But a second function is apparent: the values of salable com modities are measured and stated in terms of this medium. The comparison of values becomes possible when values are expressed in a common standard. Money becomes the common denomina tor of value and, besides making exchanges easier, makes them definite.
For wants to be wholly coincident in time is quite impossible; A may not want B's product at the particular time that B wishes to dispose of it. But the exchange value may be determined at any time and a contract drawn by which A promises to pay B so much of the money medium at a future date, and in exchange for this promise receives, at once or when he wishes, B's product. Money, in other words, becomes the standard of deferred pay ments, performing thereby its third fundamental function. The seller is willing to agree to accept the money, because he is con fident that social custom will not change meanwhile and that the medium will still be generally acceptable in exchange for things that he may desire.
Minor Functions of Money In addition to these three fundamental functions of money there are many minor functions. One of the latter, important in banking, is the storing of value against emergencies. As will be explained later, credit-issuers, such as banks and governments, hold on hand reserves of the money commodity. Other commodi ties may be and are, directly or indirectly, used to store values; the money commodity, however, by reason of durability, stable value, and small bulk, may perform this function better than other commodities.
Moreover, just as money acts as a means of storing values and making payments over periods of time, it is used to facilitate payments over distances, a capacity which rests upon money's common acceptability in distant marts and upon its portability. This function has been very much reduced by credit operations, but continues for the settlement of ultimate balances.
Characteristics of Commodities Used as Money The commodities which have been used as money have been many and various, and have possessed in varying degrees the qualities which enabled them to perform all or some of the func tions of money more or less adequately. When any commodity becomes an object of general desire and acceptability, it is rudi mentary money. Such a commodity is therefore intimately re
lated to the social and economic activities of the people. A com modity generally acceptable in one community, however, may not be so in another, and its acceptability in a community may not be lasting. For instance, wampum shells, because of their general demand for decorative purposes, functioned well as money among New England Indians, but the influx of Europeans and the changes in social and economic life of that district destroyed the usefulness of wampum as a money commodity.
To be suitable as a circulating medium, the commodity must have utility other than monetary; it must be divisible with out loss of value; it must be portable, with relatively large value in small bulk; it must be malleable and recognizable when stamped; it must be uniform in composition and quality; and it must be durable and able to resist wear and tear. To serve as a standard for deferred payments and as a store of value, its value in exchange should be as stable as possible; such stability would tend to result from limited and steady production and broad usage. All these qualities, and others which might be suggested, give to the commodity its essential characteristic, namely, uni versal exchangeability in both time and place.
Metals as Money Historically considered, the evolution of money as a corn modity is characterized by the tendency of metals to supersede all other forms of money in the more advanced communities, and by the tendency to progress from the less valuable to the more valuable metals. The result is that gold, which possesses the de sired qualities to a higher degree than the other metals, has be come pre-eminently the universal money article. The settlement of big purchases, debts, and balances is made in terms of, and by the transfer of, gold. For certain purposes, however—for example, small transactions—other metals are more serviceable, their lower value making possible a larger weight for small values. Hence in the United States the contemporary use, along with gold, of silver, nickel, and copper; these latter, however, are recognized as subsidiary to gold.