Origin and Nature of Money 1

The application of the definition is not always easy, for money shades off into other things that serve the same purpose and are related in nature. Money is not merely an order for goods, as a card or paper requesting payment ; it is itself a thing of value (though this value may be due partly or solely to its possessing the money function). Such things as a tele gram when transferring an order for the payment of money, 2 The old-fashioned miser, however, withdraws his hoarded gold for the time from its usual monetary function as an indirect agent, and treats it as a direct good yielding to him psychic income by its mere possession.

as the spoken word, and as a mere promise to pay, are not money. Even checks and drafts are merely written evidences of credit, and are used as substitutes for money.

In many problems money appears to be at the same time like and unlike other things of value, and just wherein lies the difference it is often difficult to determine. Even special students differ as to the border-line of the concept, but as to the general nature of money there is essential agreement.

§4. Qualities of the original money-good. The selection of any money-commodity has not been made by chance, but has been the result of that object being better fitted than others to serve as a medium of exchange. The main quali ties that affected the selection of primitive forms of money were as follows: 1. Marketability (or salability) ; that is, it must be easy to sell. The first forms of money had to be things that every one desired at some time and many people desired at any time. That was the essential quality that made any one ready to take it when he did not wish its direct use himself. Many kinds of food and of clothing are very generally desired goods. But few of these classes of goods have in a high measure certain other important qualities, now to be named.

2. Transportability; that is, the money material must be easy to carry; it must have a large value in small bulk and weight. To carry a bag of wheat on one's back a few miles requires as great an effort ordinarily as does the raising of the wheat ; and the cost of carriage for fifty miles, even by wagon, will often equal the whole value of the wheat. Cattle, while not comparatively very valuable in proportion to weight, and not possessing the other qualities of money in the highest degree, have the advantage that they can be made to carry themselves long distances, and therefore they have been much used as money in simpler economic condi tions.

3. Cognizabllity;

that is, the money-good must be easy to know, and to judge as to quality. If expert knowledge or special apparatus is needed to test it in order to avoid counter feits, few could be ready to take it, and trading would be a costly process.

4. Durability;

that is, the money-good must be easy to keep without much loss in amount or in quality, perhaps for long periods, until it can be passed on in trade. Few kinds of food answer very well to this last requirement, being organic and perishable. But all four qualities above named were pretty well embodied in primitive times in rock salt, in rare flints and bits of copper suitable for tools and weapons, in furs in northern countries, and in many articles of personal adornment, such as beads, feathers, jewels, and metal ornaments.

5. Divisibility;

that is, the quality in the monetary ma terial that permits it to be divided? witty ikito smaller amounts and then to be united again into larger masses at little cost and without loss in amount or in quality. This quality is present only when the material is homogeneous throughout the whole mass, a condition fulfilled more com pletely by the metals than by any other goods. This quality makes it possible to put the governmental stamp upon the money material, and to produce pieces some of which are exact duplicates and some exact multiples, of others. In this manner pieces of money are provided suitable for transac tions of different magnitudes, down to small fractional amounts. A monetary system of this kind aids greatly the development of the sense and habit of exact estimation of price.

§ 5. Industrial changes and the forms of money. The money use, as has just been shown, is a resultant of a number of different motives in men. The changing material and in dustrial conditions of society change the kind of money that is used. Things that have the highest claim to fitness for money with a people at one stage of development have a low claim at another. The final choice of the money-good de pends on the resultant of all the advantages. Shells are used for ornament in poor communities, but cease to be so used in a higher state of advancement, and thus their salability ceases. Furs cease to be generally marketable in northern climes when the fur-bearing animals are nearly killed off and the fur trade declines. When tobacco was the great staple of export from Virginia, everybody was willing to take it, and its market price was known by all. It served well then as the chief money ; but, as it ceased to be the almost exclusive product of the province, it lost the knowableness and marketability it had before. In agricultural and pas toral communities where every one had a share in the pas ture, cattle were a fairly convenient form of money; but in the city trade of to-day their use as money is impossible. Thus, in a sense, different commodities compete, each trying to prove its fitness to be a medium of trade ; but only one, or two, or three at the most, can at one time hold such a place.