II. It reduces the costs of circulation.

1. Money is saved in three ways by the introduction of credit.
A) Because it is henceforth not needed in a large number of transactions.
B) Because its circulation is accelerated. On the one hand, owing to the technical methods adopted by the banks. On the other hand, owing to the acceler- ation of the turnover of commodities due 1o credit.
C) Because paper money is substituted for gold.
2. Credit shortens the various phases of circulation, hence also the whole process of reproduction. On the other hand, it permits cf the processes of buying and selling being longer separated, and thus serves as basis for speculation.
It reduces the reserve fund, which phenomenon can be regarded from a twofold point of view: from that of the reduction of the medium of exchange in circulation, and from that of the reduction of the amount of capital necessary in money form.