26 POPULAR SCIENCE MONTHLY, 



measuring the value of the commodities for which they are ex- 

 changed. And as the value of commodities depends upon the 

 efforts expended, under the law of supply and demand, in pro- 

 ducing and delivering them at the place of need, the ultimate 

 function of paper representatives of value is to measure and 

 reward human effort. 



By way of example, let it be supposed that a tailor sells a suit 

 of clothes and receives in payment therefor a check for, say, 

 fifty dollars. He deposits that check in a bank in the belief that 

 he can obtain a definite worth for it in whatever commodities 

 or services he may choose to invest it, and the bank likewise 

 accepts and places it to his credit, in the belief in the ability of 

 the signer and indorser to produce commodities or services of 

 the value for which it calls. If the tailor buys a set of furniture 

 and gives his check for fifty dollars therefor, what he has done 

 has been to exchange the value of cloth as measured, cut, sewed, 

 and trimmed into particular shape for timber, cut, joined, and 

 varnished into a particular shape of what he deems an equal 

 value. The value of the efforts of men expended in producing 

 the clothes has been balanced against the value of the efforts of 

 men expended in producing the furniture. If fifty dollars in coin 

 were received for the clothes and given for the furniture, the 

 effort expended in producing the clothes would be measured 

 against the effort expended in producing the furniture, by the 

 use of an intermediate commodity ; if a check were received for 

 the clothes and a check paid for the furniture, effort would be 

 measured against effort by means of paper representatives of 

 value through the agency of a bank. If the tailor, instead of 

 purchasing furniture worth fifty dollars, purchases a number of 

 articles aggregating fifty dollars in value, the result is the same. 

 The efforts of men in producing the number of articles have 

 been measured against the efforts of men in producing the suit 

 of clothes, and this is the function performed by money in every 

 exchange, whether great or small, and whether the money is 

 coin or a paper representative of value. Effort as expressed by 

 result is measured against other effort as expressed by other 

 result. 



The test of the efficiency of a paper representative of value, 

 therefore, is the extent to which it can be exchanged for the 

 value which it expresses. But as the value of a paper repre- 

 sentative of value is expressed in terms that also express the 

 value of coins, it is a measure of so much value as is represented 

 by the coins, and a paper representative of value is at present 

 almost universally considered as such only to the extent that it 

 is the representative of coin. A certain amount of coin, or the 

 bullion from which it is derived, has a definite and known value 



