Such an operation implies, however, not only regular commerce of considerable volume but also mutual confidence among the participants. How could B know whether D actually had a correspondent in a distant place who would meet his obligations promptly? It was not, in fact, until the thirteenth century that bills of exchange were used to any considerable extent; then they were developed in Italy, and spread from there. =137. Development of banking in Italy.=—In Italy, also, the money-changers developed other forms of banking. As they were dealers in money, business men in want of capital for their operations naturally sought it of them. The money-changers might lend it from their own stock or act as brokers and secure the money from some man who had a surplus. The short step from this to the common form of modern banking was made when merchants deposited their surplus cash with the money-changer, and he had thus a considerable stock, which he could lend so long as he kept sufficient reserve to meet the demands of depositors. It soon became unnecessary for money to pass at all in large transactions; a man could get a loan from a bank simply by having a deposit ascribed to him on the books, and could assign this loan to others as he chose to pay it out. The characteristic danger of banking, the attempt to make a great deal of credit out of a little capital, appears early in Italy, with its results of failures and crises. The advantages of the banking system, however, the economizing of time and money and the facilitating of business operations, were so clear that banking kept its place, and spread toward the close of the Middle Ages from Italy to other countries. QUESTIONS AND TOPICS There is, in the history of commerce, no topic more difficult and none more important than the development of the organization. The student who has learned the facts has made only a beginning; he must grasp the significance of the facts if he is to gain anything from his study. The teacher is advised, therefore, to enlarge on the advantages of association and cooperation, as they are treated, from one point of view, in Adam Smith’s celebrated discussion of the division of labor, and in many manuals of economics.