35 
PRINCIPLES OF CURRENCY, 
By 
Me. F. E. 
(Read 14th September, 1915.) 
The word currency is used to denote that which passes from 
hand to hand as a medium of exchange. At the present time, 
coin, notes, cheques, bills of exchange, postal orders, etc., consti- 
tute our currency. 
Simple exchange or l)arter is clumsy and inconvenient, except 
for those isolated occasions when one person has exactly what 
another wants at the same time that the second person has exactly 
what the first wants. This coincidence is so rare that the need for 
the use of some commodity as a store of value and a medium of 
exchange, that is to say as currency, is one of the earliest felt by 
traders in any community. It is only in small villages where a 
simple form of communism has been established that any collective 
life can be carried on without a currency in which to measure the 
value of the various services ])erformed. In barter one of the 
greatest difficulties is how to deal wdth large objects difficult or 
impossible to divide. One of the first conditions to be fulfilled by 
the medium to be used as currency, must therefore be divisibility. 
Alost of the currencies of the past, except that of the pastoral 
states, were made of materials easily divided to meet the needs 
of small transactions. 
For currency it is desirable also to select something which is 
generally w^anted. as an article which is in fairly constant demand 
will remain at about the same value at all times. Stability in 
the value of the material used as currency is obviously important. 
It is desirable also to have as currency something that can easily 
be carried about, easily recognised, difficult to destroy, and homo- 
geneous in character. 
It is clear that it is difficult, if not impossible, to find a com- 
modity fulfilling all these requirements, nor are they alw^ays of 
equal value. The nature of the trade of the country concerned 
would decide which of the attributes wxre the most important. 
For a small country with simple industries, a currency that can 
easily be passed from hand to hand, keeps about the same in 
value, is easily divided, and easily recognised, would be about all 
that would be required. History shows that for such conditions 
currencies of cow’rie shells, wampunpeag. rum, sugar, tobacco, or 
