Money. The villagers are tired of bartering. The dairy farmer wants to buy corn, even when he does not have milk to trade, and the corn farmer wants to buy meat, even when the butcher does not want corn. So they decide that special gray stones that they can collect from a nearby riverbed will represent an abstract unit of value, called money. They reason that if everyone uses stones to represent value, then people can transact when they would like, rather than when both parties are willing and able to barter.

The villagers picked special gray stones to be money because the stones were portable, durable, and most importantly hard to collect. The only way to get them was to walk an hour outside of town and spend all day sifting through the riverbed. Sometimes, a villager would do this and only find one or two special stones. And so like any other job—winemaking, farming, cobbling—the job of collecting stones was self-regulated by the value of the activity.

While the general store owner is happy for the rancher to buy on credit, the shoemaker is not. He too trusts the rancher, but he wants money now to expand his business. Since the shoemaker would not be paid in stones for a year—it takes a long time to raise a cow—the shoemaker cannot use that money to buy new tools or hire an assistant in the meantime. Having stones today is better than having stones in a year. So the shoemaker makes a deal with the rancher: the rancher can have boots today but pay for them in a year; however, rather than paying one hundred stones for the new boots, the rancher must pay one hundred and five stones.

The entrepreneur borrows the stones from the widow, and he promises to return them in one year with an interest of three stones. And then he lends these stones to the rancher, on the condition that the rancher pays him five stones of interest in a year. The business plan is to make the spread, two stones, in a year’s time. This works because the entrepreneur knows both the widow and the rancher.