labor in seeking a wire-cloth-ivory-boat series of exchanges, could not possibly become the specialized industrial society of to-day? Without a medium of exchange, the division of labor and the facilities of exchange of our day are not conceivable -- not even in that theoretical world, peopled with a type of animal that never did exist, which some of the early economists often imagined for the sake of argument.
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