270 



MONKY 



great. A coincidence of mutual want* at the same 

 time ami place is the first condition of any \ 

 change, ami it is jdain that a common HI nl in in of 

 exchange will obviate one of the principal ditticul- 

 tie of direct liarter. If there is some one tiling 

 which every one is willing' to take, it follows tliat 

 anything else can he bought or sold against tliis 

 paitinlai < iimxlity. Aeeoidingly tin- lii-st func- 

 tion of 'money' is to provide (1) a met/turn of 

 ejeehange, and its first forms consist of things 

 which 'are generally de-ired in simple states of 

 society. Skins, c.-ittlc. shells, com, pieces of cloth, 

 mats, salt, and many otlirr commodities have at 

 different times and places lecn used as 'money,' 

 in the sense of a common medium of exchange, 

 The commodity chosen, however, will be of little 

 advantage unless it can IMB used Irnth in large 

 and small quantities. This consideration leads to 

 another primary function of money viz. (2) as 

 a nieasure of value. Not only is it necessary that 

 things can be exchanged against a common sub- 

 stance, but the rates of exchange must be measured. 

 Finally, as society ad vances, a liosis for (3) deferred 

 /"ii/ments, and also a method of (4) storing 'values' 

 without deterioration, liecome of importance. In 

 order that these four primary functions may lie 

 fulfilled, the substance chosen for money must 

 have certain properties, of which the principal are 

 portability or great value in small bulk, durability, 

 sameness 'of quality, divisibility, stability of value, 

 and cognisahilitv. It was soon discovered that 

 these qualities are possessed in the highest degree 

 by gold and silver. Other metals have !>een used 

 at different times even for standard money, but all 

 of them fail in one or more of these particulars. 

 Iron is liable to rust, lead is too soft, tin too brittle, 

 and copper t<io heavy. It may IK- observed, that 

 the importance of the qualities varies according to 

 circumstances. Thus, when, as in modern societies, 

 the greater part of wholesale transactions are 

 effected without the intervention of material 

 money, portability is of comparatively smalt im- 

 portance, whilst on the other hand stability of 

 value is of the greatest Importance in all kinds of 

 deferred payments. It is not necessary that all 

 the primary functions of money should be fulfilled 

 by the same thing. In Saxon times, for example, 

 aild for long after in Kngland the standard measure 

 of value was the pound-weight of silver, but the 

 actual medium of exchange consisted of silver 

 pennies. At present the actual medium of ex- 

 change consists to a great extent of bits of paper 

 bank-note*, cheques, and various instruments of 

 credit whilst the standard measure of value is a 

 piece of gold. 



So long as the attention is directed to material 

 money, die principal questions that arise are 

 in connection with coinage. At first, after the 

 introduction of the precious metals, it was left 

 to the panics concerned to test their weight and 

 fineness with citrntt cnifitor for the rule, and the 

 present unsatisfactory state of the Knglish gold 

 coinage is mainly clue to the survival in law of the 

 presumption that it is the duty of the receiver of 

 money to see that it is of full value. lint the 

 essential obj-i-t of coinage is that a responsible 

 authority should allix its stamp to small ingots of 

 metal, in such a way as to signify their weight and 

 purity. Simple ami impoi l.uil as tills duty appears. 

 lusiory is full of examples of the deliasement and 

 deterioration of coins by governments with the 

 view of making a |H>tty gain. It is worth noting, 

 however, thai from the earliest times (with I lie 

 exception of the reign of Henry VIII.) the Knglish 

 silver was kept of the same fineness. It is true 

 that the weight of the coins Wame gradually less, 

 but it was proliably in most cases the recognition 

 of an accomplished fact (through ordinary wear 



ami tear), and was not an at tempt to defraud. 

 The evils which ari-eiiom the natural or artificial 

 debasement of coins have IH-CII well dcscrilicd by 

 Macaulay in his account of the recoinagc in the reign 

 of William 111. Since the piimarv object of coin- 

 age was simply to furnish a mark of weight and 

 fineness, all metallic money was at first exactly 

 what it professed to lie. Thus, the old Knglish 

 silver pound was coined into 24it pennies; and this 

 fact is preserved in the Troy table 20 jieimy- 

 weights = 1 oz., 12 oz. = 1 pound. In process of 

 time the actual weight of the penny Ix-eame lew 

 than a pennyweight, but the same mnaben were 

 still supposed to go to the pound. Finally, a 

 certain amount of gold of a certain fineness wag 

 declared to be equal in value to a ' |xiund of silver,' 

 or rather to 240 pennies. This is historically tlie 

 answer to Sir Robert Peel's famous question, 

 'What is a pound?' The technical answer to the 

 question is now given by the Coinage Act of 1870 

 (in substance the same as that of 1816). The act 

 declares the precise weight of the sovereign in 

 grains, and the pro|M>rtion of alloy in standard 

 gold. Nominally, any one can take standard gold 

 to the mint ami get it coined into sovereigns or 

 half-sovereigns free of charge; 20 pounds-weight 

 Troy being coined into 934 sovereigns and one liulf- 

 so\ereign. Practically the time and trouble in- 

 volved in going direct to the mint induced people 

 to sell their gold in preference to the I'uink of 

 England, and at first (within certain narrow 

 limit-) the price varied. Now the Iwink is com- 

 pelled to purchase all standard gold at C.'t, 17s. 9d. 

 per o/., and, as it obtains from the mint 3, 17s. 

 lOld., there is a small profit by way of brokerage. 

 Allowing for this small difference, it will lie seen 

 that the mint price of gold viz, 3, 17s. lOJd. 

 simply refers to the numlier of standard coins mad<; 

 out of a certain amount of standard metal. It 

 follows that this mint price is li\ed and invariable 

 so long as the law remains unchanged. Thus, if 

 gold liecanie as plentiful o-s blackberries, or as 

 scarce as diamonds, the mint price would remain 

 unaffected. At the same time, however, the value 

 of gold in the sense of its purchasing power over 

 commodities would change according to the varia- 

 tions in the quantity, though the precise nature 

 and extent of the change would depend upon other 

 elements. In some eases government makes a 

 definite charge for coinage that is to say, practi- 

 cally the weight of the coins returned is so much 

 less than the weight of the bullion brought. This 

 charge is called seigniorage. So long as tlii* charge 

 is [(aid, however, there is no restriction on the 

 quantity of metal which may be converted into 

 full standard coin. 



It is necessary now to notice the distinction 

 lietween standard money, in the projicr usage 

 of the term, and token money. The chief charac- 

 teristics of the former are that, as just explained, 

 it is coined to an unlimited extent, and further, 

 that for any money contracts it is unlimited 

 legal tender. In 'token' money these t wo charac- 

 teristics are alwent The nature and uses of token 

 money are also liest explained historically. In 

 the middle ages silver w:is very scarce, ami prices 

 were extremely low. The silver penny was origin- 

 ally al>out the si/.e of the present three|x>nny- 

 piece; consequently for the low range of prices 

 then current it wa- inconveniently large and valu- 

 able. In a petition of the date of l.'t.'W) it waa 

 |M>inted out that 'licer is one jienny for three 

 gallons,' and that a [>cnny is the smallest coin, 

 and the petitioners pray that smaller coins may 

 lie struck to pay for their little purchases, and 'for 

 works of charity.' The great practical dilliculty, 

 however, was to make very small coins of full 

 standard value. So muck was the need of biuall 



