Server won't start with ActiveMerchant

Hi,

Everything was working fine until I went to use ActiveMerchant.
Have spent a few hours trying to figure this out with no success.

Here's the error I'm getting

** Starting Rails with development environment...
Exiting
/Library/Ruby/Gems/1.8/gems/activesupport-2.2.2/lib/active_support/dependencies.rb:445:in
`load_missing_constant': uninitialized constant ActiveMerchant
(NameError)

And in environment.rb I have

unless RAILS_ENV == 'production'
    PAYPAL_ACCOUNT = 'sandboxaccount@example.com'
    ActiveMerchant::Billing::Base.mode = :test
  else
    PAYPAL_ACCOUNT = 'paypalaccount@example.com'
  end

Appreciate anyone kind enough to help me out. Can't get my head around
this and holding me back.

Cheers

Lee,

Do you need to have a require statement in environment.rb?

    require 'active_merchant'

Al